The Benefits of Becoming a Landlord
Becoming a single-family home landlord is not always a planned event. Circumstances may arise when you have the opportunity to buy one or more houses to rent out, or hold onto existing properties that you may have considered selling. There are many great things about being a landlord. Owning rental property offers these financial and lifestyle benefits:
- Appreciation and wealth building – If you hold onto your property long enough, it will almost certainly appreciate in value. It’s a great way to increase your net worth.
- Income – A well-managed investment property, with tenants who pay the rent on time and monthly expenses that are less than the rent, can bring you a steady stream of income.
- Lower-risk investment – Unlike more volatile investments, historic returns on real estate are fairly steady. While stock values can fall or even disintegrate entirely, land and property won’t disappear on you.
- Investment diversification – Owning property also diversifies your investment portfolio, a cardinal rule of investing. As you approach retirement, it’s good to start shifting into lower-risk investments, to ensure that the cash you need doesn’t disappear when you’re relying on it.
- Diversification of income – If your primary source of income is suddenly at risk, owning one or more investment properties provides the opportunity to diversify your income stream.
- Leverage – Unlike other investments, a little bit of cash may buy a lot of real estate. Leveraging your investment allows you to trade up to more properties.
- Short-term tax advantages – While the rental income from your property is taxable, you can also deduct most of the expenses related to owning and maintaining the property. Another major tax-advantage is the ability to “depreciate” your property over time.
- Long-term tax advantages – As the value of your property increases, the IRS won’t expect you to pay taxes on that increase until you sell. (Your state and local property taxes may be another matter, rising steadily to catch up with the property’s value.)
Being a landlord and owning multiple rental properties can give you a major sense of accomplishment. It shows that you are willing to take risks, learning new skills, and positively affect people’s lives. These will all be extremely useful as you expand your home rental portfolio. Visit us at www.b2rfinance.com and follow us on Twitter @B2RFinance.
The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.