Your decision to rent should be based on your current needs and motivations. At various stages of life, our requirements change due to different circumstances and factors. Therefore, it’s essential to evaluate the benefits at the time of deciding to ensure they align with your situation.
Long-term benefits include:
You create a stable and predictable income - Rental properties are one of the most stable and predictable sources of income due to rental returns. There will always be a need for housing and for low-risk more consistent returns making long-term rentals attractive.
Create consistent income – Long-term lease agreements offer you consistent, stable and predictable income throughout the contract period.
Long-term appreciation - Rental properties also have another aspect that contributes to their return, which is appreciation over time. Property value typically appreciates in value annually due to the consistent demand for housing. Your returns can be impressive, thanks to a combination of rental income and property appreciation
Versatile exit approaches - Aside from just holding onto the property for long-term income, you may be able to refinance it and use the proceeds to fund another investment. Alternatively, you might choose to sell the property and realize the returns you’ve accumulated through appreciation.
Equity through bond payments – As you pay off the bond your equity grows over time and the property's value increases. Which can become liquid capital through loan refinancing.
Protect Against Inflation- Long-term rental properties can be an excellent hedge against inflation. Property generally appreciates overtime, often matching or exceeding the rate of inflation. Even during economic downturns, rental properties tend to maintain their value and may continue to appreciate despite broader market conditions.
More affordable overheads – With short-term rentals such as Airbnb landlord’s must-have furniture and appliances whereas most long-term rental properties are rented unfurnished avoiding the costs associated with up-to-date furniture, bookings, and advertising. Making the process easier and less stressful too!
Generational Wealth creation - An overlooked benefit of investing in property is the potential for creating generational wealth for your family. A rental property is a lasting investment that can be inherited by future generations through your estate.
Diversified asset allocation - Acquiring long-term rental property can be a great addition to diversifying your investment portfolio. Property tends to be a safer investment than stocks or other alternatives, while also providing surprisingly consistent returns. Investing in diverse markets can help you lower your risk exposure and cushion against market slump and deflation.
Control Over the Property- Owning a rental property offers significant control over your investment. You can make renovation decisions that may increase your revenue and actively participate in selecting tenants.Implementing a thorough tenant screening process can help ensure smooth property management.
Maintain and care for your property – long-term tenants want to safeguard their deposits and may tend to show consideration and look after the property to do so.
Potential for residual earnings – long-term rentals present an opportunity in that they can be completely passively managed. By hiring a competent property manager, you ensure that maintenance, tenant issues, and vacancies are handled efficiently, freeing up your time for other opportunities.
This is where Gauteng Management Agents step in, providing unmatched service. Reach out to us for more details.
