Who doesn't want to get ahead financially? It seems like no matter how much money you make, you could always use more. Even when you have a padded savings account, it's nice to have additional income that doesn't require hard work.
When you're already working hard at your job, the next step is to start generating passive income. Owning rental property is a simple way to generate passive income, making real estate the ideal way to get ahead.
There are multiple ways to generate income from real estate
Getting ahead financially requires having multiple sources of income and you can have multiple sources within the real estate industry. For example, in addition to owning rental property, you can get your real estate license and be your own broker. As a licensed broker, you'll be entitled to commissions, which means you'll save money each time you represent yourself as a buyer or seller.
Getting licensed online is easy. In Washington, for example, you can get your real estate license for under $200 after taking a 90-hour course and passing the final exam. Each state has varied requirements, but it's affordable and easy.
Rental property will provide long-term income
The best reason to invest in real estate is to turn properties into rental units and generate long-term income. Each property you acquire will likely generate at least a few hundred dollars in monthly profits until you pay off the mortgage.
Once the mortgage is paid off, the rent you collect will be pure profit after your expenses. You'll always need to pay for repairs, maintenance, property taxes, and other expenses. However, when you own multiple properties you'll be generating a decent amount of money.
You'll have an alternative option for your home
If you ever find yourself in a difficult financial situation, owning additional properties can give you access to another residence. Say you lose your job and can't afford the mortgage on your current home, but you have a couple of paid-off rental properties. You can give one of your tenants notice to vacate and move into the property.
Once you move into your former rental unit, you can sell the home you can't afford to maintain. This will give you significant financial relief and buy you some time to find another job. After your hard times pass, you can buy another house and continue renting your other property.
Real estate is the ideal wealth-building investment
Out of all the investments you can pursue, nothing builds long-term wealth like real estate. You can certainly achieve gains from investing in the stock market, but if you don't have a good advisor, you could lose everything.
Other assets appreciate in value, but must be sold to generate a profit. Real estate is one of the only assets that will generate income for you while you're the owner. You can buy and sell properties for income, but that's not a requirement to generate income from real estate.
The right investments can give you more time to yourself
With enough real estate investment properties generating regular income, you'll have more time to explore your personal hobbies, passions, and other business ventures.
Real estate has the potential to generate a flood of passive income, but it's only passive when you hand over the reins to a property management company. If you're new to property investing, you'll get tired of being a landlord really fast. You may not even make it through a year before wanting to quit.
To prevent yourself from becoming frustrated and to avoid accidentally breaking the law, hire a property manager from the start. It's the best way to protect your investments from costly mistakes, especially lawsuits.
Rental property creates generational wealth
If you have children, part of your financial plan probably includes strategies to transfer some of your wealth to them over the course of their lives. You may even want to bequeath your total wealth to your kids when you pass on.
Passing down wealth to future generations is easy with real estate. Unlike other assets, real estate doesn't require transporting physical objects or finding a place to stash them in your home. Your kids will need to pay taxes on the property they receive, but it's worth the expense.
Simply owning property isn't enough, however, to ensure generational wealth. You also need to take certain legal steps and work with professionals to ensure proper management and distribution.
The real estate market is thriving
Real estate has ups and downs, but the market is currently thriving despite the COVID-19 pandemic. If you've been considering real estate, but haven't made the move yet, now is the time.