Owning Rental Properties Isn’t Cheating

white and red concrete building

Parents who raise their children the right way make a point of discouraging cheating. They view fair play as more than just an ethical or moral concern. It’s also a civilizing behavior that has immediate positive results for the kids who’ve been taught to value it. “Cheaters never prosper” may not always be true (we all know that some do—and even get away with it). Yet jumping the gun at a track meet is a sure way to get a runner disqualified—just as sneaking a thumb on the produce scale at the farmer’s market will get you barred for good.

In most walks of life, cheaters are spurned by their colleagues. In extreme cases, they wind up in prison. So, sneaking an unfair advantage is frowned upon. Except when it comes to investing in real estate. In that rare exception, the financial head start of owning an income-producing home won’t be frowned upon at all! No jail sentences will result. In fact, when you own rental real estate, you won’t even be spurned by friends and neighbors. Seizing this shortcut will actually earn you the respect (even admiration) of your peers! So why the reversal from all the other forms of cutting to the head of the line?

The answer given by financial planners includes three main advantages:

  1. Owning rental property broadens your source of income. The greatest financial risk for most breadwinners is the possibility of the loss of your main job—a risk that’s been growing lately. Diversifying your income stream is a practical way to offset unforeseeable shortfalls.
  2. residential real estate investments can produce results swiftly. Many worthy investments take years to produce results. Renting houses is a way to produce cash flow almost immediately.
  3. real estate can shorten the path to financial independence. It’s the expected result of creating a diversified income stream at the same time you expand your net equity holdings.

Owning your house is the most uncontested way to build any family’s net worth—and expanding that head start by adding an income-producing residential property is an additional, powerful shortcut to financial success. Better yet, it’s a tried and true stratagem that’s not really cheating!