With so many advantages to owning rental property, as well as property management, more and more people are taking advantage of this investment. One of the major advantages to owning rental property is that when you make this type of investment purchase, you have a tangible asset, as compared with other types of investments such as stocks and bonds. It is easier to understand the true value and worth of your asset when you can actually see it. Additionally, the regular rental income that you receive is easily measurable, and you can usually expect it to continue for a long time.
Some people are concerned about investing their hard earned money into financial systems; however, in order to grow your wealth and asset base, you generally need to spend money. Real estate investing is a great solution. The stock market is known to be quite fickle, with frequent fluctuations. On the contrary, real estate tends to stay fairly strong, even when the investment market weakens somewhat. One of the reasons that real estate continues to be a good investment even in a weaker economy is that the weaker economy often prevents many people from being able to obtain a mortgage-creating a larger group of renters to choose from, since they still need a safe and comfortable place to live.
Rental property can produce a regular income, which is a huge advantage for many people. Although you do need to deduct the mortgage payment from your total income (if you have a mortgage financed) as well as maintenance and repair expenses, the property can often produce a steady stream of income for you.
Real estate can appreciate in value, depending on the market. Over time, many properties will become worth more, though this is not necessarily a guarantee but is dependent on many factors, including location, type of property, age of property, upkeep and other factors. Choosing to invest in a stable area will increase the odds that your property will appreciate in value.
Leverage refers to the ability to purchase rental property using money that is borrowed. When you can borrow the money, you can afford to invest more because you only have to put down a percentage of the total cost. Because the property itself will secure the debt, and the rental income will cover the mortgage and tax costs, you stand to make larger profits.
Another advantage to rental property is that you can take many tax deductions related to it. You can deduct the cost of maintenance and repairs, improvements, taxes, insurance, mortgage interest, and more.
When you own rental property, it is a business where you can definitely be your own boss. This is an advantage that many find very attractive. Whether you are intending to be a part time landlord or develop a career in property management, you will benefit from the ability to make the big decisions and experience the independence of owning your own business.