Advantages of Investing in Rental Properties

There is no doubt that when done right, investing in real estate can be very lucrative. Whether you invest in fix and flip properties, notes, commercial or rental properties, the payoff can be huge. There are many advantages of investing in rental homes you should know about if you are considering becoming a landlord.

Leverage

One important benefit to consider is leverage. You can use a small amount of your own money while borrowing and the rest. When investing in real estate, you don’t have to pay the full amount for the property. Instead, you are able to put a down payment (sometimes even as low as 0%) of your own money and get a loan from a bank, private lender or a hard money lender to fund the remaining. While you only put a small percentage of your own money down on the property, you are able to fully control the property and benefit from 100% of the appreciation.

Cash Flow

Any money left after paying your monthly expenses is money in your pocket. Buy smart and you can generate a monthly income from your tenants in the form of rent above and beyond what it costs to own the property. This is cash in your pocket that you can enjoy for as long as you own and rent out your property.

Appreciation

Over time rental properties tend to appreciate in value, which means while you are collecting money in the form of rent you can sit back and watch the value go up. You are able to profit from the passive income while paying off the mortgage, then later sell the property for a higher price and profit from it again. Score!

Tax Benefits

There are many tax advantages of investing in rental properties. If you receive a rental income from the rental there are numerous rental expenses you may deduct on your tax return. Expenses may include mortgage interest, property tax, operating expenses, depreciation and repair. There are quite a few tax benefits – be sure to consult with your tax professional to ensure you understand all tax implications prior to investing in real estate.

Security and Control

Another important benefit of rental property investments is that you are in control of what property to invest in, where it is located, who to rent to and what to charge for rent. You have very little control when investing in the stock market and many other investments. Investing in real estate is also considered one of the most secure investments you can make. Compared to the volatility of the stock market, real estate markets tend to be very stable. It is important to keep this in mind when choosing between investing in real estate versus stock.

Ready to purchase a rental property and need help with funding? Investor Loan Source has buy and hold loans that can help you grow your investment portfolio. Apply now or contact us at 409-735-6267 to get started and begin reaping the benefits that come with owning a rental property.