As with anything in life, there are both pros and cons when it comes to purchasing and owning rental property. Some have done very well in the business and others who have not. Each one of these individuals could give you a list of pros and cons – and they may not all look the same.
When it comes to determining the benefits of owning rental property, it comes down to the investment. If you do your research and invest in a property that is going to be marketable, then you are going to reap the benefits – benefits that far outweigh the negatives.
So, what are the benefits of owning rental property? We have got eight to spark your interest.
What if you could continue to make money while you and your family head out on a three-week vacation? What if you opened a bank account that just gathered money on the side while you continue to push forward in your full-time career? What if you spent your days doing what you love while money still comes in?
Passive income is money that you consistently make without putting in much effort at all. Who would not like the sound of that? That is why it is one of the biggest benefits of owning rental property. Whether you are wanting to use this money to make a living or to save for your future, it is a great way to earn without having to put in the time.
The word inflation can leave some people in a panic when they hear it. Inflation is a sign that prices are rising – and the world around us is getting more expensive. But for those who own rental property, inflation can be a perk.
See, as prices rise, so does the cost of living – and that means the rental rates. Landlords can increase the rent for their rental annually, never feeling overwhelmed by inflation. But are you ready for the best part? The mortgage payment on your rental property is fixed. As your rental price increases, so will your cash flow.
You never want to invest all your money in one type of investment. Why? Because investing, in general, can be risky. One sharp turn in the stock market, for instance, and you could lose everything. It is best to diversify your portfolio to include various types of investments – include property rentals.
When you retire, do you intend to simply sit back and live off your social security payment? Do you intend to live comfortably that way? You may want to think again. The way of the world today is not incredibly supportive of those who intend to live solely off of their social security income. While it may be possible, it is not always a very enjoyable retirement.
Rental property can help you save for your retirement. Not only can you put money aside in savings that you’ve earned throughout the years off of your rental properties, but you can also continue earning money from them even while actively living in retirement.
Gone is the fear of running out of money before you die.
Many people invest in real estate for the sole purpose of purchasing and owning rental property. Others decide they are going to rent out their home for a few years while they relocate, whether it is for a job or family reasons or even just to seek out an adventure. Sometimes it is hard to let go of a home you love.
Choosing to offer it as a rental property means being able to still have your property for your use in the future without having to worry about getting the mortgage payment paid.
You can always go home. In the meantime, though, open it up to renters.
Appreciation plays a big role in determining your final ROI. You cannot buy property, fix it up, and flip it – expecting a huge ROI. Sure, you may get one, but you also may not. Instead, allow your property to build up its appreciation. Buy it and turn it into a rental, holding on to it for at least ten years. Annually, appreciation has been increasing consistently for the last five decades.
In 2020, the Phoenix single family market experienced an average appreciation of 12% even during COVID. Imagine how much equity you would have if you had already purchased a rental property in Phoenix AZ.
This is definitely something to consider when choosing your investments. Take advantage of property appreciation.
There are many tax benefits of owning rental property, and they come in the form of potential tax deductions. If you are paying a mortgage on your rental property, you can deduct the mortgage interest from your tax return. Most landlords find this is their largest deductible expense.
In addition, you can deduct property taxes and licensing requirements. Other deductions include operating expenses, depreciation, repairs, and maintenance. Rental properties provide more tax benefits than almost any other investment and partaking in all the potential tax write-offs can improve your financial stability.
Perhaps the best benefit to come with owning rental property is the fact that property managers are available to handle it. Once you purchase your investment and are ready to rent it out, a property manager can handle everything else. From marketing the property, screening potential tenants, handling routine – and emergency – maintenance, preparing documents and leases, scheduling walkthroughs, and so much more.
Property managers allow you more time to invest, work your full-time career, or play golf. You do whatever you need to do, and they handle the rest. Sounds good, doesn’t it? Sometimes, the idea of investing in rental property sounds great, but the reality of all the work that comes with it can be a deterrent. Knowing that you have someone to handle that for you is a huge benefit.
While all these benefits are wonderful reasons to invest in owning rental property, it should be noted that you have to make sound investments for this to work. Talk with a property manager, get to know the area and the market, and do your due diligence before you invest. Do not miss out on what rental property can bring you.
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