There are all kinds of reasons to invest in a rental property. Real Estate can be a fantastic investment and an excellent opportunity for an investor. But, you want to educate yourself before pulling any triggers. Many people feel that the stock market and banks are the only places to make investments, and they are wrong. Real Estate investments provide incredible tax advantages and diversify portfolios for those investing in the stock market, helping build wealth.
Here are just three (3) reasons to invest in a rental property.
Property Appreciation
When people choose to purchase an investment property, they sometimes do it based on property appreciation. Property appreciation is very similar to the thoughts in investing in an Individual Retirement Plan (IRA). The idea behind an IRA (and again, the same as property appreciation) is that when you invest your money into an IRA. The stocks and mutual funds you purchase within that plan grow in value from the price you originally paid. You want to make a profit when you sell it years and years from now. It’s the same in a rental property. People will invest in a rental property and the house value will increase over time.
Tax Write-Offs
When you own a rental property, you are entitled to tax write-offs, all though we are not tax professionals. Some write off’s include: Interest on your mortgage, insurance costs, maintenance repairs, and more. We recommend discussing your tax requirements and opportunities with your CPA. Make sure you are taking advantage of everything. You can and ensuring that you are correctly following rules and keeping records for tax purposes.
Leveraging Equity
Some people have a goal to invest in a rental property to eventually leverage the equity for other means later down the road. Whether you invest in a rental property to pay off your children’s college education or purchase multiple rental properties, the right investment strategy can build what many people call “financial freedom.”
Some people find that when they invest in a rental property, they eventually can even purchase the home of their dreams. Some find themselves owning a home they never thought they could afford but end up in this ideal place because they made wise choices and investments. It’s also suggested that when you invest in a rental property, you have a capable property manager to help you tend to this property. If you’re looking to invest in a rental property and want to do your research, we highly recommend it. There is a ton of information out there to help you make an educated decision. There are also professionals to talk to and a ton of books you can read. Here is a great list to start reading that might be of help. If you currently have a home you are looking into turning into an investment property, and would like to know how much your home could rent out contact us today to receive a free rent analysis.