Reasons to Invest in Rental Property

Buying a property to rent is one of the best investment moves you can make if you want to make money. If you aren’t aware of why it is like that, we are here to explain and give you a couple of reasons to invest in rental property.

1. You can invest in rental property using the leverage

If you don’t know what leverage means, it is an investment strategy of using borrowed money to increase return on investment. And real estate has high leverage, meaning it has more debt than equity. This strategy is used by both investors and companies. You can get a loan more easily for real estate than for other investment vehicles. If you ask a bank for a big loan explaining you want to invest in rental property, you will most likely get the loan. If it were for another reason, the chances of you getting the loan you asked for would be much lower. You can even ask for an FHA rehab loan.

2. High leverage means a high return on investment

When you use borrowed money, whether it’s from an individual or a bank, you are using less of your own money. This helps you get a better return on your investment in the long run. Let’s give you an example. You are renting out your rental property to tenants. They pay for rent. And you expect their rent to cover not only marginal expenses but also to pay off the interest payable on your loans and this allows your profits to exceed many other types of investments. It increases your ROI (return on investment) because your profits will be greater than the interest that you owe. And real estate is considered to be a “high-performing asset”.

3. Many tax benefits and deductions

Owning real estate allows many tax benefits and deductions that you might not know of. Here are just some of them:

  • Interest – People who invest in a rental property and real estate in general, can deduct interest from mortgage interest payments on loans used to buy or improve the property. There are also ways you can deduct interest on credit cards that are used for goods or services for your property.
  • Insurance – When you are a landlord, you can have many benefits when it comes to insurance of your rental property. You can easily deduct insurance premiums from any insurance policy that has to do with your rental investment. For example, the flood/fire/theft insurance.
  • Repairs – If you do any repairments on your rental property, you can easily deduct these expenses.

4. You are your own boss when you invest in rental property

If you decide to invest in rental property, you are able to become your own boss. You will work from home. And you will directly be responsible for the outcome of your investment. You are the one who decides what you want to do with your rental property. You are also the one who decides who to rent it out to and how much the rent will be. This means you are controlling your own income which is not something anyone can do. It’s best to depend on yourself and not someone else.

5. Everyone needs a home at some point

Everyone needs a home. And if you properly take care of your property, you won’t have to worry about if you will be able to rent it or not. The only thing that can happen is that you are unable to find trustworthy tenants, but if you really need the money, you can always rent it like Airbnb. Some people earn much more that way. 

At some point, once you pay off your loans, of course, your children can move into one of your properties with authoritymovinggroup.com. This way you won’t have to worry about the conditions your children live in as it is your property.

6. The real estate market is stable and predictable

When the market collapse happened back in 2007, the rental property owners who were investing for long-term gains did not suffer as much as others. So even if something like that happens again, you won’t be affected too much. And as this market is predictable, there is no sign that something like what happened in 2007 will happen again soon. 

The prices of rental properties are rising, and this is the perfect time to invest in rental property. You can easily increase the value of your property and sell it for more money if renting it out doesn’t work out.

7. It's simple even though it's complicated

Being a landlord isn’t as easy as it sounds at first. But once you get everything down, everything regarding your rental property will be very easy. There are a few things you must do like screening tenants, taking care of your property, collecting rent, etc.

The best part is that you don’t have to be present to earn money. There is always the option of hiring a rental property manager that will do all the work for you. But that will decrease your income, so we suggest you learn how to be a landlord yourself. But in some cases, this isn’t possible. For example, if you live outside the country you own property in. This is when a rental property manager is very much needed.

8. There are many ways you can profit from your rental property

As a rental property owner, you can capitalize on all four of real estate’s major profit sources. Those four real estate profit sources are cash flow, appreciation, loan pay down, and tax benefits which we already talked about.  This is something only rental property has the ability to do and it’s not just one of those real estate myths.