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Renters Warehouse BW Metro | August 6, 2020

'Should I Become a Real Estate Investor?' | Columbia Property Management Tips

Updated January 17, 2022

For those considering selling their Columbia home right now, listing it on the open market certainly is one option. Yet, when there is so much potential financial risk and uncertainty, it may also be time to look at your existing property as a more impressive investment strategy. For some, it could mean becoming a real estate investor!

Before you become overwhelmed with what that could mean, consider a few key points. First, you do not have to do all of the hard work yourself. With the help of an expert Columbia property management company, you could circumvent all of the hard work that goes into owning your rental propertyAt Renters Warehouse, we know that well-managed Rent Estate™ is crucial for your financial freedom!

Stone house in Columbia, Maryland

Still, there are some things to think about before you decide to begin real estate investing. You need to weigh what investing might mean to you and the benefits it can bring. Take a closer look at why you should consider becoming a Rent Estate™ owner!

What Are the Benefits of Becoming an Investor?

Take into consideration whether being a rental property owner is right for you. While you can (and should) certainly get additional information from your property management partner, you should still evaluate the following points relative to your situation as a property owner. Everyone's circumstances for considering a sale or a rental are different.

The Income

Undoubtedly, the income from an investment property is one of the most important factors to consider. There are some financial calculators that can help you to get some information about this. However, an easy way to determine what you could get in rental income is to look at rental property sites like Zillow's rental tool. Look at what homes are being rented for in your area. For many, this can be an eye-opener. You will need to make more than the expenses for maintaining your home as a rental and mortgage combined.

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Tax Deductions

Many real estate investors will find tax deductions for renting out residential property. There are different rules on this, so it's a good idea to check out the IRS website or talk to a tax professional about deductions that may apply in your case.

Still, this is a good way of reducing your overall costs for owning the property. You may be able to see deductions for improvements, ordinary expenses, and depreciation of value.

Preparing for Retirement

One worry that many people have about retirement is whether they will have enough money to live comfortably. This worry is nearly universal, but there are ways to ease it. One way is to think about all the things you will do once you don't have to go to work every day. You can also plan financially so that you will be comfortable in retirement.

One of the best reasons to become a real estate investor at a young age is to prepare financially for your retirement. It's always wonderful to have some more money in your golden years, no matter how much pension you receive. That's when you will have all the time needed to try out new hobbies and travel around the world.

Property Appreciation Over Time

There are a few different ways that real estate investors make money. One way is through rental income - when you have a tenant who pays rent every month, that money goes right into your pocket. Another way to make money is through appreciation. Over time, the value of houses goes up, so when you're ready to sell your rental property, you can make a profit. Rents also tend to go up over time, so this means that you'll get more money every month to pay down your mortgage, or you'll have increased equity in the property.

Portfolio Diversification

Diversification is another reason why real estate is a great investment choice. First, it has a low or negative correlation with other significant investments, meaning that when the stock market takes a dive, your real estate investment is likely to hold its value (or even increase). Second, real estate provides stability and certainty; you usually know exactly what you're getting when purchasing a property. Third, real estate offers excellent potential for returns. While the stock market might only see modest returns in any given year, real estate can see a high return on investment if it's managed correctly.

Long-Term Security

Many people believe that real estate is one of the safest investment strategies available today. Investors may be interested in real estate rental property because it offers a bit more security than other types of investment strategies, such as stocks and bonds. It also provides an opportunity for property owners to diversify any other investments they may already have.

While you should speak to a financial security advisor for more insight into how this works for your situation, don't overlook the benefit of owning the home long term! Real estate often appreciates over time, especially if maintained and improved. If you wait to sell it in a few years, and you live in a neighborhood of Columbia that is appreciating, you may be able to sell it for more than it is worth now.

Run this by your trusted Columbia property management partner before you proceed to determine whether your property makes an ideal rental.

Businessman holding a small house and apartment keys in hand

You Can Manage Your Investment Your Way

Renting out the home you own now instead of selling it offers you incentives and gives you options. You can manage this property your way.

  • Some people want to maintain the property themselves by managing things like maintenance and finding new renters.
  • Others are more interested in using a trusted third-party like Renters Warehouse to manage their investments.

You can choose what works for you based on things like:

  • The time you have
  • The amount of hassle you want to deal with
  • The location of your property in relation to where you live (or move)
  • Your expertise and confidence in maintaining the property
  • A need to just have an income without the hassle.

Take the time to discuss these options with your Columbia property management partner.

Keep in mind that you do not have to own your home outright to rent it out. You should check with your insurance company and your mortgage lender about rental rules. You may also want to check with your HOA or community association if you're part of one.

Could This Be the Move for You?

Should you become an investor? Whether you plan to be very hands-on or completely hands-off, the real estate market in Columbia isn't something to overlook when it comes to your financial future! Selling now may not be the best long-term play for you. For some homeowners, renting can be much more lucrative.

Ready to learn more? Get started with our FREE Rental Price Analysis to see how much your home is worth in rent!

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