What Are The Benefits Of Owning A Rental Property?
Getting into the world of real estate investment can be a very profitable decision. As with any investment, there are certain risks and proper research is necessary before pen is put to paper. However, given that the homeownership rates are at a low, it could be a good time to learn more about what this opportunity implies. Since 2004, the rate of homeownership in the United States has dropped by 9%. A primary reason is the fact that home values have risen, which in turn makes renting more of an affordable and ideal alternative. Moreover, people nowadays are opting to remain in the rental market up until they are in their mid-30s. What this means is that the rental market is at a good place at the moment.
Great Source Of Passive Income
Are there advantages of owning rental property? Yes, many. First of all, it’s a great source of passive income – meaning that you won’t have to put a lot of effort in order to maintain it. This makes owning a rental property a good option for people who are looking to make more money on the side and who are aiming to have more financial security, whether you choose to live in one unit of the rental property and rent out the rest, or want to buy a property in order to rent it out.
Being Aware Of Taxes
It’s important to take note of the fact that rental income could be taxed differently compared to employment income. As such, hiring a professional who can advise you when it comes to taxes can be a good idea. Whether we’re talking about the current IRS mileage rate or the rental property tax deductions, having someone who has a deep understanding of how taxes work and can offer proper advice is a something worth looking into.
While renting a place will result in the personal tax situation being more complicated, there are certain deductions associated with running a rental property that you can take advantage of. According to the IRS, deductible expenses have to generally accepted within the rental business and necessary when it comes to managing the property. Whether we’re talking about insurance, mortgage interest, repairs or depreciation, studying what rental property tax deductions are all about is an important step Getting professional advice can help a great deal.
Option To Sell When The Market Is Hot
While renting out the property can bring in steady income, at some point you might want to consider selling the place altogether. You might not want to give up that source of passive income, but if the time is right and the market conditions are great then selling can bring in plenty of money. Market conditions fluctuate. What this means is that if the time is not right and selling it means that you would be at a loss, then you can simply hold on to the property and continue to rent it until the market improves. It’s also important to pay attention to appreciation potential, as it can vary depending on cities and neighborhoods.
Keeping The Property Secured
Renting out a property can also ensure that it stays safe in case you are not present. Depending on the scenario, you might want to move to a different place for work reasons, or you have a place that is constantly empty and you can’t take care of it yourself. Maintenance issues can be a problem in case you’re not present. By simply renting the place, you can make sure that the house is getting taken care of, which will give you a sense of relief and peace of mind.
There are many reasons to own a rental property. Of course, given the size of the investment in the real estate industry, there are certain risks, but there are ways that you can mitigate those risks. For example, making sure that tenants go through a thorough screening process in order to protect both yourself as well as the property you are renting out. Rental revenues have remained stable even during downturns in the market, which means that, while you shouldn’t invest blindly and you have to do your due diligence beforehand, renting can be a steady business even if the market conditions are not ideal.