is buying a house to rent a good investment

Best answer

Buying versus renting淧urchasing a home is generally regarded as a good investmentcompared to renting because you can build equity. When you rent,all you do is pay someone else mortgage,?notes Annie Kou,owner of AK Luxury Properties and a contract attorney in Los Angeles.

People also ask

Investing in rental properties provides a good cash flow since money will keep flowing into your account every month. You檒l be pumping money into your bank account without waking up each morning to go into work. Rental properties generate recurring income meaning you won’t have to put out too much effort to maintain it.

Plus, unlike renting, a house helps you build wealth. Many experts believe buying a home is a great investment because it a fairly safe place to put your money, and home values generally increase over time. However, the returns aren as large as you might see on other investment vehicles.

1. You can purchase rentals using leverage. Rental properties are great because you can borrow the bank or someone else money to increase the potential return. This is known as leverage. In other words, you don need to have 100 percent of a property purchase price on hand to be able to buy it.

Paying cash can help generate positive monthly cash flow. Take a rental property that costs $100,000 to buy. With rental income, taxes, depreciation, and income tax, the cash buyer could see $9,500 in annual earnings, or a 9.5% annual return on the $100,000 investment..