- Extra Income
One of the most obvious benefits of investing in rental property is the guaranteed monthly cash-flow that results. Since tenants are obligated to pay rent each month, as a landlord, you will have a guaranteed sum of money in your pocket. For many, this can be used as retirement income, or just extra spending money that will allow you to save more from your primary source of income.
- Appreciation of Value
Investing in rental homes is an investment that keeps increasing over time. Historically speaking, the numbers show this to be true. For example, if you buy a $100,000 property and decide to pay a down payment of $10,000, your mortgage would be $90,000. In 10 years, the home will be worth $150,00 and you technically would have made $50,000 for that initial $10,000 you invested in the real estate.
- A Reduced Mortgage
As a rental property landlord, this is a great benefit. When your tenant makes monthly payments on the mortgage of your property, it will slowly decrease. And as that decreases, the amount of equity you have on the property increases. In a sense, someone else is paying your bills and helping to decrease the mortgage. Sounds like a sweet and money-smart deal.
- Depreciation in Taxes
As a landlord, you get to enjoy a depreciation, which is a tax benefit reward to those who own rental properties. The depreciation occurs due to the ‘wear and tear’ that tenants wreak on your property, allowing you to ultimately write off the expenses at the end of each tax year.
However, in order to reap these benefits, it’s important to learn how to invest in rental homes. Learning how to invest in rental homes means knowing how to determine a good rental property, understanding what it means to be a good landlord, and to follow rental rules to a T.