Real estate is a popular way to generate passive income. But are you unsure about the benefits of investing in real estate? Is it worth your time and money? Here are seven reasons why you might want to consider buying a real estate investment property.
1. High Rate of Return
You’ll likely buy your rental property with borrowed money by getting a mortgage. This means you’ll use little if any of your own money. When you rent the property to a tenant or several tenants, you can use the rent to pay expenses.
For example, you might use a portion of the rent to pay your mortgage loan. Your investment turns into a high-performing asset with a good payout. In the long run, you earn more than what you invested out-of-pocket for the property. Property investment companies like RWInvest have been particularly keen to highlight the lucrative gains that can be made – especially with the ongoing housing supply-demand imbalance.
2. Improved Credit Scores
Making on-time mortgage payments helps your credit scores. It shows that you’re responsible and able to handle a large amount of debt. That makes you attractive to lenders – and that means an easier time obtaining additional loans or lines of credit.
3. Tax Benefits
Various tax benefits are available to people who own rental property. Speak with a professional tax preparer to learn exactly which benefits are available to you.
You might learn that you’re eligible to:
– Deduct interest on loans or credit cards used to purchase goods or services for your property.
– Deduct the cost of repairs to your rental property. Repairs such as painting, fixing broken stairs, and replacing broken appliances can possibly earn a tax deduction.
– Receive the home office deduction. It’s common for a landlord to work from home. When this is the case, it’s sometimes possible to receive the home office tax deduction. If you meet all the requirements, you can possibly deduct home office expenses from your income.
-Deduct insurance premiums from policies that are related to your rental property. This includes coverage such as flood insurance, liability insurance, or coverage for an employee.
4. Diversify Your Assets
Diversification is highly recommended in investing to minimize risk. You risk losing everything if all of your money is in only one investment. Adding real estate to your existing investments is a great way to build a diversified investment portfolio.
An additional benefit is that real estate typically appreciates over time. And with your investment property, that means you have an asset that increases each year.
5. Withstand Inflation
Inflation can work in your favor when dealing with real estate. Generally, house prices and rents rise along with inflation. That means your real estate asset increase in value.
Your income is essentially protected from being harmed by inflation. Rents will increase, you’ll earn more income, and have an easier time paying for expensive repairs and appliances.
6. Relatively Simple to Sell the Investment
You can sell your real estate investment whenever you choose. You might decide that you don’t enjoy owning rental property. Or maybe your interests have changed, and you want money for a more lucrative investment.
Because of appreciation, your property is likely worth more than when you made the purchase. If so, that’s a profitable way to get rid of an asset you no longer want.
7. Create Wealth for Retirement
Real estate appreciates over time. That means it becomes more valuable the longer you hold and maintain the property. This is why a rental property can provide a good source of passive income.
You can possibly live on rental income when you retire from your job. Another option is to use rental income to create a retirement fund. After a few years, you can sell the property for cash and tap into your retirement fund.
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Buy a Real Estate Rental Property with Hunter Gather
Searching for the perfect real estate deal is time-consuming. And with obligations to family and work, you might not have the time to begin your search. Hunter Gather can help.
You will benefit from our excellent negotiation skills and strong relationships with real estate agents. With our help, you can secure the dream home or real estate investment property of your dreams.
Hunter Gather is based in Brisbane – the capital of the Australian state of Queensland. Contact us at our Sunshine Coast Office.
