Real estate is a boon if used wisely. One smart investment can lead to long term profit and a worry-free life. One way that landlords and homeowners ensure the maximum use of their properties is by putting them up for rent. In fact, there are many people who buy properties solely to put them on rent for a steady flow of cash. However, that is not the only advantage. This article will help you understand why rental properties are extremely profitable and why you should consider renting your residential or commercial spaces instead of selling them.
Regular Flow of Cash
Without a doubt, it is the regular income from tenants that attracts many property owners to put their spaces on rent. You might not need to work in a regular job or have a business going on as long as you obtain enough rent from your properties that can cover your monthly expenses. This is a quite popular mode of income especially for those who have inherited properties. They can invest in buying other spaces or use the cash to maintain their properties. Even those individuals with jobs and businesses feel a moment of relief at the end of every month by getting this surplus of cash after expenses. This positive flow of cash can be pocketed for future savings.
Not all properties can offer you a positive cash flow. It really depends on the area and the property itself. For example, in areas such as Gulshan and Banani, although the rent is expensive, it may not cover the monthly expenses of owners. This is why those living on rental income choose to rent out multiple properties in different locations because the location matters. A property in Dhanmondi may offer a more positive cash flow than a property in Aftabnagar. It is important for a property owner to understand how cash flows are calculated. The basic idea is simple. After mortgage payments, landscaping and maintenance fees, taxes and insurance payments, repairing expenses, utility bills and other expenses, whatever amount of the rental income remains at the end of the month is your cash surplus.
Appreciation of Property
Appreciation is the increase of the value of a property with time. It is one of the biggest reasons why real estate investors choose to invest in buying land and apartments. In a crowded city like Dhaka where land availability is scarce and there are not enough apartments to meet the rising demand, real estate prices continue to soar. Investors choose to buy firsthand and secondhand apartments for positive cash flow and because they know that the rental price will increase over time. While this is not true in all locations, it can vary area wise. A property in the outskirts of Dhaka will not appreciate as quickly as a property in Dhanmondi. It also depends on the economic situation of a country. Now that inflation has kicked in, prices are so high that you may receive a negative cash flow because your rental income will not meet your expenses. During a recession you can get a very positive cash flow because prices in the real estate market are low at that point, so the upkeep and maintenance of your property will be slightly lower as well compared to the rental income you gain. The result is more cash! Lastly, it also depends on the type of property you bought. A home in a gated community will have a different appreciation rate than a home in the suburbs. Consider these points before putting your property up for rent.
If you bought a property with a home loan plan approved by a bank or financial institution, you must be paying a monthly installment with interest to reduce the loan. Many people can provide the monthly mortgage with their salaries, while many choose to put the property up for rent. The rental income is then used to pay the monthly installments. This way you are building equity and paying off your mortgage which will eventually get reduced. Even if a tenant leaves, you can always rent it to the next tenant, so there will be no problem in paying the monthly mortgage.
Helps Through Tough Times
Rental properties are always on demand. Whether the world is fighting a pandemic or inflation, homes are always needed. Therefore, in many cades it seems that rental properties act as a hedge against inflation. Assuming you took a fixed-rate home loan, it means you will not have to pay more mortgage than the amount agreed upon no matter how high the interests and prices go up. Even if it is a flexible loan that might increase interest in certain economic situations, you can increase rent to pay your mortgage off. Increasing rent would be fair under such circumstances because prices go up and the maintenance and upkeep of the property also goes up as a result.
Renting commercial or residential properties are a great way to get income and offer numerous benefits to property owners. If you are new to property ownership and want to get excellent tenants, contact bti Brokerage. We offer suitable tenants based on the market price and can also provide you with amazing home loan schemes and legal counsel so that you can rent your property out the right way. Call 16604 or Whatsapp: +8801755662414 or visit www.btibrokeragebd.com to connect with our agents.