An investment property is a property that is purchased with the objective of earning income from it. This could be a residential property like a home or apartment or commercial property like a restaurant or strip mall. Here are 5 benefits of owning an investment property.
1. Income: The main goal of an investor is to have a high return on their investment. Owning an investment property leads to solid return on investment. Investors will lease out their properties and will receive an income from monthly rent payments. Owning Real Estate is an efficient way to make money outside of your normal job.
2. You have full control over the decisions: Another benefit of owning an investment property is that you are in complete control over the decisions that have to do with the property. For example, you get to decide what type of property you want to invest in, whether that is a home, apartment, or commercial property. You also have the freedom to choose how much you want to charge for rent, who you want to rent out your property, and lastly whether you want to sell your investment property.
3. Tenants pay your mortgage: Most investment properties are financed by a mortgage loan. You can use the rent money you receive from your tenants to pay your monthly mortgage payments for the property. With each mortgage payment you are making, you are building equity and essentially own more of the property each time.
4. Fewer Risks: Investing in Real Estate is a safer route than a lot of investments. For example, property investments have few risks compared investing in stocks. Because home prices and equity increase with time, you will encounter less risks the longer you retain your property. Since a property investment is a physical asset it will always hold value contrary to a stock investment in which its value is very volatile.
5. Tax Deductions: As a rental property owner you are eligible to multiple different tax write offs and deductions. The cash flow that you receive from an investment property is tax-free. Property investors are also able to deduct most expenses related to owning and managing the investment property sch as operation expenses, property taxes, insurance, and mortgage interest, and maintenance repairs.
If you are interested in purchasing an investment property contact one of our loan officers today!