An investment property can be a great way to earn extra money, but choosing the right one is key.
A few things your realtor will help you locate in choosing an investment property is to find a property with current below-market rents. Your goal then should be to increase rents to current market rates which will provide an adequate return on your investment. Some choose an investment property with the goal of improving a neighborhood that is on the front and center of redevelopment in an urban setting that will appeal to young professionals. Another option is to locate a property with a high value potential for low improvement costs. This is a true fixer-upper opportunity and the value of the property will greatly increase after improvements are made. Truthfully, your options are vast. Whichever type of investment property you choose, make sure you are comfortable with your decision.
There are many benefits of having an investment property beyond the fact that you have the potential to earn an extra income. When you decide on the investment property, you become your own boss. You can choose what tenant you will rent to, how much you will charge in rent, and how you will manage and maintain the property overall.
Secondly, your tenants are paying your mortgage! It’s everyone’s dream to have someone else pay the mortgage and with an investment property you get just that. The longer you own the property, the more of the loan principal your tenants are paying down and the more wealth you are creating for yourself!
Additionally, there are huge tax write-offs for investment property. As a rental property owner, you can be entitled to tax deductions. You can write-off interest on your mortgage or on credit cards used to make purchases for the property. Your accountant can help you determine the specific tax write-offs available for you.
While an investment property can be a huge commitment, it can also bring financial rewards. Most notable is the cash flow left over after collecting rent, paying the mortgage, taxes, insurance, and any repairs. This sort of real estate investment can allow you to quickly build up a nice income. Now, imagine having 20 investment properties and you can always add additional properties to your portfolio. Sounds like a nice side business doesn’t it?
Overall, real estate is the only investment opportunity that can give you a great amount of financial freedom. When you consider the opportunity for cash flow, tax benefits, using other people’s money to pay the mortgage, and the fact that your investment property will appreciate over time, there’s no opportunity quite like it!