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The Benefits of Owning a Rental Property

System - Monday, August 3, 2020
Property Management Blog

While there are countless ways to invest your money, real estate is one of the best long-term investment options. If your portfolio is cash heavy or if you are tired of having your money in the bank and want to put it to work, you should consider investing in real estate. 

The real estate market is filled with milk and honey, especially for individuals that know how to analyze the market. You will be cashing out big if you know exactly how it works, and owning a rental property is one of the numerous ways of achieving this. While this might not be as easy as you may think, owning a rental property creates the best of outcomes. 

Nowadays, with the evolution of technology and the rise of the internet, becoming a landlord can happen with the snap-of-a-finger as there is always useful information to guide you. From finding the right property to screening tenants, everything can be done smoothly and efficiently. Apart from building an immediate flow of income and providing a long-term retirement strategy, a good rental property strategy can also create some incredible tax benefits if you plan properly. 

Once, you have finally made up your mind to invest, here are other important benefits of owning a rental property. 

1. High Leverage

Owning a rental property gives you high leverage. It is one of the top investments that enable you to get a loan easily. If you get to the bank for a line of credit and tell them you want to invest in a rental property or purchase a couple of houses, the response will be swift and positive. Yes, you read that right. That’s the kind of leverage you get when you invest in real estate properties. 

2. Property Value Appreciation

Owning a rental property now allows you to hold onto your property for high appreciation. It gives you the opportunity to sell when the time is right. To be on the safe side, you as an investor need to explore a buy-and-hold strategy. Do your research to see what you might be able to expect and/or to grab the best opportunities available.

3. Tax Benefits

As a rental property owner, you are entitled to tax deductions. Some of these include:

  • Maintenance and Repairs: You can deduct the cost of any repair you’ve made during the year. 
  • Interest: You can write-off interest from existing mortgage interest payments used in buying the property or interest on credit cards utilized to make procurements for your property.
  • Insurance: Irrespective of the insurance policy that is connected to your property, you can deduct from insurance premiums.
  • Depreciation: When the property is providing income, the government allows you to deduct the cost of the property based on a set depreciation schedule, even if the rental property is appreciating.

4. Cash Flow

Rental properties create cash flow. It is the biggest benefit of owning a rental property. However, not all rental properties generate cash; good rental properties do while bad rental properties do not. So, it wise to purchase property based on cash flow for it can be an additional financial security during retirement. 

There isn’t a better time to build wealth, but it is important to know that investing in rental properties is one of the many available options. It can actually fulfill your dreams of a good life. But before you get into it, consider your personal strengths, interests, and financial state and make up your mind about whether owning a rental property is the right move for you.