What I am about to tell you is surely not surprising but it
is certainly against what is being preached all over the internet. Investing in rentals only is not going to give huge wealth. Although, rental business
gathers huge praise, which it might deserve, but only a few people tell about
the other side of the coin.
Business with narrow
stream of income
While there is no denying the fact that a rental business
can withstand real estate crashes, a real estate crash is something that
doesn’t happen all the times. So, investing only in rental property, while
ignoring other profitable ways in real estate in a hope that there would be a
consistent stream of income during bad days, doesn’t represent a mindset that
of a true business person. For instance, if you have got a lot of cash, say
$800K, and you are going to invest it in the rental real estate, how much time
would you need to get that entire amount back, while not excluding the costs
that are spent again on property maintenance? It may take decades.
So, what is the issue that makes rental business the slowest
one in the real estate industry? It’s the scalability. A rental portfolio
cannot be scaled due to a lot of complications involved.
Rental property the
primary business? Surely not a way to build massive wealth
If you do not like a Nine-to-Five job due to tougher
regulations and less monthly income, investing in rental property may give you
huge relief in many aspects including the financial one. However, you wouldn’t
want to depend entirely on this option if you are looking to build a wealth.
Instead, you can choose other options in to investment money in real estate and
keep rental property business on second priority. Remember, the real estate
investments with huge turnouts are definitely fraught with risks but you will
have rental business to rely on if you will be forced to take a step back. And
after gaining an experience in the business, you will be able to build a business
around the real estate investments. This way, you will be managing a mechanism
comprising of slow and fast turnouts.
What is it that you
can do as a primary business?
If you view portfolios of the successful real estate
investors, it wouldn’t come as a shocker that almost all of them wouldn’t pick
rental property investment as the primary way. Instead, the businesses they
would most probably go for include:
- Buying, running and selling properties.
- Working in the sales in order to know how to increase the turnout.
- Working on stock options.
