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Buy One Rental Property Investment Per Year: Is This a Good Strategy?

rental-property-investment

Everyone wants the chance to secure long-term wealth and retirement funding. For investors, that may encourage you to experiment with new investment strategies. Buying one rental property per year is an investment strategy that leads several landlords to financial success. However, it’s important to make smart investing steps to get there. Here’s how you can buy one rental property investment per year and turn it into long-term wealth. 

Why Is Real Estate a Good Investment? 

Real estate can be a great investment strategy for anyone looking to obtain long-term wealth. However, it takes time, dedication, and capital to start a rental business. That said, the benefits of owning real estate often outweigh the obstacles. 

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For example, rental property investment can allow you to generate passive income and earn tax benefits. Additionally, real estate offers a bit of stability compared to other investment strategies. After all, home prices fluctuate, but not nearly as much as the stock market. 

Tax benefits are one of the most significant advantages of owning real estate. Landlords can deduct several rental property expenses like repairs, travel costs, and property management. 

Finally, real estate can offer higher returns than other investment strategies. Although it takes a bit of money to get started, most rental businesses generate income that makes up for start-up expenses. If you’re wondering how to get started in buying one rental property investment per year, follow these steps.

Steps to Buying One Rental Property Investment Per Year

Buying one rental property investment per year is a strategy used by investors who want to gradually expand their rental businesses. Buying one property per year is an easy way for landlords to slowly expand their rental portfolio instead of buying multiple properties at once. That said, when you buy too many properties at once, it can become overwhelming and too difficult to manage. 

If you’re wondering how to implement this rental property investment strategy, here are some tips. 

  1. Focus on One Property Type
  2. Stick to Your Budget
  3. Keep Track of Important Variables
  4. Utilize Real Estate Tools to Find Properties

Focus on One Property Type

If you’re thinking about buying one property per year, it’s best to focus on one property type. Single-family homes are often best for this investment strategy since they tend to be cheaper and require a smaller down payment. On the other hand, multifamily homes or commercial buildings are often more expensive and require work before housing tenants. 

Additionally, single-family homes are more likely to attract long-term tenants. As a result, landlords obtain consistent rental income. It’s clear that the affordability and high returns make single-family homes excellent investment properties. 

Stick to Your Budget

Most investors look at real estate with a budget in mind. During the investment process, landlords need to stick to a budget. In the long run, staying close to your budget can help you predict expenses and projected rental returns more accurately. 

After all, if you go after properties that are outside your budget, it could increase your debt, making it hard to pay off previous loans. Additionally, this can throw off your projections and impact your income. Overall, make sure you stay within a comfortable budget and account for any expenses beforehand. 

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Keep Track of Important Variables

When you purchase one rental property per year, there are several variables to consider throughout the process. For example, landlords must consider maintenance costs, taxes, repairs, and depreciation. 

If you don’t account for these expenses, it can impact your ability to earn a profit from your investment. Additionally, some variables help investors, like increasing rent rates and tax benefits. To maximize profits, make sure to deduct as many expenses as possible on your tax returns. 

Utilize Real Estate Tools to Find Properties

Finding an excellent rental property investment can be challenging on your own. Many investors use real estate tools or hire real estate professionals to help find properties. Luckily, some websites list available properties where you can quickly find good investment properties. Otherwise, you can hire a real estate agent to help you decide on profitable rental property investment. Either way, using real estate tools can help you increase your chances of finding a profitable rental property investment. 

Is This a Beneficial Strategy For Long-Term Wealth?

Buying one rental property per year can be an excellent strategy for any investor willing to put in the work. After all, once you buy the property, you become a landlord with several responsibilities. If you own several rental properties already and you need help managing them, contact your local Baltimore rental property management company

long-term-wealth

Once you’ve determined your landlord responsibilities, think about what type of investment strategy will work best for you. Here are some of the benefits of buying one rental property per year. 

  • It’s Simple and Easy to Implement
  • You Can Generate Sizable Income
  • It’s a Proven Way to Build Wealth
  • You Can Handle Investment Loans Efficiently

It’s Simple and Easy to Implement

Buying one rental property investment per year is one of the easiest ways to grow your portfolio. Unlike other investment strategies, this strategy is fairly simple and doesn’t come with a steep learning curve. New real estate investors can benefit from this gradual investment approach. Additionally, slowly building a portfolio over time can benefit anyone looking to expand without buying several properties at once. 

You Can Generate Sizable Income

One of the greatest advantages of real estate investing is the cash flow it generates over the years. Buying rental properties that generate positive cash flow can leave you with significant profits each year. In addition, since you own the properties, you can use the excess cash for anything, like funding your retirement or financing your child’s education. 

It’s a Proven Way to Build Wealth

Owning real estate is a proven way to build long-term wealth. After all, when you buy one rental property per year, you can start to benefit from the “snowball effect.” This happens when profits accumulate increasingly over the years. As such, with the combination of rental property cash flow and real estate appreciation, the value of your rental business can increase with little effort. 

You Can Handle Investment Loans Efficiently

Any significant real estate investment involves investment loans. That said, to become a profitable business, you must pay off your mortgage loans. When you purchase one rental property per year, you can use some of the extra income to pay off each mortgage at a time. When you stick to this method, you can quickly pay off all your loans promptly. 

Maximize Your Business With Property Management

rental-property-management

Investors with multiple rental properties are faced with several daily tasks to complete. Sometimes, there’s just not enough time in the day to get everything done. However, any rental business has critical processes and paperwork that can’t wait. So if you’re having trouble managing all the day-to-day tasks of running a rental company, don’t worry. 

Bay Property Management Group has the skills and expertise to help your rental business succeed. We offer comprehensive rental management services that can help you maximize profits. Contact us today if you need management services in Baltimore, Philadelphia, Northern Virginia, or Washington DC.