When it comes to real estate investment, the most popular way to grow your income is to buy a rental and become a landlord. While there is no doubt about the fact that a portfolio of profitable rental properties can make you a lot of money, most investors struggle to rise to the level where they are able to build such a portfolio.
The success stories of a few investors influence a lot of people and cause them to become landlords, but most of them eventually fail to replicate the same kind of success, primarily due to the lack of experience, capital and skills. And this is exactly the reason as to why we – here at Buyer Investor Match – believe that being a lender is a lot better than being a landlord. Under our Making Mailbox Money program, we encourage people to become lenders because anyone – irrespective of his or her age, skills and experience – can enjoy predicable and consistent returns.
Our program enables people to leverage their credit rating to owner finance the home to the buyer and take advantage of a fixed monthly income in the form of interest.
Here are some of the reasons explaining why it is better to be the lender than the landlord:
Lenders don’t worry about losing their money in most cases because it is protected by collateral. If the borrower defaults on the mortgage, the lender can foreclose. When someone takes out a mortgage from a conventional bank, he or she puts the property as collateral. It makes lending risk-free to a great extent for the lender.
The best advantage of being a lender is this: you will make a fixed amount of predictable income on a consistent basis. When you are a landlord, your income may fluctuate depending on the vacancy rate. You will have to fill vacancies quickly in order to avoid loss, but as a landlord, you will always get your monthly payments. In case, something goes wrong, you are protected by collateral.
Unless the house you buy is your primary residency, any acquisition of property for the purpose of making money is considered to be an investment. You pay a higher interest rate for an investment loan and can’t take advantage of capital gains tax discounts. If you build a portfolio of four or more properties, you will pay taxes at a higher rate. But when you owner finance, you won’t have to worry about paying taxes at a higher rate. Though you should consult with a CPA to know more about your tax liabilities because it depends on a lot of factors, you can potentially save taxes by being a lender.
Housing and rental markets are very unpredictable. Any fluctuation in prices will affect the value of your asset when you are a landlord. But you don’t have to worry about these fluctuations when you are a lender.
It’s quite obvious that being a lender is a much safer and less risky way of investing in real estate. Our Mailbox Money program gives you the opportunity to seller finance homes to people trying to fulfil their homeownership dream. In other words, our program makes you a lender, helping you avoid hassles and uncertainties associated with property management.
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