Why buy a rental property?

There are typically two reasons to own a rental property:

1.  Equity Growth

2.  Monthly Cash Flow

Markets move.  Prices don't stay the same forever, and with real estate, they usually go up.  Property ownership will lift you up with the market, taking you along for the ride as prices move.  If you sit on the sidelines, you will miss out.

This of course applies to the home you live in as well as a rental, but a rental property has another huge benefit:  the tenants are paying down your mortgage - not you!

That means that your equity actually grows in TWO different ways:  changes in the market, and your mortgage being paid down by the tenants.  The combination of these two things makes a rental property an investment that's really hard to beat!

When my wife and I first decided to buy rental properties, we had a concern:  what if we bought a house, and then the market declined?

Let's say we paid $200,000 for a house (yes... that's what the prices were like back then!) and then we sold the house in 25 years.  Perhaps the market had declined and now the house was only worth $150,000.  Does this means we would have lost $50,000 on our investment?  Actually, no.  We didn't lose $50,000 - we gained $150,000 - because we didn't actually pay the $200,000 for the house... the tenants paid it!  So now if the house is only worth $150,000... that's money we didn't have before (but we do now!)  Not bad for a declining market!

Of course, that's not a very realistic scenario: that house prices would decline in 25 years, but you get my point - even if they decline, you still come out way ahead in the long term.

However, that doesn't mean it's ok to buy just anything!  Buying the RIGHT type of property can make an HUGH difference on your long term results.  I can help with that.