Becoming a landlord can be an excellent and unique business and investment opportunity. But like every other investment or business opportunity, there are benefits and drawbacks. No industry has escaped the global pandemic completely untouched, but the real estate industry has regularly created headlines for things like rising home prices and extended eviction moratoriums.
However, more investors are turning to the rental market as it expands for the potential to generate passive income. With the help of an effective property manager with a comprehensive rental screening process, rental properties can be valuable for those who desire success.
Join us as we shed more light on whether becoming a landlord is still profitable in today’s rental market and the benefits of hiring a property manager.
Is Becoming a Landlord Still Profitable in Today’s Rental Market?
1. Passive Income
As a landlord, you have the freedom to decide how much to charge tenants and how to manage your rental property effectively.
Naturally, the rental price of a property will depend on three factors: the location, the current rental market value, and its condition. These are all factors you would have considered before committing to purchasing a property to avoid mistakes that kill profit.
Your early investments will start to pay off as soon as you start renting out your property and get a monthly income from the rental fees, ensuring that you have a consistent passive income stream for many years.
Additionally, setting the rental price for a short-term rental property according to the seasons can benefit investors. This will result in a much more profitable investment in a shorter time.
2. The emergence of Virtual Showcases
Real estate experts claim that the market remains active despite the 2020 economic slowdown. There is no hint of a downturn in demand for rental properties. Many individuals are still seeking rental properties despite their wish to return to their previous communities.
Although the pandemic has stopped actual property showings, open houses are still accessible online. Virtual tours are now a practical choice for buyers and sellers in the real estate market. Virtual tours have emerged as the new norm as they enable prospective purchasers to inspect homes from a distance before buying or renting them. It only demonstrates how strong the demand for rentals is still present and how the rental market is constantly evolving. You can also acquaint yourself with platforms for real estate investment to reduce the risks and stress that come with real estate.
3. Appreciation of property
As long as the location of your chosen rental property is anticipated to have significant growth in the future, owning that property will allow you to hold it for high value. Under the appropriate circumstances, if you can keep your property five or ten years after purchasing a home, you can resell it and make a significant profit.
Although not all landlords begin their real estate journey with the hold-and-sell plan, having a solid exit strategy like this will provide you with more peace of mind and security.
4. Tax Deductions and Benefits
Landlords also stand to gain from big tax breaks, which results in a more significant profit margin once the mortgage is paid off. Rental properties can benefit from substantial deductions such as interest deductions, repair deductions, property devaluation, and other professional services deductions.
When tax season arrives, landlords will be entitled to deduct substantial repairs made within the year, interest on the mortgage payment, and flood, fire, and theft insurance. Additionally, investors who own a short-term rental property may be eligible to deduct expenses such as property taxes and credit card interest for all real estate-related costs.
5. Long-Term Financial Investment
Despite fluctuations in the real estate market, buying real estate is a secure investment that only improves over time. As a result, real estate is less vulnerable to inflation or frequent market swings compared to the stock market, which is a very volatile investment.
Real estate is a safe and reliable long-term investment because prices don’t fluctuate quickly due to capital contributions or political unpredictability. In addition, owning real estate is beneficial to the investor because it provides continual income and tax advantages as the value of the asset rises.
The Benefits of Hiring a Property Manager
1. Maintenance Cost
Slow response to maintenance requests can annoy a tenant. However, property managers can easily use technology to receive and track maintenance requests. Furthermore, establishing vendor relationships may assist owners in saving money and keeping tenants satisfied by addressing issues quickly.
2. Smooth Rent Collection
Technology is essential to today’s tenant who seeks ease and convenience of usage. To streamline the entire process, professional organizations can offer apps and online services for rent collection and maintenance. This makes the process of rent collection easy and efficient.
3. Easy Tenant Screening
The most critical phase in the renting process is tenant screening. As a result, the top property management companies have tried and true techniques for screening tenants to discover the most significant tenant for your rental. This enables the easy management of properties for landlords.
4. Prevention of Legal Drama
A landlord must know all local, state, and federal laws. But it’s a lot to keep track of. Local property managers have the expertise in the field to help owners comply with the law and guard against possible flaws. By hiring a property manager, landlords can relax, knowing their property is in the best possible hands to maximize their profit potential.
Owning a rental property can help you pay off your mortgage, generate a positive passive income, and become one of your most valuable assets for achieving long-term financial independence.
Nevertheless, you should remember that owning a rental property may also have risks and drawbacks. Nevertheless, despite the challenges one may face, becoming a real estate investor might change your financial situation and significantly raise your chances of retiring comfortably.