Benefits of Owning Rental Property
Are you looking to invest in a rental property? Rental property ownership can provide passive income and long-term growth of your wealth. Becoming a property investor has gotten easier as there is a lot of valuable information online you can use to build your portfolio.
Like any other investment, rental property purchases require time and effort. You have to analyze the local market conditions and predict wider economic developments in the area. However, there is always the chance that your hard work will pay off. Buying a property in a neighborhood that has great potential for rental business can kick start your role as a landlord.
OmniKey Realty goes over the major benefits of owning rental properties. You’ll see why purchasing rental units is a wise investment if you have taken care to prepare for this journey.
Benefit #1: Hedge Against Inflation
Compared to other investment markets, investing in real estate can protect you better against inflation. When the prices rise, the monetary value of your property follows that growth. The best approach is purchasing the property at a low-interest rate. Countering inflation is a tangible benefit of putting your investment dollars into the rental property market.
Buying a rental property is actually easier to qualify for than a primary residence. Although you will need 15-20% down payment, the new payment amount can often be offset by the rental comparables in the neighborhood. That means, from a rental property mortgage underwriting perspective, that you don’t have to earn enough income personally to offset the payment as the property itself should generate that income. To find out if you qualify to purchase a rental property or to ask specific questions, give Richard Woodward a call at (214) 945-1066 or apply online now.
Benefit #2: Rental Income
Filling your rental units with tenants enables you to start earning rental income. Whenever there is any money left after taking care of all the expenses, the remaining sum turns into your income.
For example, your tenant pays a monthly rent of $1,400 and your regular mortgage payment is $800. That means you have an excess of $600 each month. Then you should aim to budget around 10% of the monthly rent amount for repairs and maintenance, vacancy costs, etc. After taking the rental budget savings into account, you will still enjoy a monthly gross profit of $460.
Benefit #3: High Leverage
Rental property ownership provides you with high leverage. As an investor, you have broad loan options when it comes to finding financing for your rental units.When you match this leverage with other investment opportunities, you’ll quickly see that your circumstances change quickly. For instance, investing in bonds, mutual funds, or stocks wouldn’t have the same leverage.
Benefit #4: Tax Benefits
As a landlord, you can access a variety of tax deductions. These tax benefits make rental property investing a more lucrative choice in comparison to some of its alternatives. Here are the top tax benefits of owning rental properties:
- You are able to deduct expenses related to any repairs carried out in your rental property. For instance, you could deduct the costs of fixing a leaky roof or applying a fresh coat of paint on the property’s worn exterior.
- You could enjoy deductions from insurance premiums no matter which particular policy covers your investment property.
- You can depreciate the purchase price of your rental. In order to make this happen, you need to use a depreciation schedule. This is a possibility even if your rental property’s value has appreciated over time.
- You may deduct interest from your mortgage interest payments. Additionally, you could write off interest on credit cards that you have used to purchase items for your rental property.
- Depending on your circumstances, other potential tax write-offs include legal fees, travel expenses, and payments to professionals.
Benefit #5: More Freedom and Control
Investing in stocks or mutual funds carries the potential for ensuring financial freedom. But you’ll have no control over the processes that 
follow your initial investment. Rental property investments put you in charge. You can choose whether you want to service short-term renters like the Airbnb model or find long-term tenants. Any other decisions regarding your rentals are all yours to make.
Here are some of the top questions for rental decision-making:
- What is the monthly rent amount?
- Who are your tenants?
- What kind of amenities you provide?
- How will you gain a competitive advantage over comparable properties?
In a nutshell: Benefits of Owning Rental Property
Rental property investing has the potential to bring you considerable profits. When you compare a real estate investment to its typical alternatives, rental property purchases come with important benefits.
- Rental property owners can enjoy numerous tax benefits
- You can earn monthly rental income
- Real estate investments provide hedging against inflation
- You have more freedom and control than with many other investments
- Rental property investing gives you high leverage
As with any other investment, purchasing rental properties demands thorough research and studying of the market conditions. Do plenty of calculations before finalizing any investments.
