In today's fast-paced world, where the cost of living is rising and the future of pensions is uncertain, many working professionals are seeking ways to secure their financial future. While traditional investments like stocks, crypto and bonds remain popular. There is an increasing rise in the number of professionals turning to real estate—specifically, rental properties, using strategies such as serviced accommodation, HMOs or supported living. Continue reading to find out how a working professional like yourself can build wealth and achieve financial independence through investing in rental property.
Passive Income Stream
One of the most attractive reasons to invest in rental property is the potential for passive income. Unlike your typical 9-to-5 job, where you trade your time for money.Rental properties can generate income with minimal ongoing effort. Once you've set up a property with reliable systems to automate guest check ins, cleans and tenants or hire a management team, the monthly rental income can provide a steady stream of cash flow. This additional income can help cover expenses, pay down debt, or be reinvested to grow your portfolio further.
Serviced Accommodation
Serviced accommodation has become a popular investment for working professionals looking to diversify their income streams and build wealth through rental property. According to a report by The Guardian the number of people who started an Airbnb business in the UK since the COVID-19 lockdown has seen a notable increase, due to the shifts in travel behavior and the rise of remote work. By 2021, Airbnb had seen a 27% increase in new listings compared to the previous year, a trend largely attributed to the economic impact of the pandemic and the growing demand for domestic travel options. These rental properties used as serviced accommodation typically command higher rental rates than traditional long-term rentals due to their premium offerings, such as fully furnished spaces and amenities tailored for short-term stays. This allows you as the investor to achieve a higher return on investment (ROI) and generate a steady cash flow. Investing in serviced accommodation also allows professionals to leverage the growing trend of flexible living and working arrangements, capitalizing on the shifting preferences towards short-term, high-quality rentals, which can contribute significantly to long-term wealth creation.
Long-Term Wealth Building
Real estate is globally considered as the most stable long-term investment. Over time once you build your capital through rental properties, you can look to buy and become a homeowner. As a homeowner the value of a property tends to appreciate, meaning the value of your investment could increase significantly. Unlike more volatile investment options, real estate provides a tangible asset that typically grows in value, even amidst market fluctuations. For working professionals, this appreciation represents a powerful wealth-building strategy that can significantly enhance your financial position over the years.
Diversification of Income and Assets
Living from paycheck to paycheck and relying solely on a salary can be risky, especially in uncertain economic times. As seen during Covid many redundancies were made, with the Office for National Statistics (ONS) estimating around 370,000 redundancies between July and September 2020 alone, which was the highest since records began in 1995. The investment of rental property allows you to diversify both your income and assets. By having multiple income streams, salary, rental income, and possibly dividends from other investments, you create a more robust financial portfolio that can better withstand economic downturns.
Learning and Personal Growth
Lastly, investing in rental property offers a unique opportunity for personal and professional development. If you decide to manage the properties yourself, dealing with tenants/guests, cleaning teams, and navigating the real estate market require skills that can sharpen your overall business acumen. These experiences can translate into other areas of your professional life, making you a more well-rounded and financially savvy individual.
Conclusion
Investing in rental property is not out of your reach or scary, when you know what you're doing or work with somebody who does. It's an accessible and effective strategy for working professionals looking to secure their financial future as you can start with as little as £7,000 and be making anywhere between £500 - £1,000 additional income per month per property. With the potential for passive income, long-term wealth building, and numerous other benefits, rental properties offer a pathway to financial freedom that complements the traditional 9-5 career. As you consider your financial goals, exploring the opportunities in rental real estate could be one of the best decisions you make for your financial future.
If you're a working professional looking to get started in rental property, drop me a message and fill out the form below and we’ll be in touch.
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Written By Trinoi Hartwell
Hartwell Residence Solutions