How Rental Homes Became More appealing Than Flipping HousesBy Paul Esajian on April 6, 2015
Has rental property investing become cooler than flipping houses? If so; why? Who should be investing in rental properties?
Rental Properties are Trending
Rental properties are trending among real estate investors. The biggest home builders and investment funds are increasing their share of the U.S. rental market. Wealthy, private investors are too. The longer process of building a large rental property portfolio doesn’t make exciting reality TV, but it does have advantages over flipping houses.
Tens of thousands of American homes are being turned into rental properties. New developments are focusing on rentals too. So is house flipping dead? Why are rentals so popular with educated investors today?
Long Live House Flipping
Flipping houses isn’t dead. Not by a long way. Flipping and wholesaling houses is not only profitable, it is necessary. Without wholesalers and rehabbers, rental property investors can be hampered in their efforts. Most are not experts at all aspects of investing. Landlords and rental operators need deal flow. They need a constant stream of viable properties coming across their desks and screens.
There are tens of billions of dollars of foreclosure and REO properties. They need to be recycled. They need to be recycled to improve the economy. And to preserve and enhance communities. Wholesalers and rehabbers facilitate this process. They save rental property investors thousands of dollars and time in real estate marketing. They provide a viable product, reduce risk, and add value. They save busy rental property investors years of learning and tens of thousands in education.
Flipping houses delivers big paydays, fast. It can be a great part of income and wealth building. For many it is the best way to start investing in real estate. For others it will always be an essential part of the mix. But, rental property investing should be too.
The Appeal of Rental Property Investing
Rental property investing may not be as exciting on TV, but the results can be. And those that are really thinking big will find it exciting every time they buy a new rental home.
Institutions and wealthy individuals invest in rentals for the passive income and wealth preservation they provide. There are plenty of other perks too. This includes; tax breaks, high yields, and keeping up within inflation. But, passive income and preserving wealth are the top draw for sophisticated investors. Without these two features big short term gains don’t mean much. Rentals are great for putting the profits from flipping houses and wholesaling into too. Flipping houses can be automated. It can work as an income and wealth building strategy. But, not everyone has the bandwidth for it. Especially busy professionals that love their current careers.
Income producing rental homes are a sustainable investment. One that keeps on producing income, and protecting wealth. And it’s essential for retirement and long term wealth. That’s sexy.
The Current Real Estate Landscape
Rental property investing is popular right now because the conditions are right. The outlook for rental property owners is bright too. Interest rates are very low. Asset prices are the lowest they’ll be for years. And there are many rental properties available for investing. Demand from renters is high. This is making for great cash flow spreads and equity growth potential. The fundamentals should just keep improving. At least for those buying rentals now.
There are many ways for investors to get in. Whatever you are starting with, there is a strategy that can help. Whether you are light on time or capital there are options. Acquiring and renovating distressed properties is great for those with time. Others may partner up. Some will put their capital into turnkey rental programs and let real estate professionals do all of the work.
Those with cash, but little time will find turnkey a smart choice. Analysts have recently recommended all individuals have at least 30% of their investment portfolios in real estate. Some might be wise to have a lot more. Turnkey investing won’t provide the emotional excitement of an active construction site. But, the results are exciting. Every time a new property is chosen investors should be excited about the income and wealth they are locking in. Each property takes investors one step closer to financial freedom.
Flipping houses is still very profitable and needed. Rental property investing is a longer term strategy. Current market conditions make this a very attractive time to invest in rental properties. There are many ways to participate. For big picture thinkers, turnkey property investing stands out as one of the most exciting ways to get in today.