If you are looking for ways to invest your hard earned cash then look no further than an income property. If you haven’t heard of this type of investment before, an income property is a property that is bought or developed for the single purpose of earning an income. Of course, as with every investment out there, you must make sure you understand the risks attached. However, for every risk, there is a benefit, and we are going to talk you through the major benefits of investing in an income property.
You’re The Boss
There is no greater feeling than being your own boss, and that is exactly what you’ll become when you invest in an income property. You’ll get to choose which type of property to invest in, who your tenant will be, how much rent you are going to charge and whether you will manage it yourself or hire and agency. This freedom and a boss-like feeling are not achievable with a lot of other investments. Take stocks or funds for example. Sure, you can choose which to invest in and how much you’ll invest, but you won’t have the chance to control or manage it.
Big Old Tax Write-Offs
As the owner of an income property, you are entitled to huge tax deductions. Of course, we recommend you speak to a professional accountant that specializes in this area of business, someone who can educate you on the best ways to save money on your property taxes. But to give you a brief understanding, you will be able to write-off your mortgage, as well as any credit card payments you made on home improvements. You can also write-off any insurance, maintenance, travel costs, legal and professional fees. What’s more, that is only the tip of the iceberg, but your accountant will be able to explain the full extent of the tax benefits available in this area of investment.
It Will Give You Some More Pocket Money
The whole point of having an income property is to generate an income, which means having tenants occupy it for an agreed rental price. Of course, it is as simple as taking away mortgage payments from your rental fee and keeping what is left, which because there are associated costs with having a property, such as maintenance costs and potential periods of vacancy. But let’s say you had an income property that you were renting out for $1000 a month, and your mortgage repayments were $600, you won’t be keeping $400. That is because roughly 10% of that $1000 dollars will be required to cover maintenance and vacancy, as such you will be left with around $280 a month. But this accounts for over $3000 a year, and your mortgage is getting paid off.
Appreciation Is Awesome
This has to be one of the greatest things about property because, if you get it right, you can see your property appreciate so much it will be like having a second income. It could be that you buy at the right time – when the market is low – or in an area that suddenly sees a huge amount of infrastructure get upgraded. There are so many factors that can have an affect, from transport links to schools, all of which will see your property rocket in price. Of course, it can go the other way too, as we saw in 2007 and 2008 when the entire economy collapsed and house prices plummeted. So make sure you do your homework first.