Control - You Decide How Your Real Estate Business Operates
When I usually discuss the benefits of investing in real estate I typically discuss six major things including income, depreciation, equity build-up, appreciation, leverage and the topic of today’s article: control.
I remember Dr. Dolf De Roos talking about this concept in his book “Real Estate Riches” and how much it resonated with me. As he explains, he talks about the difference between buying a stock and buying a rental property. When buying a stock, there is very little you can personally do to improve the return you could get from that stock. Besides tell all your friends to drink brand X or consume brand Y products, there is little you can do to make that company more profitable and affect your own return from buying that stock.
However, that is NOT true with buying a rental property. You do have a say on what you do with the property and that can have a huge impact on how well your property performs. Paint the property, it might sell for more. Concert a study to a bedroom and increase the rent you can get. Add a garage and charge extra for it. Refinance to a lower interest rate to increase cash flow when interest rates dip. Hire or become a better property manager and see fewer vacancies and more on-time payments. All these things and more affect how well your property performs and that is why control over the asset is a huge benefit of real estate investing.
Until my next post,
James