Deciding to invest in a rental property is a complicated multi-faceted decision, which should not be taken lightly, however if done and done well it can be very lucrative investors. I’m writing this piece to discuss and clarify some of the advantages of investment real estate, but note there some negatives and before any decision is made, please be sure to contact myself or someone from my office to further review before any decision is made.
Advantages of Rental Real Estate
There are many investment vehicles available to investors today, targeting different markets, offering a wide variety of options and potential for growth. One investment which I have always been a great fan of is Investment Real Estate, especially now given today’s real estate market and super low interest rates.
The Current Interest rate environment means the carrying cost of a mortgage today is very affordable, even with real estate prices being so high. This combined with the surplus of high quality renters available, (as house prices continue to increase coming up with a deposit for a home, especially for a first time buyer is getting harder) and the lack of rentals available, this makes for a great investment opportunity for those with the means to advantage of said opportunity and receive several benefits associated with investment rental properties.
Cash Flow & Passive Income - This refers to the rent money that is left over after the mortgage and related expenses have been paid, cash that you did not have to work for, that was produced by your property investment. Cash flow is an added bonus on top of your capital appreciation.
Capital Appreciation - This is the increase in value of the property over time, though not guaranteed, if the property is researched and bought properly in stable areas, the property will likely increase in value over the years. This Capital Appreciation is magnified through the use of Leverage.
Leverage – Rental/Income properties can be purchased with borrowed funds, usually at very low rates, you invest a down payment and the rest is mortgaged, but you benefit from the appreciation on the whole property, regardless of the size of the mortgage. This benefit greatly magnifies your return on investment in a tax efficient manner.
Tax Efficiency – The best part about an investment property in the opinion of many successful investors, is the tax deferral on the capital appreciation of the property, no matter how much the investment grows in value, you don’t pay tax until you sell the property, in additional once sold the property is in most cases taxed as a capital gain, meaning its only taxed at a fraction of ordinary income.
These are all great benefits, but there are also risks associated with this strategy, so again be sure to let me help you take the proper steps to research and prepare properly before a decision is made. Also ask me about my access to exclusive CONDO PRE-SALES as an opportunity to further magnify your investment success.