Recently in this space, we discussed some of the top areas to prioritize if you’re considering purchasing a home that you will then rent out for profit. For many on the real estate market, becoming a landlord is a great way to increase income, and might hold several additional benefits as well.
At Primary Residential Mortgage in Fort Myers, we provide fantastic mortgage rates and programs for all our clients, including those looking to go the rental route with their new home purchase. If you’ve never considered this approach before, what are some of the primary benefits that may come along with it? This two-part blog will go over the multiple areas where many landlords find significant plusses, both financial and otherwise.
The simplest and most straightforward reason why many homebuyers choose to convert their purchase into a rental property: The potential profits involved. Becoming a landlord generally means you can charge rent amounts that easily exceed your monthly mortgage payment, allowing you to make this payment on-time and in full each month but also retain some additional cash on top.
In some cases, investors use this extra capital to continue building up their rental profile, whether through property fixes or even the purchase of a second rental after enough time. In others, you can use it to pay down debts or fill other major financial needs – and it’s reliable income you can count on each month so long as you’re managing the rental well.
In addition to the potential profits that come with it, becoming a landlord is generally a pretty simple and straightforward process from a funding standpoint. Lenders tend to look favorably on most rental situations based on the stable income they generate, and even those with imperfect credit profiles or financial situations can usually qualify for financing on single-family homes or even multi-unit apartments. Even if you don’t have six figures saved up to spend on a rental home – as most people don’t – it can and often is still a great investment.
Speaking of investment, it’s important to think of any real estate you purchase in this light – and being a landlord can increase your quality in this realm. As you pay off more and more of the mortgage each month using rental funds, you build up your equity in the home. This is equity that can then be leveraged, often then used for a cash-out refinance that helps build up your repair funds or even begins building toward a second rental home purchase.
For more on the potential benefits that come with renting out a home and becoming a landlord, or to learn about any of our mortgage services or products, speak to the staff at Primary Residential Mortgage today.
*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.