The benefits of investing in real estate over the long term are manifold. By investing in income property, you can put your idle cash to work.
What’s an investment property anyway?
“Buying a property to earn revenue is referred to as Income Property.”
Both residential and commercial properties come under income property. Investors earn money by holding and renting the property until the value appreciates, following which they sell for a profit.
More so, if you’re looking to get higher rents for your income property, consider hiring the services of interior designers for remodeling your property to increase their rental values.
Several companies are offering the entire plethora of services. These include rental property management, interior decoration, and residential property management services. And you can approach a property management company in Delhi NCR for interior designing for homes in Delhi NCR too.
However, before investing in income property, the general recommendation is to calculate the risks, expected earnings, tax benefits, among other important aspects.
Here are 5 benefits of investing in income property.
1) You’re in control all the way
As an investor in income property, you take all the decisions – regarding rent and maintaining the property when renting out to tenants.
Also, you can avail services of such as VRBO and Airbnb for listing your property to offer accommodation to travelers. Or, hire the services of a property management company to help you connect with interested parties. And if you’re residing out of India, you can avail their NRI property management services as well.
2) Greater property value
A noteworthy benefit of investing in real estate is that you can pay some amount from your savings while borrowing the rest from lenders; they lend up 20 times more. Yes, you can leverage a property. Though, if you use more debt than equity, your investment will be ‘highly leveraged’.
Over time, your property will appreciate and you can earn appreciation profit even after clearing your interest and other dues.
3) Higher Earnings
By having tenants in your investment property, you can earn rental income. And whatever money remains after clearing all related property expenses (mortgage payment, maintenance costs, and vacancy charges) constitutes your profit.
4) Lower your mortgage
You can avail the 30-year fixed-rate mortgage loan. Such loans have interest rates that remain constant for the full 30 years of the loan. You may pay more money to interest than the principal during the initial years of the loan. Though, by the 15th year, the amount comes close to a 50/50 split. Hence, you can create more wealth for yourself by holding on to the property for longer while the more your tenants are paying the loan principal.
With each passing year that you own the property, you can utilize your tenant’s money to clear your debt. By reducing your loan amount, you’re building wealth; you can access the money if you refinance your loan or sell the property.
5) Tax Benefits
Rental property owners can avail tax deductions. You can write off travel costs, interest on your mortgage, property taxes, legal fees, maintenance repairs, insurance, and interest on credit cards that you’ve used for your property purchases.
In addition to the above write-offs, you can depreciate the purchase costs of your property as per a fixed depreciation schedule – all this while your property appreciates in value.
As compared to investing in stock markets where you’re required to pay income taxes, investing in rental property is more advantageous. Because you can offset the rental income against the depreciation expense of your property. That said, you can lower the amount of taxes you’ve to pay on rental income.