While putting money in the bank will slowly bring incremental dividends, investing in single and multi-family properties will guarantee passive income (and possible wealth) when done correctly. Think about it: people will always need places to live!According to the U.S. Census Bureau, 31 percent of the population currently rents. Someone is profiting
According to the U.S. Census Bureau, 31 percent of the population currently rents. Someone is profiting from that! Today’s renters are seeking protection from fluctuations in the housing market, freedom from home maintenance, and greater mobility. You can provide that while providing for your family in your sleep.
Note that rental properties generally appreciate over time, giving you equity in the property. Your tenants pay down the mortgage, while you wait, giving you even more equity in the property, not to mention annual tax deductions and monthly cash flow.
To get started, consider where to buy. Research the rental market in the area you’re considering making a purchase. Get to know current and past trends in rents and occupancies. Some people believe making a purchase in a lower-income neighborhood will require less investment, but if you encounter high tenant turnover and constant repairs, you may actually be losing money. If you buy where you would personally like to live, you’ll make a profit. While you want to make the minimal investment of your own hard-earned money, spending a little extra now may prevent headaches later.
Though reality TV may be all about flipping houses these days, you’re probably better off looking at this as a long-term investment. Real estate has good years and bad years, like anything else, but if you hang onto a property for a long period of time, you’ll see the trends and be able to gather a reliable figure for the property’s worth. Much of that time, you’ll be collecting passive income that may be enough to spell out retirement.
Speaking of retirement, you shouldn’t be making repairs to rental properties in your golden years. Once you get the ball rolling, income becomes truly passive when you can afford to hire a property management company. Whether real estate is your full-time business or you have a single investment in addition to your private home, having a company manage the needs of tenants means less hassle for you and more time for other things (both now and in your 70’s).
When choosing between single family and multi-family investments, know that cash flow on a multi-family property may be less risky, since you’re entire profit doesn’t rest solely on the fate of one tenant. Multi-family units are also sometimes a more convenient investment since the repairs and maintenance happen all in one place, likely using less of your time and energy than traveling to and from various units spread across the city.
Whichever you choose, you can create passive income with single and multi-family investments to make improvements to your own home, help put your kids through college, go on that dream vacation, or even secure your retirement! Contact Bodie Interests today to start investing in Houston.