If you're on the fence about investing in real estate as a rental property, learning these three benefits might tip the scales for you.
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Real estate is an excellent vehicle for building long-term wealth as an investment.
There are three benefits to focus on for buy and hold (rental) real estate investment properties:
- Cash flow: Once you close on the property and get a tenant, you'll receive income every single month from their rent. You need to make sure you're actually making profit and that the expenses of the property don't exceed the incoming cash.
- Tax breaks: There's a rule in the IRS code that allows you to depreciate the property - meaning you can write off its expenses over time and deduct it from your taxable income. This creates annual savings.
- Building equity in the property over time: As you rent out the property, the tenant will pay down the mortgage balance and the property will appreciate over time. Between your tenant paying down the mortgage and the appreciation (40-year average is about 4%), you'll build a lot of equity.
Over time, a tenant pays down your mortgage while appreciation boosts your property's value.
At the end of the investment, it's important to have an exit strategy in place to move that money into another investment or retirement.
If you're thinking of investing in Phoenix real estate or just buying a home, give me a call or send me an email soon. I'd be glad to help however I can.
