Owning an income property can be a wise financial move. That is if you don’t mind having someone rent out the space or that you may have to deal with maintenance and repair responsibilities. But having an income property can benefit your life and be the perfect way to make some side income. And that’s not all! Read on as we outline how a rental property can help make your financial dreams a reality.
An income property will easily put more money into your pocket. With rent payments going directly to your account, you can expect to have extra income coming in each month to use as you please. Just think of all the possibilities – a new car, world travel, college tuition, or even a pool. The options are endless to what you can do with this extra income.
Increase Property Value
One way to make good use of the extra income is to put the money you get from your tenant back into your home to help increase the value. For instance, you could put on a new roof, update the kitchen, install new siding, or a new back deck and landscaping with the rental income. And when you decide to sell the property you can receive more value than you would have otherwise made. Plus, improvements that add curb appeal may allow you to increase your rental rate. It’s a win-win scenario.
Pay Off Your Mortgage
You could also use the payments from your rental to go into paying off your mortgage. And the longer you hold the property, the more principal your tenant will be paying off for you. Technically, your tenants will be paying off your debt for you and you build wealth that can help you refinance or take on home improvements and other projects that would normally require a second mortgage or loan.
When you’re a rental owner there are tax deductions that you can write off. You can claim tax deductions from expenses related to the income property like insurance, utilities and mortgage insurance. Plus, you can include the rent that you collect from the tenants as rental income in the tax year.
Investing in a rental property is a great option for some people. But before you dive in head first, take your financial status and management skills into consideration. Talk with your mortgage broker about purchasing an investment property today!