Have you considered investing in real estate yourself, and are intrigued by the idea of owning rental properties? The homeownership rate is at its lowest level in 50 years, so now may be the perfect time to explore this opportunity.
Owning a rental property has several advantages, one of which is that it can generate passive income. The pride of ownership may be part of the appeal for some landlords. Being able to manage and make decisions regarding your property confidently can be rewarding.
Some individuals may be more interested in the monetary benefits of rental property ownership as well as the sense of security that comes with it. A rental property with the intention of providing income and long-term capital appreciation, however, can present ups and downs. It is important to note that the housing market may fluctuate depending on a variety of factors, including location, supply and demand, and the economy.
Considering the real risks involved, the return you reap from your rental property should be greater than that you would earn from conservative investments, such as bonds and dividend-paying blue-chip stocks. Additionally, not everyone is capable of managing a property or a tenant.
The Internal Revenue Service allows you to deduct many expenses connected with rental property in the categories of:
- Ordinary and necessary expenses
Consequently, you are entitled to deduct your insurance costs, mortgage interest, maintenance costs, and wear and tear on the property.
It is possible that depreciation will result in a nominal loss that can be deducted from other income. Therefore, you may be able to generate a net positive cash flow from the rental income minus expenses, but still, incur a net loss for tax purposes. However, you should be aware that depreciation also reduces the cost basis of a property for the purpose of calculating capital gains.
FLEXIBILITY TO SELL AT THE RIGHT TIME
Suppose you are ready to relocate, but the market conditions are not favourable. As an alternative to selling your property at a loss, you can rent it out until the market conditions improve. The flexibility of renting out your property allows you to sell it once you are in a position to make a profit on it.
PASSIVE INCOME STREAM
Landlords are able to determine how much to charge tenants and how to manage their properties. Your rental price will be determined by the location, the current market value, and the condition of your property, which you will have evaluated prior to making the purchase.
Therefore, once you rent your property and receive monthly rental income from it, your initial investment quickly begins to pay off, providing you with a reliable passive income source for many years to come. Rent prices are expected to rise over time, so you will always be able to take advantage of the housing market.
PROPERTY VALUE APPRECIATION
When you rent out your property, you are able to hold on to it in case its value increases, allowing you to sell it when the time is right. Depending on the market, there will be a variation in the amount of appreciation. Identify which cities and neighbourhoods have the potential for appreciation so that you can determine what kind of return you may be able to expect.
DIVERSIFICATION OF INVESTMENTS
The stock market may already be a source of income for you. According to a recent blog post by BiggerPockets, owning rental property allows you to diversify your portfolio, helping to mitigate risk. Furthermore, it may enable you to take advantage of positive market swings.
We can help out:
Are you a landlord who is tired of having an empty property? Or, do you have tenants, but managing your properties is taking too much of your time? Or, are you fed up with increasing over-regulation and keeping up with the compliance required to maintain your portfolio? If so, we can help.
Our guaranteed rent scheme provides no voids, no stress, just hands-off management with a fixed monthly income, and by becoming one of our Landlords, we ensure you stay compliant at all times, by providing up-to-date reliable information that you need to know, whilst keeping your property compliant.