As property management and real estate experts in Tampa and the surrounding areas, we talk to a lot of different investors with a lot of different investment goals. Some of the real estate owners we work with are focused on income. They want to increase the money they receive on a recurring and monthly basis. Others are more concerned with wealth, which is the value of all the assets they hold.
Long-term real estate investing brings in both. When you invest for the long term, you’re earning great income right now and you’re allowing your real estate assets to appreciate in value while your tenants pay down your mortgage.
It doesn’t have to be income or wealth. It should be both.
Increasing Wealth with Real Estate Investments
Investing in real estate allows you to attract and build wealth. Here’s how that works:
Generally, property values double every 10 years. Sometimes, those values increase by even larger percentages. Thirty years ago, it was possible to buy a house in Tampa for $40,000. Those same houses are worth around a half million dollars today. These are excellent returns that set up investors like you for some fantastic generational wealth.
You need to start with a well-chosen property in a desirable, growing neighborhood. You need to continue maintaining your property and making improvements and updates that keep it attractive to highly qualified renters. When you take care of your investment property, you build wealth with increasing property values and growing equity.
Increasing Income with Higher Rents and Lower Expenses
Generally, rents can be expected to double every 20 years. When you first purchase an investment property in Tampa, and you have a mortgage payment, that property will likely not have cash flow for you right away. There will be a negative cash flow until you’re earning enough rent that your mortgage payment and other expenses are completely offset by what you bring in.
As rents increase, the property will start to generate income. Over this time, your income goes up. Your tenant’s rent will pay off the mortgage, and you’ll find yourself earning passive income, which, of course, is the Holy Grail of real estate investing.
While you’re looking for ways to keep your income up, you’re also looking for ways to keep expenses down. Avoiding deferred and unreported maintenance, for example, will ensure you’re not responding to endless emergency repairs. Screening tenants carefully means you won’t lose money on evictions and lawsuits.
These are the most powerful drivers of wealth and income when we talk about the money you can earn owning real estate investments.
The key is to hold those investments over the long term. If you sell after a few years, you’re not realizing the full potential and ROI that you could with a rental property.
Talking to investors about their wealth and income strategies is something we love to do. Please contact us at Hoffman Realty to discuss your own investment goals and how we can help you reach them.