Rewind 2 years. My husband and I had recently gotten married, I was career and investment focused, and I held a commission based job that I was rocking. This equated to a large savings that was earning less than 1% interest. Inflation was eating my money, and I had to stop it! Enter: the rental property.
Investing has always been an interest of mine, and I know that the savings rate isn’t going to make me rich. I had about $30,000 that I needed to put somewhere that was going to potentially make me some money. The stock market is something I wasn’t familiar with, and I didn’t want to throw that much money into it without a great deal of research first.
At the time, I was in real estate so I saw a lot of transactions from investors going on around me. I had the insight from these investors and the resources to get the correct information.
As a side note, I will be writing a post later about how to buy a rental, so stay tuned!
At the time, we weren’t sure where we wanted to live and what kind of house we wanted. My husband was switching jobs to go back to school and I was self-employed. Those reasons steered us away from buying our own house. We were happy in our current rental and were getting a great price. It didn’t make sense to buy a house at that time.
That is when I made the bold suggestion to my husband: let’s buy a rental property.
There were a lot of benefits of buying our rental property first. Here are 7 of the biggest ones we found.
- It pushed us to invest. If we would have sunk our whole savings into a primary residence, we might never have bought a rental property.
- It allowed us the flexibility to move whenever we wanted and wherever we wanted. We weren’t tied to a house.
- It created a passive income stream for us! We hired a property manager so we rarely have to deal with the property.
- We were able to qualify for a loan easier because we didn’t have the overhead cost of a mortgage payment. It also made it easier for us to take the risk, because we knew we didn’t have a large mortgage we were tied to every month.
- If anything went wrong or we couldn’t find renters, we could always move into the property ourselves. This was a great fall back plan that put our mind at ease.
- We are now on track for retirement. We didn’t have to increase our 401K or IRA contributions to put us on track. We will have the house paid off long before retirement, which means we will have a large amount of money coming in every month.
- We see a larger return on our investment. We are making money on our rental in FOUR ways!
- We make $200-300 a month in rental income, after expenses.
- The tenant pays down about $200 a month in principle on our loan. Every year we own the property, this number will continue to increase.
- The house appreciates in price over the years.
- It helps us out with taxes because we can depreciate the property over time.
It was definitely out of the ordinary to buy a rental property before we owned our own home. A lot of people thought we were crazy to do it. It’s been almost 2 years since we bought it, and I’m so glad we took the chance!
Would you consider buying an investment property before owning a primary residence? Comment below. We’d love your feedback!