Contemplating selling your rental property? You probably have a justifiable reason.
Perhaps it's a hot sellers' market and property values are through the roof. Or maybe you're struggling with landlord duties and while the rental income is awesome, it's not worth the trouble.
Well, we're here to convince you the benefits of owning a rental property far outweigh the downsides. Read along and we'll show you why.
1. Steady, Passive Income
The dream is to earn money without lifting a finger. With sufficient passive income, you can quit your job and forget about your employer's paychecks.
Rental property investing is a top source of passive income for many Americans. As long as your rental has a tenant, expect to bank rental income every month. Although one rental unit isn't going to earn you enough passive income to make you retire, gradually you can buy more properties and increase your rental income.
2. Real Estate Equity
Over time, real estate value typically appreciates. It's the reason the median price of a home keeps increasing every year.
You might be wondering how a rental property that increases in value will translate to real money in your pocket. Of course, property appreciation means you'll likely pocket a profit if you sell it, but our goal is not to sell.
You can tap into positive real estate equity via an investment property line of credit. If your property has gained $50,000 in value over the last decade, for example, your bank can give you a credit line that's worth as much. You can use these funds for building maintenance and upgrades, or even as capital for other real estate investments.
3. Homeownership Security
Your rental property is your home, only that it's not your current place of residence. Whether you own your current residence or not, there's a greater sense of security knowing you have a "second home" you can move to if need be.
For example, if you lose your primary home to foreclosure or a fire razes it down, you can move into your rental property and go on with your life. Landlords can terminate a lease to move into their rental property, as long as the agreement has that clause.
4. Investment Diversification
A savvy investor works toward portfolio diversification. It's a proper risk management strategy.
If you already have stock market investments and they're performing well, you might not see the need to hold on to a physical asset (rental property) that requires maintenance and repairs. Why not sell it and buy more stocks?
Well, what if the stock market nosedives and suddenly most of your wealth is lost? The real estate market doesn't have high volatility and won't lose all its value overnight. Real estate property is also a good inflation hedge.
Owning a Rental Property Has BIG Benefits
Owning a rental property is a dream come true for many people. It's understandable if you're considering selling yours, but as we've demonstrated, you would be making a bad decision. You don't want to miss out on the many benefits of being a rental property owner.
What's more, you don't have to worry about the stress of being a landlord. PMI San Jose, a full-service property management company, is only a call away.
