Is rental property a good investment? Why Invest in Rental Properties?
As a REALTOR, a number of questions from folks wondering about whether or not rental properties are really a good investment in the Duluth area. There have been a number of stories in the news vilifying landlords and a lot of unease regarding the Duluth City Council’s ordinances, all the rules and regulations, as well as the perceived difficulty of managing tenants.
These are all valid concerns. As you know, I own and manage a number of rentals in Duluth and I want to set the record straight as to why I believe rentals are still an excellent investment.
1) The high levels of distressed properties on the market. Although we are well past the peak of the foreclosure crisis, there are still a number of properties out there that are being sold off at far below their value while the banks attempt to finish cleaning up their assets. The benefit of buying a foreclosure and turning into a rental is huge because you not only get instant equity for the difference between the market value of the property and what you would pay for it but opportunities for sweat equity in fixing a home up to meet licensing standards will also add value to a property.
2) Low vacancy rates. If you’ve ever looked for a rental in Duluth, you know what the market is like! The demand for apartments and homes to rent is very high, and places in good condition will usually turn around to new tenants really fast. Also, because of this high demand, you as a landlord will have a number of prospective tenants to choose from, giving you the chance to be sure you’re going to have responsible, respectful tenants.
3) Long term investment stability. In general, the value of real estate appreciates over time. Combine this with the fact that you can generally cover your mortgage on a rental with the rent money collected means that your investment is going to appreciate even faster!
4) Duluth is a great place to live! People from all over are drawn to Duluth’s natural beauty, our small town feel, our lively arts and outdoors communities, and the overall reasonable cost of living. People really want to live here, and raise their families here, and this translates into long term demand for rental units, especially single family properties.
I firmly believe Duluth’s best days are in the future. The area continues to gain jobs and national recognition for quality of life, and I think that our community is a great place to invest!
If you want to know more about what it’s like being a landlord, or are curious what the financials might look like on a particular property as a rental, or want to talk more about what the implications of the current set of licensing rules are, please don’t hesitate to give me a call or send me an email. I’m happy to help however I can!