Are Rental Properties a Good Investment? – Things You Need to Know (Part 1 of 2)
Are rental properties a good investment? This is one of the most common questions we hear from folks who are considering investing in real estate.
Real estate is one of the biggest industries in the world. Whether it’s residential, commercial, or rental, there is constantly a demand for brokers and investors.
The short answer to the question of are rental properties a good investment is- yes, real estate is definitely a great way to generate income and accumulate wealth.
Are Rental Properties a Good Investment? – What You Need to Know?
When looking for the best investment properties, investors must be precise in regards to the location and its viability. This is especially important if you are planning to buy a rental property for your real estate investment. Making a profit from your investment property needs to be carefully calculated ahead of time, to ensure that you’re going to be able to create a successful investment over time.
Rental Properties Benefits
Passive Income
A decent monthly income can be generated by renting out the property being maintained and held by the investor. Aside from the fact that the value of that property appreciates over time, the chance for ROI plus profiting from higher value of its sale is very feasible.
Tax Write Off
The advantage of writing off the value of your property over a period of 27.5 years is possible if the investor remains active during that period. (See Tax Reform Act of 1986)
Appreciation
Industry statistics show a trending fact for real estate consistency in its value appreciation over the past 40 years. Investors tend to hold their properties longer to gain more equity, better ROI, and higher profits when they are ready to sell.
Hedge Against Inflation
As inflation rates rise, investors who own real estate will benefit from the increase in the value of their properties.
Increasing Rents
As the demand for rental properties increases, landlords and investors who own properties may have the authority to raise monthly rent prices charged to their tenants. This can be an extremely good way to increase income; however, it’s important to charge fairly and with fair warning for tenants to abide by the landlord-tenant agreement.
Rental Properties Additional Benefits
- Can cover mortgage payments
- Can cover your monthly expenses and even turn a profit after expenses
- Can build equity out of the monthly rentals
In our next blog post, we will continue to discuss investment properties and how to go about being profitable. See you back here next week!
Wendy P.
