Well, I think you guys missed all the best reasons for investing in rentals. Here's why I do it.
1. Meeting wonderful people! What other business allows you to meet drug addicts, liars, deadbeats and other wonderful people on a daily basis! You can't help becoming a people person in this business.
2. Learning a trade. There's nothing like the rental business to teach you how to get that nasty feces stain out of the new berber carpet or how to lasso a rabid pit-bull before he takes your arm off!
3. Helping the homeless (or is that making the deadbeats homeless)!
4. Helping all the nice lawyers in your community! I get a warm feeling knowing that every low-life, scumbag contingency lawyer is kept in business by suing rich landlords!!!
5. Seeing my tax dollars at work. There's nothing like the feeling of seeing those tax dollars come back to you in the form of Section 8 payments. It gives me a warm feeling to know that my tax dollars are going to a young, unmarried girl that has had 5 kids by 5 men and is too lazy to work!!!
It's a glamourous profession, just like on the infomercials!!!
I'll give mine, though they're somewhat specific to the area I'm working.
1) Inflation - I believe there is a significant risk of inflation. Owning real estate is a good hedge against inflation.
2) Cash flow - With a good deal, there is some amount of immediate cash flow. While nothing is certain, I believe inflation will have the effect of improving cash flow over time.
3) Prices are cheap. The area where I'm trying to acquire property has been slammed by foreclosures. Prices are 30-40% below where they were two years ago. They may get cheaper still. However, its actually quite competitive to acquire these properties, which I think will limit further declines.
4) Declining vacancy rates. In general in the Denver area vacancy rates are far below where the where a few years ago. In researching this area, there are few houses for rent.
5) Job growth. Several hospitals have opened nearby. Several more are in the works for the same area. Major redevelopment projects are underway. All this, IMHO, is going to bode well for long term job growth in this area.
1. Instant Equity - We look for deals that have equity in them. Our first purchase was a duplex for $26k that we are refinancing for $55k. You would most likely never find a buyer for that price, but by owning you can use that equity.
2. Cashflow
3. Tax Benefits
4. Appreciation
5. Time vs Benefit - For the time I spend dealing with my rentals, I believe all of the benefits make it a great investment.
Well, I think you guys missed all the best reasons for investing in rentals. Here's why I do it.
1. Meeting wonderful people! What other business allows you to meet drug addicts, liars, deadbeats and other wonderful people on a daily basis! You can't help becoming a people person in this business.
2. Learning a trade. There's nothing like the rental business to teach you how to get that nasty feces stain out of the new berber carpet or how to lasso a rabid pit-bull before he takes your arm off!
3. Helping the homeless (or is that making the deadbeats homeless)!
4. Helping all the nice lawyers in your community! I get a warm feeling knowing that every low-life, scumbag contingency lawyer is kept in business by suing rich landlords!!!
5. Seeing my tax dollars at work. There's nothing like the feeling of seeing those tax dollars come back to you in the form of Section 8 payments. It gives me a warm feeling to know that my tax dollars are going to a young, unmarried girl that has had 5 kids by 5 men and is too lazy to work!!!
It's a glamourous profession, just like on the infomercials!!!
This is true to an extent. It depends upon whether RE is a full-time or part-time activity for you and it also depends upon your overall AGI. Owning rental property provides zero tax benefit for me and I think people don't always understand that these writeoffs have limits, caps, and phaseouts. In my case, the writeoffs can only offset my rental income so it's a wash, no tax benefit whatsoever except I guess that my meager cash flow can stay in my pocket. My main home is what provides the real tax benefit.
1. Cashflow
2. Instant equity. Most property that cashflows well has very good equity.
3. It's worked for 6 centuries. It's not a flipping strategy that's only good for 3-5 years.
4. It's easier REI, imo. I will quietly exit the rat race in 10 cherrypicked deals.
5. It will give me the cash base to try other flipping/quick turn strategies. I imagine it's a lot easier to make a flip profitable when you can buy it for cash.
I live in the Bay Area, where home prices are high. The thought of putting a majority of my hardwork money into my mortgage was not something I wanted to do. I still want a life and having a rental propety free up cash-flow and gives me more flexiablity. In case I got laidoff or wanted to relocate, I know my mortgage is being paid for.