Buying rental properties is one of the most lucrative investment opportunities of 2021.
It is also one of the easiest and most rewarding ways to invest for beginners. Want to find a way to make some extra money without putting in a full week of work?
A rental property may be the answer.
If you’re looking for a push to get you started in the world of real estate investing, you need to take a look at these benefits. Keep reading below to learn how a single rental property can impact your financial situation for the better.
You Don’t Have to Buy a Rental Property With Your Own Money
When you buy a rental property for sale, you only have to pay 15% to 25% of the cost with your own money. After that, you can use the tenant’s money to pay off the rest of the debt. In other words, you’re getting an investment property that can continue to make you money for years to come without really paying for it.
Don’t think you can swing the 15% upfront?
There are several different ways you can work around this problem. For example, these types of financing will give you a way to legally own the property while still making money at the same time.
You’ll Start Making Passive Income
At the end of every month, you receive a rent deposit from your tenant. After you finish paying off the rental property (which won’t take long), you can pocket that money.
And you don’t have to do much in return.
You just have to take care of any necessary repairs, and that won’t happen very often. Even when you consider the costs involved in managing an investment property, you’ll still be in the positive at the end of each new pay period.
It Will Give You Several Tax Benefits
When April 15 rolls around, owning an investment property will only help you. Because of all the things you can deduct, you can lower your tax bill substantially.
Here are just a few examples of common investment property tax write-offs:
- Management fees
- Maintenance costs
- Insurance premiums
- Mortgage interest
- Depreciation
- Closing costs (in some cases)
- Travel expenses (to and from the property)
Even if you’re already making a profit before you take out these deductions, you can make that number even bigger after deducting these expenses. This means you can make even more money than you have documented on your monthly statements.
You’re in Complete Control of Your Investment
Owning an investment property isn’t just a passive income. It’s a business (even if you only do it as a side hustle). Since you’re the landlord, you’re in complete control over everything.
You get to decide who rents your property. You get to choose how much the tenant pays every month. You get to decide how long the tenant gets to stay in your house.
There’s no one else telling you what to do, which gives you more freedom over your rental property management. You have the ability to grow your investment in any way you choose. If you don’t want to handle all the responsibilities yourself, you can also choose to hire someone to help you.
There’s Little to No Risk Involved
When you buy a stock, you’re hoping it goes up in value, but it might not. If things don’t work out, you may end up losing money.
You don’t have to worry about this type of risk when you buy an investment property. As long as you do your research and know the value of your house, there’s almost no way you’ll lose money. Even if you decide you don’t want to rent the property anymore, you can turn around and sell it again.
This will allow you to make all the money you spent to buy the property back in the end, and if you do a few home improvement projects, you may be able to make a profit during the sale.
You know how much money you’re going to spend every month on your property, such as property taxes, insurance, and maintenance expenses. Once you subtract that amount from rent, you know what you’ll make at the end of the year.
While this number might vary somewhat, you won’t be caught by any surprises along the way.
The Property Value Will Continue to Rise
As long as you take care of your property, there’s a good chance the value will just keep rising.
Your rental property investment, like any house, will go through appreciation, meaning the value will get higher as the demand gets higher. Even if you don’t do anything, your property can end up being worth more money over time.
You can also make improvements to the house to increase the value. This will allow you to raise the rent and, when it comes time to sell, list it at a higher price. As long as you know what buyers are looking for in your area, you can make more money selling your property than you put into it.
Why Your Next Investment Should Be a Rental Property
Buying rental property is a great way to diversify your investment portfolio. Once you finish the closing process, most of the hard work is done. After that, you can find a tenant and get a passive income (while making a profit) and the end of every month.
Want to learn a few other tips to jump-start your investment opportunities?
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