Investing in rental properties can be one of the best ways to build wealth.
For one, it can provide you with a steady stream of income. Additionally, it can be a great way to build your wealth over time. And, if you choose the right property, it can appreciate, providing you with even more financial security down the road.
Previously real estate investing was only available to traditional investors with the resources to deal with all the fees, intermediaries, and jargon.
But now, anyone can get in on this investment opportunity at a much lower entry point. Not only that, but it’s a way to help achieve the double whammy potential of investing: portfolio growth and stability.
Ordinary investors have new opportunities to make money from rental properties by investing as little as $100 per share.
How it works
Companies like Arrived, Fintor, Fractional, or Fundrise offer a selection of pre-vetted homes that have the potential to generate income for investors. Investors browse available houses to get started and then choose to invest in shares.
Investors then review the terms, sign an online contract, and fund the investment by linking their bank accounts.
Once you set everything up, investors collect a share of net rental income and participate in property value appreciation.
Home investment companies focus on single-family rentals, which have become one of the most sought-after assets in today’s real estate market. The pandemic led to high demand for rental homes, as people moved to new locations that provided a lower cost of living and higher quality of life.
The companies give people an opportunity they might otherwise have and often draw first-time rental property owners to invest.
Here are some of the top benefits of investing in rental properties:
1. Low minimum investment
2. Diversify your investments by investing in multiple properties
3. No operational responsibility for the home
4. Passive and consistent income
5. No responsibility to vet tenants
6. No personal liability
7. Access to lucrative markets
But of course, no investment is without risks.
The most common risk with rental property is a vacancy. If a unit sits vacant for too long, it can eat into profits.
The most significant risk associated with investing in rental properties is the potential for declining property values. If the property value decreases, the value of your investment will also decrease.
However, as long as you continue to receive rental income from the property, you will not “lose money” on your investment unless you sell it.
The news and editorial staffs of The Denver Post had no role in this post’s preparation.