5 benefits of owning a rental property?
The real estate market is seemingly filled with milk and honey—especially for those who know how to analyze real estate deals. If you have an eagle eye, you’ll be cashing out big, and owning a rental property is just one of many ways to achieve this.
Here are five convincing benefits of owning a rental property.
1. PASSIVE INCOME SOURCE
The biggest benefit of owning rental property is that it’s a passive income source. This means that it is a recurring income that requires relatively little effort to maintain. It can be an alluring option for people looking to make some money on the side, or even as additional financial security during retirement. Additionally, rental income may be taxed differently than employment income.
2. GREATER SECURITY
Many people need to make a temporary move for work. Others inherit a family home that they don’t want to sell for sentimental reasons. There are a variety of reasons that people may find themselves with an empty property. A vacant home is potentially left open to vandalism and squatters, and maintenance issues have gone unnoticed that can quickly escalate into larger problems. It’s hard to always keep an eye on a home you aren’t living in. Renting the property out to tenants can give you greater peace of mind that the home is being maintained and watched after.
3. High ROI
The truth is when you borrow money for property investment, you’re putting a small portion of your money to invest in that property. You’ll get a better return on your investment in the long haul. And as market forces continue to drive rents higher, rental property owners will keep smiling to the bank.
Again, rent will always cover both marginal expenses and pay off the interest on your loans. In such a situation, your profits will go past several types of investments—it will surpass the interest owed, and that is an increase in ROI. With more leverage as stated earlier, your monthly cash flow will rise, resulting in high ROI.
4. Diversify Your Assets
The power of diversification plays a critical role in investment. To lessen risks, you’ll have to invest in many markets. One such market that guarantees return is the real estate market, and the benefits are in the numbers. Real estate appreciation happens over time with market forces at play.
5. Tax Benefits
Investing in real estate gives you an excellent opportunity to access an array of rental property tax deductions. Some of them are:
Interest: As a landlord, you can deduct interest from existing mortgage interest payments utilized in purchasing the investment property.
Repairs: You can deduct the cost of repairs in the year they were carried out. If you fix the door or repaint the building, the costs can be deducted.
Depreciation: When the rental property is providing income, then you can get a tax benefit for owning a rental property, which is achieved by way of depreciation. To this end, landlords can deduct the cost of the property in years to come.
Insurance: Another benefit that comes handy is deductions from insurance premiums regardless of the insurance policy that is connected to your rental property. This may comprise of flood/fire/theft insurance or landlord insurance.
As you can see, owning a rental property can be advantageous both financially and personally. Any real estate investment comes with risks, and rental property is no exception. However, there are ways to mitigate these risks, especially those involved with renting to bad tenants.
If you have any questions, you can schedule a coaching call with Real Estate coach SAWAND L. BELCHER.