While there are many real estate investors flipping homes for profit, the same excellent benefits can be found by investing in rental properties. Even during economic downturns, people will always need somewhere to live. If those people do not own their own homes, then they will need to rent them.
And do not disregard the great benefits to be had with multi-unit buildings or two-family homes. When you start to plan your own strategies for real estate investing you should give serious consideration to rental properties.
The following are some of the reasons why rental properties make excellent investments:
With the strategy of investing in real estate comes the idea of appreciation. This is when the property value increases. If you are receiving an income from a rental property, then that appreciation can reflect in potential rent increases. Also, you can take more equity out of a property when you can prove its value as a rental.
Pride of Property Ownership
There’s the sense of pride that you can feel when you own multiple properties. You could provide multiple couples or families with the opportunity to live in comfortable, safe, surroundings. Apart from the cash flow, you will feel a great sense of accomplishment when you are providing these rental opportunities. It’s also an excellent way to increase your investments. As soon as you have become accustomed to life as a landlord, adding more buildings will be easy.
Positive Cash Flow
Rental properties can generate positive cash flow. These are the three magic words all investors want to hear. With just one rental property, you can have your mortgage payment covered along with an extra few hundred dollars each month.
Now, multiply these with a multi-unit building and the extra couple of hundred dollars each month will add up very quickly. As soon as your rental property is up and running, you will be receiving the monthly checks with very little effort on your part.
Investing in the rental business provides you with a certain level of security during economic downturns. Not only will you have a guaranteed income, but you will also have equity that you can tap into. This is what financial independence is supposed to be all about.
During tax time, you will find rental property owners to be another useful benefit. Under the current tax codes, property owners can assess an annual tax deduction for depreciation on their properties.
When you sell the property, you will have to pay capital gains tax, but this does not always have to be paid all at the same time. When you begin real estate investing you will be entering into an entirely new level of tax filing. This is when you will need the skilled advice of an experienced tax accountant or investment coach.