5 Advantages of Investing in Rental Property

Rental properties are lucrative investments in the modern society and seemingly becoming a trend for younger generations to try to capitalize on. With online platforms like AirBnB and Instagram, real estate has become “sexy” to get involved with. Thousands of business moguls in the world have dominated the sector because of its enjoyable benefits and they are sharing those experiences on their social media accounts daily. If you invest wisely in the real estate industry, you could make huge profits and live a lifestyle one can dream of.

Alternatively, you may want to focus on building what some consider “long term savings accounts” where you have renters paying down the mortgage and insurance, while your property maintains or even grows in value. When you sell, you are rewarded with a large chunk of change, tax free depending on the time you’ve owned the property.

If you want to invest in rental property, you have to ensure that it has the best features to attract excellent tenants while also working with a property management company to help market and manage as you build your portfolio further. Some of these features may include:

  • Provide the best utilities
  • Convenient location
  • Spacious parking
  • Safety and security of tenants
  • Provide mutually beneficial terms of the lease

Below are 5 key benefits of investing in rental property from Barker Realty.

1. High Leverage

If you own rental property, you can easily access borrowed capital. The capital will enable you to maximize your returns on investments. Rather than using your cash, you can use the loans to invest in other opportunities. Rental incomes will cover the interest costs and monthly mortgage.

2. Property Value Appreciation

The value of your rental property should increase over time, in most markets. Real estate is not a volatile sector these days, unlike 2008/2009. In the long run, your property is likely to attract serious buyers or at the very least, maintain quality tenants.

Moreover, apart from your asset increasing, the rent prices may also rise. Therefore, rental properties are the best assets to own today because they always combat inflation.

3. Source of Passive Income

You generate a direct income stream from tenants every month, which is the biggest advantage of investing in rental properties. Many property investors call this “Mailbox Money”. It just shows up, every month. You can use the extra funds to launch other lucrative projects or build up your savings.

4. Tax Benefits

If you own a rental property, you will enjoy multiple tax benefits, which include these deductions:

  • Insurance
  • Interest
  • Home office
  • Depreciation

Therefore, we recommend speaking with your accountant or working with an accountant who is very familiar with real estate investing and has other rental property owners in order to maximize your annual deductions when it comes to filing your State and Federal returns.

5. Retirement Strategy

After retiring from a formal job, many people look to real estate to invest their money or to continue working, but for themselves. Others see this as a way to maintain income after retirement if they have owned property while also working a full time job.

It is advisable to hire a local property management company who are experienced in maintaining the value and condition of your property, vetting potential tenants, and marketing your property to obtain the highest dollar possible in your market and making sure your tenants are paying on time.

Contact Barker Realty for more information about getting started on the real estate investment path, or if you already have property, talk with us about having it professionally managed.

"Let each of you look not only to his own interests,

but also to the interests of others..."

Phil. 2:4