Happy Monday debt-destroyers! Today I've got an awesome guest post from Rich over at CureRabbitEars.com! In this post he discusses owning real estate as a Millennial (which is something I have ALWAYS wanted to do) and how it can change your life! Fun M$M fact – my LLC was originally intended to be a real estate investment firm, but as any business owner knows, your business doesn't always take the direction you thought it would! Now I do inbound marketing and SEO…who would have known?!? However – I still keep an eye on real estate as an investment vehicle, and you should too! Enjoy – M$M
(Yes…thats a real life monopoly house up there ^^^…I couldn't help myself.)
Are you wondering if you should turn your home into a rental property? Looking to up-size, down-size, or simply fed up with the jerk next door? Maybe you’re thinking of buying a rental property with the express purpose of turning it into an alternative investment?
Well, what are you waiting for?
Here are 7 reasons you NEED to make a rental property a serious part of your investment portfolio:
1) It's a low risk investment
Real estate is a low-risk investment because of the high amount of personal control you have. In other words, you’re not at the mercy of the disastrous tides of other investment vehicles, such as the stock market. However, that control needs to be harnessed through education. I took a college course that cost me a fraction of what I’ve earned—and earned only because of what I learned—on real estate. There’s obviously a lot more to it than meets the eye. I’d advise anyone to invest their time learning about real estate before blindly investing their money into an inevitable disaster.
There’s no need for you to rage out and rip donuts in your pick-up on your tenant’s front lawn, whose background you never cared to check and is currently bombing rent payments while cooking meth in the basement. It sounds dramatic but, what can I say? I was pissed. Yea, right, like you wouldn’t have done the same thing! Anyway, take the time to learn how to be a great landlord first and great tenants will follow.
2) It's also a high yielding investment
Trust me when I say that pulling off a 30% return on a rental investment year over year is peachily within the realm of possibility. Even though I practically stumbled into my first rental investment, I am currently banging out 120% returns on that property (Would you look at this guy?). Now I’m not saying I didn’t take a risk… I went balls to the wall on this one. What I’m saying is that the potential is there to make above average returns.
3) Rental properties are a great alternative investment
Maybe you’re like me. You wanted to take charge of your well-earned money. You said screw the financial adviser who’s going to put my cash into whatever mutual fund he happens to wing him the highest commission. Maybe you just wanted to dodge the blood suckers in the stock market for a hot minute!
Just know that there are other ways to “diversify your portfolio,” as they say. Remember, having control is a key factor in successful investments, and with real estate you’re practically a self-made dictator. Now, there are those of you who may call me a control freak, but when it comes to my cash, no one runs the show but me. This here rabbit’ll bare his teeth to the baddest of wolves!
4) They are also a tax advantageous investment
Rental income is considered passive income and gets taxed at a far smaller percentage than capital gain. Yet another reason why I prefer real estate over stocks. Not to mention you can claim depreciation, something you cannot do with stocks. In the end, what I cough up for taxes is little more than a furball full of chump change. Remember that real estate course I mentioned? It was a complete tax write off!
5) It is a learning experience for future entrepreneurs
I’ve always considered myself an aspiring entrepreneur; maybe not one of the big dogs, but an up-and-coming pup—a pup with a firm bite and a bark to be reckoned with in this dog-eat-dog business world. Little did I know how much of that I would gain by throwing myself at just one rental property.
From calculating rent, to marketing, to customer relations, to accounting and property management: I feel like I’m one step away from taking down Zuckerberg, storming corporate America and dominating the world. Then again, maybe I just need to adjust my meds. Nevertheless, owning a rental property comes with a lot of valuable experience for all you future business owners and entrepreneurs.
6) Rental properties help reduce life expenses
You can use a rental property to write off such expenses as a cell phone, a laptop and even a home office. On top of that, you will probably discuss your real estate investments with your significant other over dinner and, hey—why not?—write that off too! All of these things that you use or do anyway can now be taken advantage of at a 30% discount. Because you’re a Manhattan-drinking, beach-reclining, hard-working landlord and you don't have to use after-tax money for any of the tools of your trade.
7) Most importantly, they are a fun project for you and your partner
Maybe you get a kick out of renovating a scum-coated bathroom dystopia into a secluded jacuzzi paradise. Maybe nothing pleases you more than playing musical chairs with colors and furniture and lights until the feng shui of a room is harmonized just so. It’ll be a bit of work, but if you’re handy or design-savvy, you can cut corners with DIY projects. You’ll relish the accomplishment of something you enjoy doing and have fun in the process.
A Final Word On Rental Properties
Ignore the ignorant. Generally those who criticize rental properties have yet to own one. Their advice is blindsighted at best. I enjoy real estate not only because of the advantageous investment and tax benefits, but because there is a certain dignity in being a landlord. There is a certain, dare I say, kingliness to owning property, and in my private moments you just might catch me donning the proverbial crown.
Common people own common stock and go right on being common. I, however, Rich Rabbit— genuine millennial, determined investor, downy bunny — aspire to new heights, and to even higher investment returns! And this is one way that I get them. My first rental property completely changed my life, and it can change yours too.