Is now a good time to invest in rental properties? This is the question most people ask me when they realize I have been in property management for over 26 years and an investor for almost 30. My answer is an undeniable yes. There are many factors affecting our market today. The economy is improving and interest rates are on the rise which impacts greatly an investors bottom line. In addition, the housing market has bounced back in most areas and prices are steadily rising. The demand for rentals exceeds the supply, thus allowing an investor to command a higher rental price and obtain a better-quality tenant. The Millennials’ are not interested in home ownership as they do not want the responsibility nor do they want to be tied to one place long term.
But how does this compare to other investment opportunities? Real estate, when purchased correctly and professionally managed, can be one of the strongest returns I have found with very minimal risk. In real estate, you have the future appreciation of the property, your tenants are making the mortgage payments for you and are paying down the principle, all your expenses associated with the rental are tax deductible against the income and lastly you have tax benefits of the depreciation of the asset. For the strongest return, I always coach first time investors to invest in “middle America” and stay away from high end properties or high crime areas. While both of these look good initially, they rarely perform better and usually come with more headaches. I also caution investors to not over leverage. A good rule of thumb is 30% down with a mortgage of 70%. If you are thinking of investing in real estate go talk to a licensed real estate professional or property manager who owns their own investment property. They will give you the best advice.
Sandy Ferrera, CEO
All County Property Management Franchise Corp.