Investing in Rental Properties: An Introduction
Why Real Estate?
When you think about buying real estate, the first thing that comes to mind is probably your own home—but physical property can play a major part in any successful, diversified portfolio.
Investing in real estate, a tangible asset, provides a more secure and involved investment opportunity for those looking to diversify their financial portfolios. Owning rental properties is a safe and fantastic way to build wealth. And in the growing Dallas market, residential properties, and particularly single family homes, are on the rise. Real estate can enhance the risk and return profile of an investor’s portfolio, offering competitive risk-adjusted returns.
Even factoring in the subprime mortgage crisis, private market real estate returned an average of 8.4% over the 10-year period from 2000 to 2010, based on data from the National Council of Real Estate Investment Fiduciaries (NCREIF). And generally speaking, the real estate market is one of low volatility, especially compared to other forms of investment such as equities and bonds.
Real estate is also attractive when compared with more traditional sources of income return, this asset class typically trades at a yield premium to US Treasuries and is especially attractive in an environment where Treasury rates are low. The addition of real estate to a portfolio can lower its volatility and provide a higher return per unit of risk as well. Along with this, and being backed by brick and mortar, the diversification potential that investing in real estate provides is just yet another benefit.
Why Rental Properties? And Why Provision?
The way in which an investment property is used has a significant impact on its value. An investment property can be an intentional short-term investment, such as in the case of flipping houses, or a long-term endeavor as well. We at Provision feel entrepreneurs and investors should consider rental real estate as an important part of their developed portfolio.
Real estate investment groups, such as our firm, are somewhat like small mutual funds for rental properties. Therefore, if you want to own a rental property and reap the benefits, but don’t want the hassle of being an individual landlord, Provision is the solution for you.
For investors seeking an income stream from rental properties, the most important aspects to consider are the property location and market rental rates, as well as the overall trend of the market in the region. As an individual investor, one must know the market in which he or she is searching for a property to invest in and bear the burden of the purchase, management and upkeep as well—which is what we do best at Provision Capital, on behalf of our clients.
The factors, or rather, the pros and cons, of owning rental properties can be significant to some and less so for others. We at Provision Capital seek to identify any problem areas for our clients and solve issues before they even arise.
By investing in a property though Provision, investors don’t have to worry about the typical fears and burdens individual property owners bear. We not only do all advance research on the property to pick the best possible choice in the area, but we also alleviate any ‘cons’ of owning rental properties by helping our clients make the best possible choice for their individual portfolio, and once purchased, assist in the property management side as well.