5 Long-Term Strategies for Building Wealth Through Rental Properties

Pluxa Partners

April 26, 2024

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Key takeaways:

  • 5 proven strategies for building wealth through rental properties.
  • Associate with professionals who can help you streamline your rental property investment and maximize the ROI.

As of 2023, a fifth (18.8%) of UK homes are privately rented.

And the number is expected to grow in the coming years.

So, how can you leverage the opportunity in the rental property arena?

Think of building wealth through rental properties like planting a garden. 

You start small, maybe with one little house, and with care and time, it grows into a whole bunch of houses that pay you monthly rent.

Here’s the kicker: it’s not just for big shots with fancy suits.

You can get in on this even if you are new in the investment game.

How? 

Here are the top 5 long-term strategies to help you with rental wealth. 

5 Long-Term Strategies for Rental Strategies You Shouldn’t Miss Out

You can rely on several strategies to strengthen your rental property investment portfolio. 

But when it comes to long-term games, you must play with long-term people and strategies

We have filtered the top 5 long-term strategies to help you build wealth. 

Real estate investment trusts (REITs)

REITs are a well-known strategy that can help you build a solid portfolio. A REIT is a company that owns and manages different income-generating real estate properties.

So, can they help you generate wealth?

Well, you can own a share of a diversified portfolio of properties without the hassles of owning and managing different rental properties. 

For example, you’ve got your eye on commercial property, but you lack the experience or resources to purchase and manage individual properties. 

Your options?

You could contribute to a commercial real estate REIT, which is like a big basket of different commercial properties.

By doing this, you get a slice of the property pie. You can achieve diversification and potential for long-term growth without day-to-day property management.

Partnering with investors

You can partner with other investors to pool their resources and purchase bigger or more properties than you could on your own.

Seems like a great strategy, right?

Even more, so if you are a new investor. 

How?

Because with the experience or resources, you can purchase properties on your own.

For example, if you and your investor each have $10,000 to invest in rental properties, you can collaborate and purchase a larger property for $20,000 instead of purchasing two separate properties.

The result?

You can generate more rental income and build wealth over time than purchasing individual properties. 

But there are ground rules you must be aware of.

You should establish clear expectations and guidelines with a written agreement that outlines each person’s responsibilities.

That’s not it. 

How will your profits be split? And how will decisions be made?

House hacking

It is one of the top considered long-term strategies you must use if you want to keep a keen eye on your rental property and build wealth in the rental property investment business. 

It involves purchasing a multi-unit property renting out other units and living in one. The strategy can minimize your expenses and also help you expand your portfolio if you are just starting in the rental property industry. 

By living in a single unit, you can also benefit from owner-occupied financing that offers lower interest rates and down payments compared to traditional investment property loans.

For example, if you purchase 4 units of property for $100,000, you live in one unit and rent out the other three for $200 per month each. 

It can help you generate $600 in rental income each month. Even if your mortgage payment is $400, per month, you can cover your mortgage payment and live for free. 

Interesting proposition?

So, do consider the option. 

Cash-out refinancing

You can use cash-out refinancing to leverage your assets for expansion. 

It involves refinancing an existing mortgage to a higher amount than what is currently owed, thus accessing additional capital. 

Confused?

Let’s understand with a simple example.  

Consider owning a rental property valued at $250,000 with an outstanding mortgage of $100,000. If eligible for cash-out refinancing, you might be able to secure a new mortgage for $150,000. 

You can get $50,000 in cash that could be invested in acquiring more rental properties or upgrading existing ones.

Home equity line of credit (HELOC)

A good strategy that you can use is applying for a home equity line of credit (HELOC).

What’s that?

A HELOC is a type of loan that allows you to borrow against the equity in your home. With a HELOC, you can access the equity in your rental properties and use the funds to purchase more rental properties. 

For example, if you own a rental property valued at $250,000 with a mortgage balance of $100,000, you might be eligible for a HELOC up to $100,000.

But that’s only possible based on your creditworthiness among other considerations. The line of credit could then be used to invest in another property or to upgrade your existing rental units.

So, which strategy is ideal for you?

Facing a dilemma?

That’s normal.

You can associate with professionals to streamline your strategy planning and execution.

Pluxa Partners Is Your One-Stop Shop

Choosing our professional property management services can significantly ease your burden of managing your rental property. 

We, at Pluxa Partners, offer a comprehensive approach to cover everything from effective marketing strategies to ensuring your property reaches potential tenants.

By listing your serviced apartment with Pluxa, you simplify your property management. 

On top of that, we also take care of the day-to-day operations of your rental property.

Contact us now. 

FAQs

What initial steps can I take to get started in rental properties?

You start your rental property investment journey by educating yourself on real estate investment basics, assessing your financial status, identifying desirable locations, and consulting professionals.

Are there ways to build wealth through rentals besides direct property ownership?

Yes, in addition to owning properties directly, you can invest in real estate investment trusts or consider partnerships with other investors.

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