Are you looking forward to investing in a rental property? If so, your rental property investment should help you establish an immediate cash flow and offer a long-term retirement plan. Besides, owning rental property creates some incredible tax advantages if you plan well. The following are some of the key benefits of owning rental property.
Property Appreciation
This benefit doesn’t advocate for a fix and flip strategy. A property owner should plan on keeping their property for a minimum of seven to ten years. Moreover, property appreciation is one of the vital benefits of the investor’s return on investment. According to the National Association of Realtors, the average annual appreciation of the real estate sector has been over 6.74% in the past fifty years.
This rate of return on investment outperforms many other forms of investment nationally. However, some form of property investment in this sector may fail to experience this kind of growth. Therefore, you cannot overlook the benefit of property appreciation if your goal is owning rental property.
Mortgage Reduction
Many people usually overlook this benefit when it comes to owning rental property. However, making a wise investment enables your property to break even in cash flow when you have tenants. This is because tenants also help with paying the mortgage.
Cash Flow
Generally, an excellent rental property investment generates cash flow, while a bad real estate investment does not. Buying a property with a good cash flow also adds other benefits. Besides, it is crucial to pay attention to the property cash flow based on the experience of economic challenges and the drop in property values.
Cash flow is also a portion of an investor’s return on investment when analyzing a property. A person should consider their total cash expenses to evaluate their cash-on-cash return rate as they try to reduce cash costs linked to the property. Furthermore, an investor should also focus on maximizing their tax write-offs to enjoy tax advantages.
Owning a rental property is one of the best investment decisions a person can make. However, it is essential to do some research before making your decision. If you want to invest in a rental property at Lode Capital, we offer the best financial solution. Contact us today!