Investing in Your Future: 5 Reasons to Invest in a Rental Property
If you’re searching for a new investment opportunity, real estate could be the
perfect venture for you. The real estate market is one of the more stable investment
options, providing appreciating assets, tax benefits, and flexibility to those who take
advantage of it.
If you are interested in buying a rental property, check out the following benefits
of real estate investments before taking the plunge:
Appreciation
While you may observe the housing market’s current rise and fear an inevitable
drop, real estate is a smart investment because your property’s value will appreciate
over time. Ebb and flow within the market is to be expected, but well-maintained
properties are reliable assets that will be more valuable on the day you sell them than
they were on the day you bought them.
Unlike many other investment options, you have the ability to research the
market in the location you’re interested in before purchase. Because real-estate value is
overall consistent, you will be able to see the trends occurring in that area and educate
yourself before getting involved in the local market.
Tax Benefits
Real estate investments can afford you some tax breaks and deductions! You
can deduct some costs of owning and managing your property—including property-
related purchases and repairs—that will ease the financial burden of maintenance and
help you maximize your profits.
Some good examples of tax-deductible expenses include fixing floors, replacing
broken windows, and stocking the property with essential appliances.
Earnings
In addition to the long-term benefits real estate offers, you can make more
money than you might expect by renting out your property. If you start long-term rental
agreements and take on the role of a traditional landlord, you can make consistent
money from your tenants and cut down expenses by doing a lot of maintenance and
management yourself.
Short-term rentals, by comparison, can make even more money in a shorter
amount of time. While traditional renters pay their fees monthly, short-term rentals can
charge higher nightly rates with faster turnover. If you can keep your property
consistently booked, you could make significantly more money than you would from a
long-term rental.
Some factors influence your revenue—like your property’s location, amenities,
and competition—but rentals are extremely lucrative overall. For traditional renting,
research the rates of similar properties in your area. To see how much money you could
make from a short-term rental, try using an Airbnb income calculator to estimate potential earnings.
Flexibility
Rental properties are beneficial investments due to their flexibility. Regardless of
the type of rental you choose, you get the benefit of adjusting your rates to
accommodate for inflation—a benefit that most other markets don’t allow. Traditional
landlords can raise their rent fees to earn more money and compensate for the rising
costs of maintenance and repair.
Short-term rentals can raise their rates as well, but owners of these properties
enjoy different kinds of flexibility. At any time, you can choose to unlist your property to
create availability for your personal use or to free up the space for another reason. You
don’t have to worry about long-term tenants and you have the freedom to come in and
out of your property as you please.
Retirement
Finally, one of the biggest benefits of rental income is that it is considered
passive income. Owning and maintaining a rental property doesn’t have to require much
hands-on work, which makes it the perfect investment to hold onto as you move into
retirement. You can use the earnings from your rental properties to supplement your
retirement funds. This would allow you to live more comfortably and, if your rentals are
vacation properties, provide a secondary home to visit at your leisure.
Rental properties increase in value over time and offer tax benefits, high
earnings, flexibility, and an opportunity for supplemental retirement income. If these
features appeal to you, choose a promising property and start reaping the benefits of
your wise investment!
