Benefits of investing in an income property

Buying Investment PropertyBuying rental property for the sole purpose of generating income can be incredibly profitable. It’s not without risk, but if you are willing to do your research and put the work in, income property is a wonderful investment. Let’s look at five benefits of investing in and income property:

1. You Are In Control

In some ways, you can think of your income property not just as an investment, but as a business. You make the choices. You choose which property to buy, who you will rent to, and how involved you want to be with the property. Some owners are hands-on, some leave the details and management to a third party. If you are looking to be your own boss, you can make income property your business.

2. Increase In Value Equals A Highly Leveraged Asset

In most cases, your actual out-of-pocket cost at the outset is low, with the bank picking up the rest. Over the next few years, your property will go up in value. If it was originally worth $100,000 and now it’s worth $180,000, and you put only $10,000 of your own money down, then you have effectively turned $10,000 into $180,000. Not bad.

3. Rental Properties Generate Income

In addition to the value of your investment, your rental property can also generate income. Depending on your situation, it may not be much. For example, if you purchased a single-family home and you have a mortgage of $750, but you rent it for $1250, then you are theoretically making a profit of $500. However, you must keep in mind other expenses such as property tax, maintenance and other fees. Over time, however, this amount will grow, and if you purchase a larger property, such as a duplex or a small apartment building, your potential income may be much larger.

4. Your Tenant Pays Your Debt

Even if you are not making a large initial profit off of your rental income, you are creating wealth through leveraging your tenant’s money. They are paying down your mortgage for you every year, allowing you to build equity at little or no cost out of your pocket.

5. Generous Tax Write-Offs

Owning an income property brings a surprising amount of tax benefits. You can write off interest on your mortgage, the cost of improvements and more.

While there may be risks and pitfalls involved with income property, it is for the most part a sound investment. Be smart about it, and over time, you can build considerable wealth and security.

Importance of Hiring a Good Property Manager

Property Management in Kannapolis NCOwning income property can be one of the wisest financial investments a person can make. Unfortunately, owning income property can also be a major drain on time and energy. Consider the following three benefits to hiring a good property manager:

1. You can skip collecting and depositing monthly payments.

If you’ve spent any amount of time trying to procure payments from people, you understand how frustrating and awkward it can become. Tenants who don’t pay on time or fail to pay late fees can quickly and easily become a source of stress. Your time is money, and unless you enjoy chasing payments in your downtime, it’s a task you can easily pass off to someone else.

2. You can outsource tenant management.

Good tenants come with a certain number of reasonable expectations, and routine and emergency maintenance issues require time. Even the process of finding the right tenants and building a strong tenant-landlord relationship requires effort so that the tenant wants to stay on good terms. A good property manager can spend the time and effort securing background checks, running credit reports, and calling on tenants who need assistance. Perhaps better still, hiring a property manager means you won’t have to handle the middle-of-the-night phone calls when the toilet overflows!

3. You can invest in properties wherever you want.

Choosing to manage your own investment properties limits you to a tight geographic location. By hiring the right property manager, you are free to snap up investment properties at good prices wherever they exist. And since one helpful strategy for hiring property managers is finding someone who lives in the rental unit (an apartment complex, for instance) and trading labor for a percentage off of the monthly rent, you are literally free to go anywhere and hire anyone to keep an eye on the property for you.

One important caveat when hiring a good property manager: Be sure whomever you hire has a good grasp of state and federal laws as it pertains to selecting tenants.

And then rest easy. For now, your work is done.