You may be wondering if buying rental property is worthwhile. Or you may be wondering if it’s a good idea to rent out your current home. According to a Redfin report, 28% of millennials plan to rent out their homes and move up, rather than sell.
Whether you’re buying your first rental or choosing to rent out your home, owning a rental property has many clear benefits. At Rentalutions, we work closely with rental property owners, so we know there’s never been a better time to get started.
Here are 5 reasons why you should invest in your first rental property today:
1. The Rental Market is Growing
According to the U.S. Census Bureau, more than 37 percent of all Americans rent their homes, the highest percentage in decades. What’s more astounding, though, is that 59 percent of all new households created between 2010 and 2030 will rent their homes, according to Urban Institute. This shift towards renting is causing historically low vacancy rates and driving up rental prices.
As an investor, this trend ensures you’ll be able to find quality tenants to rent your property to. And the growing demand for rentals will increase rent prices for the foreseeable future.
2. It’s Easier to Borrow
During the Great Recession of 2007-2009, it was challenging to obtain loans for investment properties. Only experienced investors with significant down payments had access to capital.
Over the past few years, many banks have started lending again. If you’re looking to buy today, this is great news for you. By leveraging loans, you minimize the amount of out-of-pocket cash that you have to put into a property. Assuming the property increases in value over time, by using other people’s money, you’ll magnify your return on invested cash.
3. Interest Rates Are Historically Low
If you decide to borrow money to buy your rental property, you’ll be able to lock-in a loan at historically low interest rates. As of September 2, 2016, the average interest rate for a 30-year fixed loan was 3.57%.
Although it’s unclear when the Federal Reserve Bank will increase rates, many experts believe the earliest an increase will happen is December 2016.
4. It’s Easier Than Ever to Research Investment Opportunities Online
As an investor, it’s never been easier to research potential investment opportunities. While sitting in the comfort of your home or office, you can search for available properties on Redfin. You can narrow your search by location, property type, property value and more.
The Redfin Estimate even allows you to view estimates for properties that are not yet on the market.
5. You Can Manage Your Rental Property with Easy-to-use Technology
People oftentimes avoid investing in rental properties because of the hassle that comes with leasing and managing the rental property.
In the past, part-time investors had two options: hire a property management company or manage the property themselves. These have both been bad options in the past. Property managers oftentimes charge 10 percent of the monthly rent, which can mean the difference between making money and losing money every month. Leasing and managing a property on your own, though, oftentimes meant doing everything manually with lots of paperwork.
Recently, though, online tools have emerged that help landlords save money and time by automating the rental process.
Rental property owners can now rely on software to simplify each stage of the rental process:
- Find tenants with an online rental listing
- Screen tenants with online tenant credit checks
- Sign a digital lease
- Collect rent
- Manage maintenance
There’s never been a better time than today to buy your first rental property, or to rent out your home if you’re moving soon. Experts believe that rental growth will continue, which will create demand for rentals and keep rent prices high.
Borrowing standards have also become less stringent from the impossible-to-get-a-loan days of the Great Recession. This means that many first-time real estate investors are now able to access the capital they need to buy their first property. Not only is it possible to borrow money, but it’s actually a great time to do so because interest rates are low.
After acquiring your rental property, you can rest assured that managing the property won’t cost you a fortune or your free time. Online tools make it easy to find and screen tenants, create and sign leases, and collect rent online.
Buying your first rental property has many benefits. If you’re interested in more information, chat with a Redfin real estate agent in your area.