Everyone knows that true wealth requires investment. You can work all you want and keep your savings aside, but if you ever want to have true wealth on your side, you’ll need to find a way to invest those savings.
Most financial whizzes will tell you that the best place to put that money is into some real estate property.
There are many advantages of owning a rental property, after all, and many of them aren’t even about your personal finances. If you’re on the fence about investing your savings in this manner, hearing about the many upsides to this kind of work might be able to push you over the edge.
What are the benefits of rental property that you should be aware of? Read on, and we’ll walk you through what you need to know.
1. Great Way To Build Your Long-Term Wealth
Let’s start with the benefit that turns people in the direction of real estate investing, to begin with.
Most people who invest in rental property do so because it is a kind of investment that can help increase in value over time.
Homes appreciate, neighborhoods change and improve, and most homeowners sell their properties for far more than they bought them for, generally.
Yes, a home can be a big investment. Whether you plan to live in this home or purchase it solely as an investment property, it can be a big purchase to make. However, over the course of many years, it’s a purchase that can put a whole lot more money back in your pocket than what you started with.
Depending on where and when you buy, you might be able to even double or triple the amount of cash you’re able to take home as a result of your initial investment.
It all depends on the property, the location, and what you’re able to do with it.
2. Great Way to Build Your Short-Term Wealth
Of course, if you aren’t planning on living in your new real estate purchase, there are other ways to make money off it. You can rent out the property and use the rent to help pay the mortgage.
Potentially, depending on how much rent you collect and what remains of your mortgage, you might be able to make a profit sooner rather than later.
A piece of real estate property can make passive income for you in more ways than one. You could rent it out to long-term buyers, who will pay you rent per month as the year goes by. You’ll sign a lease with the tenant and have them sign on for a certain number of months.
Alternatively, you could list the property on a platform like Airbnb and use it as a vacation rental. You can rent for much higher prices per night this way, but you also may have nights where the property isn’t occupied. Thus, it won’t be generating any profit.
Even if you do plan on living in the property you buy, you could rent out the other bedrooms to roommates. This way, you’d be covering the mortgage while getting assistance from the payments of your roommates/tenants.
All this would still be progressing even as the property accumulates in value over time.
3. Gives You a Home Away From Home
One advantage of listing your property as a vacation rental is that it will give you the flexibility to use it as a rental yourself whenever you want to get out of town for some time.
If you purchase a piece of property outside of the bounds of your own town, you’ll have a place you can crash around new scenery whenever it isn’t filled up with a tenant.
This can be particularly advantageous if you own a property in a desirable location, such as one in a major city or near the beach. You’ll be able to take your vacations now at no additional cost to yourself in terms of lodging – a hard deal to beat!
You can see more here about choosing the best kind of rental property to invest in. There are many types of rental property to consider.
4. Various Tax Benefits
Of course, there are also the many tax benefits of this kind of real estate ownership to consider. You can deduct the interest from your mortgage payments when it comes time to pay your taxes, saving you money there.
In addition, you should be able to deduct the insurance premiums you pay for the property and the cost of any and all repairs you have to take on. As long as the repair took place within the calendar year of your tax payment, you should be able to deduct it.
Ideally, your home won’t ever depreciate in value. However, if it does, you should be able to deduct this loss from your overall tax burden as well. This way, if you do experience a loss, there’s at least a small financial upside to the burden you’ve taken on.
The tax laws have made owning a piece of property very advantageous. It’s just another great way to save money when you move to real estate.
Benefits of Owning a Rental Property
If you’re looking to increase your wealth and build a solid financial foundation for your life, you’ll certainly want to look into real estate investing. Owning a rental property can benefit you in a great many ways, and the above are only some of the most important to note.
Need more personal finance advice and info? More advice on how to manage a rental property? Keep scrolling our blog for more.