By Peyton Zachrich - What Does it Mean to Invest in Rental Properties?
To invest in a rental property, you buy a house or apartment and rent it out. You need to find the property, market it for rent, and pay for all of the expenses to keep it in good condition for your tenant. If you do it right, your total expenses should be less than the rent, providing you with what's left over as your monthly cashflow.
You can make a much higher return investing in rental properties than you would expect in stocks and bonds. You benefit from cash flow, loan paydown, appreciation, and tax benefits. It can be one of the fastest paths to passive income and financial independence.
Investing in real estate requires more work, learning, and skin in the game than many other investments, and it's a long-term commitment. Much is within your control, but you need to get things right, or there are real risks and consequences.
Rental property investing is like running a tiny business with debt. You are responsible for keeping everything together and doing whatever it takes to: 1. Always provide safe and quality housing to your tenants and 2. Make sure everyone that is owed money always gets paid.
Learn, learn, learn! Investing in Real Estate is much more complicated than buying index funds, with much higher stakes in terms of upside and downside. It is a commitment. Also, work toward saving enough to make a down payment, and be proactive about maximizing your credit score.
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