Benefits of Owning a Rental Property

To quote Tony Soprano, “Buy Land, AJ, ‘cause God ain’t making any more of it.” You don’t have to be a TV buff to understand Tony’s message - real estate is a valuable asset. Investing in real estate and rental properties is one of the most time-tested ways to get a sizeable return on your investment, with only moderate work on your end.

If you’ve been debating turning an old property into a rental property, buying a property specifically for renting, or getting in the rental business, you need to know both the financial and secondary benefits. Let’s learn the benefits of owning a rental property, the tax advantages of rental properties, and what else you need to do to make it big as a landlord. With more Americans renting now than ever since the 1960s, it’s time you scratch your own back by investing in a rental property.

Regular Income – Most landlords own property as a secondary form of passive income. A rental property provides you a regular cash flow every year or month that you can add to your portfolio. There’s no guessing what type of returns you’ll get when there’s a rent check every month.

Flexibility on Buying and Selling – Imagine that you want to sell the current home you live in and have buyers lined up around the block to purchase, but you have nowhere to go. Real estate transactions can move quickly in a hot market which could prod you to buy a new home quickly and doesn’t always leave homeowners with the new home they truly wanted.

Owning a rental or secondary property gives you flexibility in a fast-paced market. Instead of finding a rental home for yourself or buying the first thing you see, you can move into the rental while you find the perfect new home.

Diversity Your Portfolio – One of the most repeated pieces of advices for growing your wealth is diversifying your portfolio, i.e. investing in a variety of different industry. If your portfolio is loaded with volatile stocks or a few CDs, expand it by purchasing a rental property. The passive income is a great way to grow your assets when the market is down.

Control – Unless you hire a property management company, you are in charge of your rental. You oversee the rent you charge, the property’s maintenance, and much more. Owning a rental property gives you a control over your investment you don’t see in other forms of investing, where someone is choosing and charging for you. If you want an investment that comes with plenty of freedom, rental properties are that asset.

Vacation Home – If you choose to invest in destination or vacation rental property, you have an established home away from home. With a vacation rental you’ll never worry about hotels again when headed to your favorite destination. You can still deduct all expenses as a vacation rental even if you stay at the home for 14 days or 10% of the time you normally rent to others.

A rental property provides regular income to fatten your wallet immediately but there are secondary tax advantages that give you further financial incentive.

Every property you own will cost you in fees, mortgage payments, and maintenance, but it’s much easier to recover fees and taxes for a rental property compared to other investments. In fact, rental properties provide more tax breaks and financial incentives than almost any other investment out there.

While there are over a dozen different federal tax advantages to rentals, and even more depending on where you live, the most popular include:

• Can deduct loan interest.
• Can deduct depreciation of the property because it’s seen as another investment.
• Can deduct any professional service. This includes regular maintenance like landscaping services but also includes services like attorneys or brokers.
• Can deduct insurance policies on rental properties.
• Can deduct vehicle expenses from property visits.
• Can qualify for the Pass-Through deduction which can help with different expenses.
• Can deduct appliances and any personal property used for the rental.

There are many more deductions available depending on what type of rental you own and how you operate it. Before purchasing your rental, talk with your financial adviser or a real estate professional to see what real costs you can expect.

If you are ready to invest your hard-earned money, there aren’t many better investments than a rental property. Talk with a rental property management company, a real estate company, or your financial adviser about setting up your own rental property and raking in passive income today. When you’re ready to rent out that new property, using ForRentByOwner.com can help you to keep more of your rental income in your pocket.