Real Estate Business: Top 7 Benefits of A Rental Property
The allure of investing in real estate is stronger than ever in the United States. About 35% of the population now considers real estate as their most preferred long-term investment option. If you’re among this group, you’ve probably considered owning rental property.
Few types of real estate properties are more lucrative than rental homes. Yearly, American renters pay a colossal $485 billion in rent. Isn’t it time you claimed your piece of the pie?
Sure, there are certain risks involved in this type of real estate business, but the benefits far outweigh them. If you’re still not convinced, here are seven reasons guaranteed to change your mind.
1. You Have a Guaranteed Source of Passive Income
One of the biggest secrets of wealthy people is that they have multiple sources of income—and passive income is one of the best. With rental houses, you can enjoy regular monthly payments without having to do any work.
Of course, you will need to put in some initial effort to get the property rented out and to find good tenants. The good news is that there’ll always be tenants in your area searching online for the “best rentals near me,” so you can always take your pick on who to rent to.
Once you’ve found the ideal tenant, you can sit back and relax while the money rolls in.
2. Tenants Provide More Security to Your Property
Empty homes have a higher risk of being broken into and vandalized. But when you have tenants in your rental property, they will act as a deterrent to criminals.
This is especially the case where you inherited the property, or it’s in an area that you don’t live close by. In these cases, it may make sense to hire a professional property management company to take care of the security of your investment.
But even if you live near your rental property, having tenants offers an increased level of security. And if you have good tenants, they will take care of your property as if it were their own and report any suspicious activity to you right away.
In addition, most tenants are required to have insurance. So, if there’s any damage to the property, their insurance will cover it. That gives you greater peace of mind as a landlord.
3. There’s Lots of Flexibility When It Comes to Selling
The real estate market is always changing, and it’s hard to predict when the perfect time to sell will be.
But with a rental property, you have the flexibility to wait for the perfect moment. You can keep the property as a long-term investment and enjoy the monthly cash flow. Or you can hold onto it until the market conditions are just right and then sell for a handsome profit.
It’s completely up to you. And that flexibility is one of the biggest advantages of owning a rental property.
Another advantage is that you can sell the property in parts. For example, if you have a four-unit apartment complex, you can sell each unit individually. That’s a lot easier than trying to sell a single-family home.
4. You Always Have the Option to Move Back in
There may come a time when you need to move back into your rental property. Maybe you’ve been transferred for work, or you need to downsize because of financial reasons. Whatever the reason, it’s nice to know that you have the option of moving back into your own property if necessary.
And if you do move back in, you can charge yourself rent. That way, you’ll offset some of the costs of owning the property, such as the mortgage payments, insurance, and taxes.
Of course, you need to be careful about this option because it can have tax implications. It’s best to speak with a real estate or tax professional before making the decision to move back into your rental property.
5. Your Reap Property Appreciation Benefits
In most cases, the value of real estate increases over time. So, when you own a rental property, there’s a good chance it will be worth more in the future than it is today.
Of course, there are no guarantees when it comes to real estate. The market can go up or down, and you could end up selling the property for less than you paid.
But over the long term, real estate has historically been a good investment. And as a landlord, you can benefit from that appreciation by selling the property when it’s worth more than you paid or by refinancing and getting cash out of the equity.
6. There Are Many Tax Benefits
The tax benefits of owning rental properties are also worth mentioning. For starters, you can deduct the mortgage interest and property taxes you pay from your taxable income. That can help to lower your overall tax bill.
You can also deduct any expenses you incur in the course of operating your rental business, such as repairs and maintenance, insurance, and professional fees.
And if you eventually sell the property, you may be able to take advantage of the capital gains tax exclusion.
7. You Get to Diversify Your Portfolio
Another benefit of owning a rental property is that it can help to diversify your investment portfolio.
If you’re like most people, the majority of your assets are probably in stocks and cash. And while those are both good investments, they’re also subject to market volatility.
Real estate, on the other hand, is much less volatile. So, by investing in a rental property, you can help to balance out your portfolio and reduce your overall risk.
Venture Into the Real Estate Business as a Landlord
Clearly, there are many benefits to owning a rental property. From the potential for income and tax breaks to the ability to diversify your investments, This type of real estate business is a sure way to create wealth.
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