Monday, 6 March 2017

Why Investing In Rentals Only Is Not the Quickest Way to Build Massive Wealth

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.
Here, I am going to clarify again that rental property is not a bad investment at all. It’s the marketing abusers who make it something with profitability that of a monster size, which it is definitely not. My point of talking about rental property investment here is that it is not going to build you the massive wealth anyway near the way it is often portrayed.

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