Here are 5 benefits:
1. Asset Appreciation
The median return on investing in US property market is 8.6% according to the S&P 500 Index.
Rental property investment techniques affect the average return on investment however.
This can be very attractive for many due to the cash flow that could come in.
2. Tax Write-Offs
When receiving income from a rental property, you also get to write-off certain expenses on that income.
Some expenses for example: Mortgage interest, property taxes, operating expenses, depreciation and repairs.
Depreciating an assets allows you to deduct costs from taxes and improving the property over it's useful life.
The depreciation formula deducts the value of the home over a 27.5 years time period at a around the rate of 3.636%
Important note: This does get recaptured down the line when you sell.
4. 1031 Exchange Opportunities
A 1031 exchange means you defer the taxes up on the sale of investment property by swapping one property for another.
Important note: It's not simple and make sure you work with a true professional.
5. Borrowing Against Equity
As the equity builds in the property, you can borrow against it. This is a common tactic to use for purchasing another property.
It can be a very useful tool, but beware it is a loan you must pay off.
This gets a lot of people in trouble as they over leverage.
There are many great benefits to real estate investing. Just like any investment, there are risks associated with it.
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