Owning a property is a good investment. Besides the fact you have a place you can call your own, investing on a real estate can help your cash rolling through rental properties.
It is very simple. Invest your money on buying a few condo units or a cool and hip house near a university or near the college campus and convert them to rentals.
And while it can be troublesome to do rental properties - you will have to deal with the monthly costs, fulfill your responsibilities as a land lord, and even hire brokers to find renters - there is a positive return of investment that may cover your monthly mortgage payments and other bills that you have to pay on your own humble abode. Here are five ways a property can massively boost its value - and of course, can bulk up your net worth according to Trulia:
1. Rental properties create cash flow
Cash flow, by its very definition, is the total amount of money being transferred into and out of a business, especially as affecting liquidity. It is one of the cornerstone principles of all real estate buildings and rental properties. A house near a university or a building with a good number of units owned can generate money monthly that pays your carrying costs, mortgage, and expenses.
Other than that, if the cash flow is a positive turnout-paying tenants surpassing your property's expenses-the extra money left each month can cover your property bills, paving a way to pay off mortgages early.
If you pay your mortgage early, the sooner you'll have money rolling to you rather than the bank.
2. You don't pay your own mortgage, other people will
It's simple logic. If you have a mortgage and you have your place rented, the tenants will pay of your mortgage via their rent money. With this, you are actually paying down your loan amount. Keep the property rented for a longer time, say 15 to 20 years, and you can own the house without having to spend a single penny of your own.
3. Market appreciation boosts your equity
Market inflation and simple supply-and-demand economics also increase home prices over time. The combination of appreciation from improvements and long-term market appreciation is a huge bonus for rental properties, thus assuring this kind of investment is profitable and attainable.
4. You can be creative while earning cash
If you find improvements on a poorly managed, not only can your rent increase, but you can also be created in terms of the interior and marketing. With improvement, there will be a significant boost on its market value and your equity, and also its rental prowess. Keep in mind those quality rentals means quality clients and higher rents.
5. Tax advantages keep more money in your pocket
There are tax benefits to owning rental properties, which include depreciation, rental expenses, and mortgage interest deductions you can take each year, because from an accounting standpoint, "it's on paper."