Buy and Hold Investments
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Rental Investments
Maybe it seems like you have to be an adrenaline junkie in order to benefit from the current real estate investment market. Prices are high, inventory is low, interest rates are going crazy, and it seems like an uphill battle.
However, when asked if this is a good time to invest, we always say yes. Not because we thrill from adventure but because there is value in real estate, especially when you invest strategically and commit to holding your property for the long term. Is this a good time to buy and flip a distressed home? Probably not, it depends on the property. But, if your investment goals include a buy-and-hold strategy that prioritizes long-term appreciation over immediate cash flow, you have a lot to gain right now.
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Rental Cash Flow and Returns
Rents are pretty high, and that’s good news for anyone collecting those rents. In many cases, rent has risen by more than 25% or more. This will impact the rent you set on a vacant property that’s new to the market and it will also impact rental increases at renewal time. The higher rents and lower inventory has led to higher tenant retention rates. Residents know they’ll spend more renting a new place. They are more likely to stay in the homes they currently rent.
If you’re worried about what you’ll spend on an investment property, take some time with your calculations. You’ll see that even while you pay more now, you’re also earning more. The rental income is consistent and recurring and is not likely to decrease anytime soon. Also, your property will continue appreciating in value, leaving you with an asset that your tenants have helped you pay for.
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Leverage for Your Investment Portfolio
Another great reason to invest now is that you can diversify and strengthen your entire investment portfolio. Maybe you want to grow what your portfolio is worth. Or, perhaps you want to branch into other types of investment classes. If you own mostly single-family homes, for example, this is an excellent time to invest in a duplex, a new construction condo, or even a small apartment building. Markets like this require creative thinking and risk taking.
Remember that there are general perks to real estate investing that hold true. You earn consistent rental income. You hold an asset that grows in value. You lean on tenants to contribute towards your mortgage and other expenses. And, you can enjoy tax benefits on the losses and expenses you incur with your property.
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Strong Rental Markets in Gallatin County
One of the best reasons to invest now is that the rental markets are just as competitive and squeezed as the sales market. There are a lot of well-qualified tenants looking for rental homes, and those homes are increasingly hard to find. If you can offer a property that’s attractive, well-maintained, and in a desirable location, you’re going to have a pool of tenants wanting to rent it.
More and more would-be homebuyers are feeling priced out of the market, which means there’s a larger pool of tenants. A lot of investors who were renting out homes, especially single-family homes, have sold their properties over the last year. This has created a huge demand for rental housing.
That translates to an opportunity for you.
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