Why You Should Buy Your Rental Property Instead of Selling It
Inflation and gas prices might be on the rise, but it's still important to think about investing in your future. That investment can take many forms, but the one we recommend is purchasing a rental property.
But why buy an income property when it seems like the perfect time to sell? It turns out the exact opposite is true right now. If you're asking, "is it worth buying a rental property?" let's look at some of the reasons why buying a rental property is a good idea in today's current market:
St. Pete, Tampa Bay, and Pinellas Are Hot Real Estate Areas
Florida has always been a hotspot for tourists, but in recent years, its population has been exploding with new residents ready to enjoy the sunshine state. Pinellas County — home of St. Petersburg and part of the larger Tampa Bay metro area — has seen a big jump because of the increase in not just because of the beaches but the community, night-time entertainment, great schools, and other attractions. Honestly, there's never been a better time to invest in real estate in Pinellas County.
Lucrative 5 & 10 Year Projections
We’ve been seeing investors snatching up properties in Pinellas County for years. But recently that activity has increased all because of the lucrative projections that are expected in the next 5-10 years. While experts expect all of Florida to see home values increase, places like Tampa Bay, St. Pete, and other nearby cities are likely to rise even more in price. Therefore, investors are now seeing Pinellas County and the surrounding areas as a perfect addition to their portfolio.
Country’s Woes are Area’s Gains
A place that was once considered just a tourism capital or where people go to retire has become a hotspot for everyone, from families to businesses. While much of the country is going through financial woes now, these woes are proving to be the area's gains as more people are moving and investing in Florida property. The state is quickly becoming the "Golden Goose" of real estate.
Moving from Stock Market to Real Estate
Everyone knows that the stock market is always in flux, but that's never been clearer than it has in the past few years and, especially, this year. Those who are looking to diversify and improve their portfolio are pulling out of the stock market and switching their funds to real estate instead. Places like St. Pete, Tampa Bay, and other cities in Pinellas are on their list because these areas are growing exponentially.
It's Easier to Get Approved Right Now
While it's true that purchasing a rental property is a bigger investment than something like an automobile, it's often easier to get approved for a mortgage. Yes, the process is more involved and may take a little time to get through, but your chances of being approved without high interest rates are better. To improve your chances, we suggest that you have a credit score of at least 629, make a sizable down payment, and maintain a low debt to income ratio.
Lower Interest Rates Are Available
Although interest rates aren't at an all-time low right now, we've been seeing dips in the recent market. At the same time, inflation is unusually high, which makes this a great time to buy. That's because any debt you incur will depreciate while the assets you buy will appreciate in value. This means that after the dust has settled a bit, you will come out on top.
Use it as a Passive Income Source
Purchasing rental properties is one of the very best ways to produce a passive income, and it's a big reason people get started in real estate. Once you've waded through the buying process and made whatever updates or repairs needed, maintaining a property is typically fairly easy. Especially if you are getting the help of a professional. Paying a property manager for each property might eat into your profits a bit. However, having someone with experience handling the hard parts is typically worth the extra expenditure and will be beneficial in the short and long run.
Diversifies Your Assets
As we've been told since we were little kids, it's important that you never put all of your eggs in one basket. Diversifying your financial portfolio can help protect you against potential risk. It's also possible that diversification will allow you to take advantage of positive market swings as economies and outlooks improve.
Various Tax Deduction Benefits
One of the greatest benefits of rental property ownership is the number of tax benefits you'll enjoy. Landlords can take advantage of deductions related to interest, depreciation, insurance, repairs, home office expenses, and more. You can even write off the interest that you pay on your credit cards whenever you use them for goods and services intended for your property.
Every investor's goal is to get a high return on their investment, and real estate has always been a high-performing asset with a substantial ROI over the long-term. Part of the reason for this is that you're using borrowed capital, so you only need to invest a small amount of your own money. Then, rental payments can go toward marginal expenses and any interest on the loan.
Reliable Retirement Income
Since real estate typically provides such a high return on investment, it's probably no surprise that it's a reliable source of income once you've retired. In fact, it's perfect for retirement income because real estate investment becomes more valuable as time goes on. You'll still need to tend to certain responsibilities, but if you play your cards right, it’s possible to retire on landlord income alone!
Easy and Flexible Selling
We just spent a good deal of time explaining why it's better to purchase rental property than to sell what you already have, but we'd be remiss if we didn't mention selling for just a moment. Another benefit to purchasing real estate as an investment is that you can easily sell it as needed.
The truth is that real estate will always be a popular investment, so if you want to move on, you won't have a problem finding another buyer - and you'll often sell it at a much higher price tag.
Contact Tourtelot Property Management for Help Buying a Rental Property
Tourtelot Property Management can walk you through the steps needed to purchase a rental property and can help you manage the property once the process is complete. If you have any questions about renting a property or what residential property management services we provide, give us a call at (727) 345-6006 today to schedule a free consultation.