Is Income Property the Best Investment?
One of the problems that a first-time investor will have to deal with is the abundance of options. Too many options mean that you might have a hard time picking which investment to go for. If you like to choose the option that most people pick, then real estate should be your choice.
According to a survey, 35% of Americans say that real estate is the best long-term investment. Stocks came at a close second at 27%.
So, if you have the money now, you should consider getting an income property.
What Is an Income Property
An income property is a real estate asset that was bought and developed with the sole intention of earning revenue from it. You can choose between residential and commercial properties. You can rent it out or you can wait until its value goes up and then sell it for a profit.
Benefits of an Income Property
Here are some of the benefits of investing in an income property:
You’re in Control
When you invest in an income property, you are the one in control. You choose which property to buy, who to rent it out to, and who to sell it to. For some, having that level of control is important. When you invest in stocks and mutual funds, you are giving control over to someone else.
One of the great things about property investment is that you can use your own money, which would make up a small portion of the price of the property, and then borrow the rest for the purchase. When the property increases in value over the years, then you can sell it for more money.
Let’s say that you rent out a house that you bought. If your mortgage payment is at $800 each month but you charge a rent of $1,200 for your property, that means you will have an extra $400 monthly and you still get to keep the property.
Just keep in mind that you should set aside some of that rental money for maintenance costs which will eventually be needed or in case the house is vacated for a certain period. Still having that extra money can be a good thing.
You are entitled to deductions because of your property. You can write off interest on your mortgage, property insurance, and cost of maintenance repairs. There are other deductions that you can write off but overall, the amount that you can deduct can be substantial.
What to Consider
Getting an income property seems a good idea, doesn’t it? Before you jump ahead and try to purchase your first income property investment, there are a few things to consider.
- The first thing to consider is the type of income that you can get from your investment. Are you sure that you can rent it out?
- In case you need the money, can you sell the property quickly?
- What is the risk factor involved? Remember that there will always be risked involved in investments.
- How diversified is your portfolio? Are you only investing in property?
These are just a few things that you should consider when you are planning on getting an income property.