4 Advantages of Investing in Rental Property | Pyramis Company

4 Advantages of Investing in Rental Property

 

Investments are incredibly exciting; by their nature investments encourage us to look to a brighter future, full of possibility. We invest when things are going well in our lives; we have the money to cover our current expenses, and our source of income seems sustainable, so we anticipate our needs years down the road. Investing in a rental property is a great way to generate income, for a myriad of reasons; though it’s not for everyone, here are some of the advantages of owning rental property.

The Investment is Intuitive

Investing in stocks and bonds is complicated, and requires an in-depth knowledge of the stock market and a variety of obscure investment techniques. Investing in a city you know well or a neighborhood you’ve lived in is much easier. You know the nearby schools and amenities, you have an idea about how much similar houses have sold for, and you have a sense for which areas might be up-and-coming. This makes a rental investment a solid choice if you don’t want to learn about stocks.

The Investment Earns Income

Stocks can earn you dividends, but annual stock and bond yields are typically not that high; it’s in the selling of these where you’ll see greater returns. Rental property investment is also an investment in real estate; it’s not uncommon to see landlords earn double-digit returns on their investment, even after mortgage payments and repairs. Once you’re done with landlording, you can sell your property, just like a stock; there’s likely a lot of money in that property after a few years, and you can expect a great final return on investment.

The Investment Comes with Tax Deductions

Governments want to create tax incentives for rental properties. Renters can often be from vulnerable populations, and high-density urban environments are easier to upkeep for municipalities. This means that the more rental properties that exist, the happier the government is; as a result, you’ll often be able to claim expenses and losses in rent on your taxes. Stocks, conversely, tend not to be nearly as tax deductible.

The Investment Hedges Against Inflation

Your investment portfolio will almost certainly contain stocks and bonds in addition to real estate; it’s important, then, to hedge your bets. Inflation hurts stocks and bonds, but it helps real estate, by increasing the value of your property. This allows you to continue generating value on some investments even when others might be flagging.

Rental property management services can help you make your rental property investment just that: an investment, and not a full-time job. By screening tenants, handling communication, and leveraging existing relationships to get discounts on maintenance and insurance, property management can help you make rentals a safe bet to grow your money.

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Categories: Investors, Real Estate

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