More adults are choosing to rent, rather than purchase their homes. Consider adding investment properties into your financial portfolio. This segment of the commercial real estate market includes apartment buildings, single-family homes and multi-family homes. Many individuals are shying away from home ownership, which puts you in an ideal position to offer rental properties. Here are some things to keep in mind when making this move.
Tenants Come and Go
Renters do not want to be financially tied to their homes. They can move into a stimulating community with activities that match their interests. As the tenant’s interests or lifestyle changes, they may leave your facility. This can lead to faster tenant turnover, which affects your bottom line. Every time a tenant terminates or does not renew their lease, you have the additional cleaning and updating costs for the unit. Don’t forget to consider the cost of finding, vetting and signing new tenants.
Residents Like To Travel
Individuals that prefer to rent want the ability to move from one location to another with minimal hassle. They do not have a home that needs to be sold, so moving is as simple as packing their things and finding a new rental unit. Many investors are taking advantage of this by creating investment properties in similar markets across the state and country. Tenants have the flexibility to move from one unit in one area to another area. They are familiar with your management style and you can limit the cost of attracting new tenants.
Budgets Are Controlled
Tenants avoid taking on new debt by renting. Student loans and credit card debt are replacing mortgage payments for many people. Leasing allows them the flexibility to take a higher-paying job farther away, and they can pay the debt off faster. Tenants also avoid additional payments associated with home ownership, including homeowners insurance, property taxes and closing costs.
Property Management Requirements
As you expand your investment properties portfolio, you may find it beneficial to hire a property manager. An effective property manager is worth finding. Property managers help you increase your profit on your rental units. In addition, you can prioritize your time for other activities. Some of the things they can help you with include:
- Marketing your building
- Accepting and screening tenant applications
- Establishing appropriate rental rates
- Collecting rent
- Maintaining the building
As a growing number of adults are finding the benefits of renting versus purchasing, you should consider expanding your financial portfolio into this market.