Investing money can be a great way to bring in some extra cash to help your financial situation and perhaps add to your retirement savings.
Mysmartmove.com reports that 91 of the 100 largest U.S. cities have seen rent increases over the last year, which means there’s obviously a big demand for rental properties.
If you’re thinking about investing in a property, here are a few things you should know ahead of time.
8 Things To Know About Investment Properties
1. It’s A Secure Investment
It’s safe to say that a piece of land will never really lose its value, especially with our growing society around the world.
Even though property can take a long time to sell, it’s also something that won’t go stale over time either.
In fact, it’s been proven that homes and property investments tend to double every seven to ten years in many parts of the developed world.
2. Rental Income
The obvious benefit of an investment property is the potential for monthly income.
This can be used to pay for another mortgage loan or potentially even create a yield for making enhancements to the rental property.
You may also be able to purchase an additional property with that money such as Brampton homes for sale, or others.
3. The Tax Benefits
There are several tax benefits when you own investment properties.
With a mortgaged property, you can typically take several tax deductions for things like repair and maintenance work, travel expenses, legal and management fees, and property condition depreciation.
4. Property Value Growth
Population growth, neighborhood development, and national economic performance all contribute to your investment property’s value growth.
In many cases, you will be able to forecast the price trends for your property based on what is in the immediate environment and how it’s grown historically.
5. Property Has A High Cost
Buying property is going to cost you thousands of dollars up front, so you need to be prepared to fork out some money to get started in this kind of investing.
This is one of the cases where it certainly takes money to make money.
6. It’s Not Very Liquid
Unlike stock shares, having property means you will have a lot of money locked up in something that you won’t be able to sell at a moment’s notice.
It can take several weeks and sometimes months or longer to sell a home and land, so if you anticipate needing money right away this might not be the right investment for you.
7. Potential Bad Tenants
Having tenants who don’t abide by your home’s rules or respect your property can make for a very sticky situation and create a lot of stress.
It can help to interview potential tenants, but at the end of the day, you never really know how things will go.
8. The Ongoing and Surprise Additional Costs
Owning a property that’s being rented out means that you are the person responsible for making sure that your tenants are taken care of.
Any out of the blue repairs or problems that arise will be up to you to take care of, and that can cost a pretty penny in some cases.
You will have to have some money in reserve in the event that something happens to your property that needs immediate attention.
Investment properties can be a great way to bring in some extra money each month, but you’ll have to do a lot of work to get something out of it.
If you have the time and patience to put into owning property, it can be a worthwhile investment that you love having.
Rental properties are constantly growing in demand, so if you feel like this is the right project for you to take on, now is the time to get started.