5 WAYS RENTAL PROPERTIES MAKE YOU MONEY (AND WHY YOUR REAL ESTATE PORTFOLIO NEEDS DIVERSITY)
There are many reasons today’s most prolific real estate investors are gobbling up single family rentals: Home values are rising. The dollar is shrinking. The construction of single-family properties hasn’t caught up with demand. More American families can only afford—or find—rental properties. But rentals aren’t just a trendy way to invest into today’s market—they’re a long term money maker. And the return on investment for rentals is likely higher than you’d expect, thanks to the multiple ways this investment pays you back.
Here are the five ways you can expect a return on your investment with rental properties:
1. Mailbox Money
It’s always a good day to get a check in the mail (or transfer to your account) from your rental properties. Your net cash flow is the money you get from your tenants, minus expenses and your loan payment.
Example: You purchase a $120,000 rental home. Tenants pay you $1,200 monthly. If your expenses and loan are $1,100, your net cash flow on a monthly basis is $100. Granted, $1,200 a year isn’t a large chunk of change. It’s more like the cherry on top of the other ways rental properties make you money. Compare it to the dividend of a stock; it’s likely not your primary reason for the investment, but it sure doesn’t hurt.
