As you get older, you begin to realize the importance of real estate investments. Owning real estate is some of the best passive income you could ask for. Imagine if the rent you charge on your rental properties amounts to the cost of your mortgage and living expenses. My parents both owned rental property, so I grew up watching them maintain properties. There were some struggles, but they both shared a sense of excitement about the business.
I am beginning my journey into home ownership and found some interesting insight on the advantages and disadvantages of owning rental properties. Hopefully, you find this stuff as helpful and motivating as I did.
Renting your property can help you pay the mortgage faster and you could earn some extra cash!! Rent is typically more than the actual mortgage. So, the homeowners earn hundreds to thousands of dollars a month in passive income. Seeing residuals like this are the formula for wealth and financial freedom.
Know Your Property Value
Depending on the neighborhood you purchase in, the property value could increase. If the value of your rental property increases, you could charge higher rent or sell the property for more than what you paid. Try to be ahead of the curve and look in areas where people want to be: near a school, shopping center, or popular attraction. As technology advances and neighborhoods developments take place, your property value increases too!
Investors receive tax exemptions investors from owning a rental property. Rental income is not subject to self-employment tax. In addition, the government offers tax breaks for property depreciation, insurance, maintenance repairs, travel expenses, legal fees, and property taxes.
Make Your Own Schedule
For me, I have interest in ventures outside of real estate, but it’s hard to focus on your passions when you have to commit to a 9-5 schedule for a job. Financial freedom is not having to worry about your finances and having the freedom to make your own schedule. With substantial passive income, you could earn enough to quit your boring job.
Home Improvement Fun
This last one is not particularly everyone’s favorite. But if you’re into DIY projects and HGTv. Owning your rental properties gives you the chance to put your skills to the test! Have fun designing and redesigning the way your homes look.
Property Taxes, Fees, and Insurance
Property taxes come event with owning your own home. Unfortunately, if your property is not rented, you will still be responsible for those taxes and fees. In addition, if your property value goes up, so does the tax on the property. So, the goal would be to have your home rent ready and occupied at all times.
Finding The Right Tenant
I saw my parents dealing with this issue growing up. Some people just don’t have any interest in taking care of your stuff! They may not pay, and sometimes they will leave your property a mess!! The best suggestion here is to make improvements on the home that can’t be damaged easily.
I will keep you posted on my journey into home ownership in future posts. But if you are at the point where you are making your decision now, Go For It!! I haven’t met anyone that regrets their decision to get into the real estate business.
- The Advantages and Disadvantages of Owning Rental Property
- 7 Major Benefits of Investing in Real Estate