Buying An Investment Property

You may have thought about it at one point or another: purchasing a rental home, condo, or townhome, and "making the plunge" by investing in real estate. However, with all of the recent headlines and the housing downtown our country has seen, many investors have simply been scared off entirely. Today, let’s took a look at some of the benefits of investing in real estate.

First of all, when you buy rental property, realize that over time, real estate surely has gone and will continue to go up in value. Granted, the last few years have been extremely difficult with many markets seeing prices slide. However, over time, real estate has slowly but surely gone up in value. And there is no reason to believe that long term, over time, this trend will not continue. As an investor, you will be able to make money on the future appreciation of your property.

Secondly, you often times are able to make monthly cash flow. The tenant is paying you monthly rent, and that monthly rent pays off all of your expenses on the property (mortgage, taxes, and insurance.) What is left over, is simply called cash flow.

Third of all, you will be paying your loan down over time. Or should we say, your tenant will be paying down your loan for you on that property over time. Often times, borrowers are able to put a 30 year fixed rate loan on a property (and still have it cash flow.) As a result, each month, your mortgage balance is decreasing. If you put a 15 year mortgage on a property, you will even be paying it down more quickly of course.

Lastly, you are able to depreciate that rental property, thus saving you on your taxes each year. This is one of the most often time missed benefits. Depending upon the ability of an investor to qualify for these tax benefits (income, etc), the tax benefits can truly be outstanding.

In conclusion, there are four primary benefits to buying investment property (whether it be a home, townhome, condo, duplex, etc): cash flow, principal pay down, appreciation, and tax benefits. Realize that historically, investing in real estate has proven to be an awesome long term wealth building strategy. In spite of this recent real estate market and correction, there is no reason to believe things will not continue in a positive direction. There are obviously no quick solutions, but real estate investing has helped make many "average joes" from around the country into millionaires.

Ryan O’Neill is a licensed agent with RE/MAX Advantage Plus. As the founder of The Minnesota Real Estate Team, Ryan and the team help clients buy and sell Minneapolis Real Estate and Minneapolis Homes for Sale.

Article Source: ArticleSpan