Many investors, experiencing less than thrilling returns on ‘sleepy’ portfolios, are looking for ways to wake them up with investments that can provide a potentially high return, yet are more consistent and secure than stocks. Cash flow property is one way of achieving steady returns, and it has become more popular than ever, especially as the number of renters throughout the U.S. grows. Now is an opportune time to get serious about it.
Today’s information-rich environment enables us to learn much more about properties and neighborhoods, as we have access to bigger and better data that we lacked even a few years ago. And, with services providing hands-free real estate investing, you don’t have to spend the time hunting down properties, screening tenants, or managing your properties.
At HomeUnion, we believe that the more information you have going in, the better your outcome will be, regardless of who does the investing for you.
5 Things that Seasoned Investors Know
1. A New ‘Rentership Society’ is Emerging
The American dream is shifting, or at least it is being delayed for millions of Americans who, for a variety of socio-economic reasons, cannot afford to buy a home. Reasons include:
- Restrictions on mortgage lending
- Increased debt
- Uncertainty about the future
Thus, demand for single-family rental properties is increasing, and both independent and institutional investors are taking advantage investing in single family rentals.
2. Cash Flow Property Helps Balance Risk
When the recession in 2008 hit, many saw their stock dividends evaporate before their eyes. Those close to retirement saw nest eggs dwindle and had to put their best-laid plans on hold.
Stocks can be volatile, responding to market indicators that can fluctuate within hours, if not minutes. While real estate values can fluctuate as well, people still need a place to live when the economy experiences a downturn, which provides investors with a steady income from rental properties. This is why savvy investors who understand the unique value of real estate are balancing out the risk in their portfolios with passive cash flow real estate investing.
3. Location is Key, but Not Necessarily in the Way You Think
Many people think that ideal investment property should be located in places in which they would like to live or vacation, such as coastal regions or mountain resort areas. However, when it comes to selecting cash flow properties, the ideal locations may surprise you.
Currently, smart investors are keeping their eyes on cash flow markets that offer:
- Low property prices, but proportionately high rents
- Strong employment (in non-seasonal industries)
- A large population of renters
- Upward trending population growth
The days of investing only in one’s own backyard are gone. With increasing access to modern property management companies, remote investing is extremely easy. It is now possible to live in one state and own cash flow rental properties on the opposite side of the country, without any hands-on involvement needed.
4. You Can Get More Properties and More Cash Flow…with Other People’s Money
Real estate can be paid for with a government secured loan. Fannie Mae and Freddie Mac offer investment property loans that you can use to multiply your buying power, increase your returns, and spread your investments over a broader base of properties. With low mortgage rates, It’s never been a better time to invest with other people’s money!
5. Good Property Management is Key
With an increasing number of investors going outside their own states to purchase property, having a strong property manager is key to your success. Here’s what today’s property managers should be able to provide you with:
Quality tenant recruitment: Nothing beats a strong pair of boots on the ground for active recruitment of desirable tenants. A good manager will handle everything from background checks, credit checks, employment verifications, and tenancy details to verify payment ability.
Property Value Maintenance: Good property managers are proactive ones in terms of keeping your property in walk-through condition at all times. That means keeping track of scheduled maintenance, repairs, and being dialed into local resources.
A track record of high tenant retention: A good property management firm treats their tenants well, so there is less turnover, leading to less income lost on your part.
There has never been a better climate for investing in a cash flow property than today. With more data at our fingertips, we are able to identify ideal regions throughout the U.S. and drill down to the most desirable neighborhoods. We are able to obtain more information on tenant behavior than ever before. And, with dynamic new investment models, such as HomeUnion, investors can enjoy the benefits of cash flow completely hands-free.