If you have followed my articles for a while, you probably know that I am generally against the idea of buying rental properties.
I believe that most investors underestimate risks, overestimate returns, and forget to consider the negative impact that owning a rental property can have on your lifestyle, career, and even your health.
Beyond that, several studies have shown that publicly listed REITs (VNQ) outperform private real estate over multi-decade time periods, and this makes sense when you consider that REITs enjoy significant economies of scale, are managed by the brightest in this industry, have better capital, relationships with tenants, and I pass on many other reasons: see chart in full article >> HERE
But this does not mean that all rental property investments are bad per se.
In fact, given the current world events, I think that buying a rental property may even make a great investment in 2022.
Recently, I even bought one myself. It is not exactly a rental property since I will use it as my primary residence, but I made the purchase because of the same rationale.
Below, I present 3 reasons why you may want to buy a rental property in 2022, and after that, I present a few REIT alternatives for those of you who don’t want to deal with the ugly 3 Ts: tenants, toilets, and trash.
Reason #1: Highly Leveraged Bet on Inflation
Today, we have very low-interest rates, but unusually high inflation.
This combination strongly favors highly leveraged, inflation-protected real asset investments like rental properties.
This is the best kind of environment to be a landlord/borrower because you are buying assets that appreciate in value with debt that’s depreciating in value.
Let’s look at a simple example:
- You buy a rental property for $200,000.
- You finance $160,000 (80%) of it with a 30-year fixed-rate mortgage.
- Your interest rate is 3.5% and your monthly rental income is $1,200…
Read the full article at – https://seekingalpha.com/article/4494765-why-buying-rental-property