Perks of Owning a Rental Property

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Reasons Why You Want to Own a Rental Property  

In this day and age, more and more people are diversifying their investment portfolios. From dabbling in the stock market to making investments into new business ventures or products, having more than one source of investment income is an ideal way to set yourself up for success as you progress through life. One of the most valuable types of investments you can make is owning a rental property, and more specifically, owning a rental property in Orange County. Orange County is one of the most desirable areas to rent in right now. If you've been thinking about expanding your investment portfolio, here are some reasons why you want to consider owning a rental property.

3 Perks of Owning a Rental Property

Tax Write Offs
One of the biggest perks of owning a rental property is the tax write offs. There are many different write offs that you can take advantage of when you own a rental property:

· Landlords can deduct a bonus depreciation deduction for the first year of owning a rental property. Ironically, the IRSdeems rental properties depreciating assets. Under the old tax plan, you were only able to deduct up to 50 percent of the property’s value in the first year but under the new tax plan, you’re able to deduct 100 percent of the property value.
· Mortgage interest, property tax, operating expenses and repairs are also deductions you can take when you own a rental property.
· Deduct the costs of certain materials, supplies and repairs to keep your property in good working condition, but not the improvements themselves.

Additional Income
The main reason most people purchase rental investments is to generate additional income for themselves. As an investor, you’re able to make money with cash flow and appreciation, but we’ll get to that part later. Cash flow is typically the number one motivator to make a real estate investment. You want to invest in something that’s going to generate income passively, meaning you don’t have to do very much in order to reap the rewards.

The key to making additional income is making sure your monthly rental expenses don’t exceed your monthly rental income. You can figure out what dollar amount you want to make monthly off of your rental property, and charge accordingly based on the area. Having a cash flow positive rental property can have a huge impact on your life financially.

Appreciating Asset
This is the most obvious perk of owning a rental property. If you buy in a desirable area, a rental allows you to sell the property down the line for more than you purchased it for. Typically, it takes 10 years for you to hold on to a property for it to appreciate. Keep in mind that some markets are going to appreciate more than others based on conditions in that particular market.

Work with a Local Real Estate Agent to Find a Rental Property

Investing into a rental property has so many benefits that you could start taking advantage of today. If you’ve been thinking about purchasing a rental property, I can help you. New developments are popping up all over Orange County, and now is a great time to get in on the ground floor. Let me help you find a property that will generate income for you in the years to come. Contact me today to get started.

Kathy Burns

Kathy Burns

Realtor®, CIPS, RSPS, SFR
License #: 01423984
Coldwell Banker Residential Brokerage