the long-term rental strategy
The long term rental strategy is a perfect way to grow steady generational wealth. The basic principal is this: Acquire quality properties in various areas or just one. Place well qualified tenants in them. Collect rents. pay-down your mortgage and have money left over to save, reinvest or spend. That of course is the basic principal. There are many facets to each one of those principals but that’s the basis of the model. Whether it’s times of uncertainty or a time of flourishing growth, real estate has the ability to weather the storm and pay you handsome dividends. Historically, if you look back through the overall charts from when home prices were being recorded and look at the trend, real estate is an uphill chart. Its overall characteristic is growth in value and demand. In fact, for the most part, your property should more-less double in value every 20 years. This is going to be one of the main focuses in our journey.
Lets concider one of my very first properties. In 2016 we bought said property for $75K. Here in 2022 its now worth $150K. Now thats not even close to 20 years but it was purchesed in a not so stable market time and grew through this crazy rise in values we’ve been having. This type of long term rental is going to be another focus of our journey. Not only does this property have more value than when we purchased but its been giving off cashflow (cash after all expenses are paid) since the day it was tenanted. It’s also to date one of our best performing. I only mention this property because these low dollar high quality homes have a very low barrier to entry. Considering most investment properties require 20% down, at least at first. That’s only $15K down. That same $15K investment consistently generates and extra $500 per month in cashflow, pays down our principal balance, offers an opportunity to take an equity line or cash out refinance, sell and move profits uphill or simply hold until paid off. In two years my original investment is paid back and everything else is profit. There are so many strategies we can use on just this one property. Using a mortgage calculator app you’ll see the PITI (principal, interest, taxes and insurance) is quite low. As I mentioned above, this low down payment and low monthly payment coupled with low maintenance cost makes the price points perfect starter properties. Our Blog will begin to cover different price points, strategies and lessons learned as we grow this site. We will also provide valuable links for various things you will need along the way.