4 Reasons to Consider Buying an Investment Property in 2022
Updated: Feb 27
If you’ve been looking for ways to make a passive income and diversify your investments, 2022 may be an excellent time to consider buying an investment property. To get you off the fence, here are five reasons why you may want to own an investment property.
1. Return on Investment
Many would think of investing in the stock market before investing in property, but investment property can have a higher return. The average annual return on the Dow Jones over the last 10 years has been 4.8%. Whereas, in 2020, the average gross yield for rental investors was 7.7%, and that number could be much higher depending on where the property is located.
Currently, the stock market has a level of volatility that is not as attractive for some investors. Real estate, however, is still going strong. It also has the advantage of being a tangible asset, unlike stock. If you are looking for a good return on investment, a well-chosen rental property could be a better option than growing your stock portfolio.
2. Ability to Build Equity
Instead of buying a first home, consider buying a first rental property. For as long as you choose, someone else can help pay your mortgage, and you’ll potentially start building equity on your property. You may even be able to make money by charging more in rent than the monthly cost of your mortgage. This extra cash flow can go towards debt, bills, rent or savings for the down payment of your next house.
3. Current Competitive Rates
If you’ve spent any time researching the real estate market, you’d know that interest rates are low. Rates averaged 2.87% for 30-year fixed-rate mortgages in the week ending August 12th, according to Freddie Mac data. A slight warning, though: analysts are predicting 2022 could bring a 0.5% to 1% jump. Just a small shift in rates can represent thousands of dollars lost or earned. To take advantage of the long-term savings current low rates will bring, it may be wise to buy sooner than later.
4. Protection Against Inflation
Over the last year, the market has seen inflation and a change in the buying power of the dollar. While these changes can affect the stock market for the worse, real estate weathers the inflation storm. Many times, inflation can benefit property owners. Rent and real estate prices tend to rise with inflation. This means that you can raise the rent on your investment property as inflation increases. With a fixed-rate mortgage, your principal and interest mortgage payments will remain the same. This may create a greater profit margin without having to significantly invest in the property.
Let’s Get Started
If you’re considering purchasing an investment property, some mortgages are better than others for this kind of purchase. At Hartford Funding LTD we can help you choose a mortgage that is right for your situation. Contact us to begin the process, or have any of your questions answered. We look forward to working with you.
This offer is made by Hartford Funding Ltd. Address 100 Crossways Park Drive West, Suite 302, Woodbury, NY 11797, which is not affiliated with your current lender nor is it an agency of the federal government. Hartford Funding Ltd. is approved by HUD/FHA, Fannie Mae, Freddie Mac and Ginnie Mae. This is not a government form. This is not a credit decision or a commitment to lend. Hartford Funding Ltd. Company NMLS#: 58160.