Buying Income Property, is it a Smart Investment?
Buy vs. Rent

Buying Income Property, is it a Smart Investment?

Buying Income Property, is it a Smart Investment? So you want to buy a new home? Some home buyers ask me, “Is Buying Income Property A Smart Investment”? Many people find security in investment properties and I say YES to their question without hesitation.

Some on the other hand, don’t want being bothered. Understandably so because of tenants issues along with their complaints. There are  advantages to owning income real estate. Who really pays the most income taxes rental property owners or those who don’t own? This article may be explained in better details, The Truth about How the Income Tax System Works?

The American Dream

Everyone’s American Dream is to own a home. One they can call their own. Their homes come in an array of forms and styles that matches their own tastes. And the personal characteristic of a home is as vast as the imagination can possibly conjure up. And, there is a home, which will meet your particular needs. It’s best if you begin with the end in sight of what that home looks like to you.

Most home buyers overlook a critical point and that is there is also another type of real estate that can bring a financial benefit to its owner. Maybe more than the traditional single family resident (SFR). That real estate is income property or sometime called investment property. These properties come in many forms but for most personal smaller investors of real estate, duplex, tri-plexes, and four-plexes are the norm.

Out of the box thinking

Buying Income Property, is it a Smart Investment?
Over-bids

Today’s rapid real estate market can makes it’s very difficult to purchase a SFR without facing a bidding war type experience. However, buying a duplex, which will produce a steady stream of income for you, has less competition. That is because most home buyers do not think of income property as an acceptable home. This is a mistake but can be an extra advantage for you, the smart home buyer.

The lack of home buyers wanting to purchase income property over single-family homes lowers your risk of over paying for your new home. Likewise repair costs are less when you compare the costs for a single family home. If you should lose income from your job for any reason, you will still have income to offset your mortgage with the rents you regularly collect.

Save money on taxes

Income properties like a duplex or triplex, through the rents collected, will eventually pay for its total expenses. It will pay principal, interest, taxes, insurance, utilities, advertising, landscaping, management costs, and more. A payment for the costs of ownership will not come from your personal bank accounts either; instead it will come from the income property account. You will have money coming in every month, year in and year out, even when there is a vacancy. Sure the empty unit will cause you to lose revenue, however, after time the rents increases will help off set most of your expenses. So any losses at the worse will be minimal with the passing of time.

Buying Income Property, is it a Smart Investment?
For Rent

When you have an income property, it’s easier to manage and keep up than say the same number of SFR. Single family residences are single inanities in different locations. You will spend extra time and money going from one to the other for simple things like collecting rent every month. Even if you build your own multi-family residence the costs are cheaper than individual SFR homes of the same number.

If you wanted to offer features like washing machine and clothes dryers to your income property or any other coin operated machine you would receive another steam of income. You can lease them from a company and receive a set monthly amount of the money your tenants spend on operating the various machines. (Only your imagination is holding you back from coming up with another steam of income.)

Access to bankers wanting your business

Banks look favorably on multi-family residences because they will qualify with the cash flow they generate and approve your loan more quickly. Banks view your ownership as a viable business that is generating income. They know after a few years the property will start repaying the debt by itself and their risk diminishes greatly.

As you have read, owning income producing property have many benefits to the homeowner. My favorite aspect is the passive income it will give during the homeowner’s golden years of retirement. If concerns about Social Security and whether or not funds will be available for you when you reach the magic age of 65, passive income will stop your worrying.

What to do next?

Buying Income Property, is it a Smart Investment?
Hit the target

It you are having a difficult time finding a single-family home may I suggest you investigate the opportunities of owning income properties. I think you will be glad you did.

If you are like most home buyers your first home is only the beginning to home-ownership. Real estate is a cyclical market and when home price and competition soften you can always refinance your income property and buy a new home. Then you will have both income property and SFR home. It’s a no brainier.

A good place to get started is to call Cliff Keith and Team. We will help you by answering any questions you may have in regards to owning rental property. We may not tell you what you want to hear but we will tell you the truth. Rental properties are not for everyone. We might also be able to help you find your new home. We are looking to earn the right to be your Realtor. Call today: 650-346-7366

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