Home Ownership through Renting Having it all, but owning none of it

What is Rentership

In the simplest terms Rentership is Renting

Thousands of investors including Intentional Property Investors, Accidental Owners and Unintentional Investors all over the country are taking advantage of the Rentership culture because they understand that America is changing, especially when it comes to housing.

In today’s culture people can enjoy whatever they want without the hassle of ownership. Forbes calls it “Having it All & Owning None of It” Rentership Society. It’s about renting everything. Homes, cars, equipment, clothes, equipment and even pets. Things are being replaced by services. Think about the massive growth of monthly subscription services for meals, clothes, makeup, music, movies ect…Millennials, X’ers and Boomers are seeking lives full of experiences and memories. Get what we want on-demand.

Why are people Renting vs Owning

  • Homeownership continues to fall
  • Graduates are carrying more debt
  • Stringent credit requirements
  • Rent prices have increased making it harder to save for a home
  • Young adults are delaying traditional milestones
  • Shortage of low to mid priced homes
  • Downsizing trends of Baby Boomers
  • Spending on experiences and memories vs accumulation
  • Cheaper than owning
  • Want Mobility On demand

Don’t get us wrong. We are not advocates of renting vs owning. We are advocates of owning property and taking advantage of the opportunities of the Rentership Culture.

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Take Advantage of Rentership

  • Tax Benefits / Depreciation: the power of depreciation is largely undervalued or ignored by investors when comparing returns by asset class.
  • Long-term capital growth: property investment has historically proven itself to deliver capital gain if you select the right area
  • Passive Income: income without doing a lot of work. Mailbox money
  • Create Personal Wealth: more millionaires have created wealth through property than any other investment form because 1. Leverage other peoples money 2. Create passive income 3. Equity growth 4. Reduce payable tax 5. Use equity to duplicate strategy
  • Add Value for Quick Return: unlike many asset classes, you can renovate and create value out of thin air even through a simple paint job.
  • Cash Flow: some property’s can offer really nice cash flow that can be used in all areas of your life. Who doesn't want a few extra dollars.
  • Historically safe investment: unlike shares in the stock market, property is a tangible asset that won’t vanish as result of technology, management

The Big Picture

Lets compare selling your home versus keeping it as a rental property. It’s hard to turn the immediate dollars away but before you do, make sure you look at the big picture.

Selling your Home

  • Home Value = $250,000
  • Mortgage = $225,000
  • Profit from Sale = $25,000
  • Commission & Fees 8% = $16,000
  • Actual Profit = $9,000 (Forever)

Renting your Home

  • Rent = $1500
  • Mortgage & Expenses = $1250
  • Cash Flow = $250 mth / $3000 year (not as good as selling)

Wait...

  • 5 years later = $15,000 (better than selling)
  • 10 years later = $30,000
  • 20 years later = $60,000
Analyze
Analyze

It gets better...

  • Cash-on-cash return = $3000 divided by $25,000 of equity = 12% (better than stock market)
  • Home Appreciation of 3% per year = Home Value of $400,000 in 20 years
  • Tax Benefits & Depreciation = paying less taxes which increase your return

It gets even better...

  • Rents will go up and mortgage stays the same
  • At some point your mortgage will be paid off so you will be making $1375 per month /$16,500 per year!
  • Oh yeah, you will be able to leverage your equity in the home to buy more property

The Big Picture... If you are patient in the beginning you will have made a steady stream of cash while someone else paid your mortgage and in 20 years you will have cleared about $60,000 in profit and have a valuable home with no debt worth $400,000 so you have made $460,000 compared to the 9,000 you made selling your home. So when it comes to renting vs selling it helps to see the Big Picture.