Is Buying Income Property A Smart Investment?
Everyone seems to want a home they can call his or her own. Their homes come in an array of forms and styles. And the personal characteristic of a home is as vast as the imagination can possibly conjure up.
That being said there is also an other type of property that can bring a personal and financial benefit to its owner. And maybe more than the traditional Redwood City single-family home. That type of property is called income property or sometime referred as investment property. These properties come in many sizes, but for most individual investor of real estate they are; duplex, tri-plexes, and four-plexes.
Here are: Five Good Reasons For Buy Income Property.
- Today’s rapid real estate market makes it very difficult to purchase a single-family home (SFH) without stiff competition. However, buying income property like a duplex will produce a steady steam of monthly income for you. Additionally, most people want a single-family home making the competition not as fierce when purchasing income property. There is a lack of people wanting to purchase income property over single-family homes. This in turn lowers your risk of over-paying for your new home. Likewise repair costs are less when you compare the costs of a single family home. If you should lose income for any reason like loss of a job, you will still have income from rents you collect. Making it easier to pay your expenses.
- Income properties such as a duplex or triplex will eventually pay for its total expenses from rents collected. 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. Sure the empty unit will cause you loss of revenue, however, after time the rents increases will help off set any of your expenses. So any losses will be minimized at worse. And the best part of income property is most expenses are a tax write-off! This is not true for single family home you live in.
- When you own multi-family residence they tend to be easier to manage and keep up. They are all in one location than say many single-family homes. Single family homes would be scattered in different directions from each other. Even if you build your own multi-family residence the costs are cheaper than the same number of individual single-family homes.
- If you offered features like washing machine and clothes dryers to your multi-family residence you would receive an another steam of income. (Only your imagination is holding you back from coming up with other steams of income.)
- Banks look favorably on multi-family residences because you will qualify for a loan and they will approve your loan quickly. Taking into consideration a portion of the rents as your qualification requirements banks view your ownership as a viable business which generates income. They know after time has passed the property will start repaying the debt by itself.
As you may understand owning income producing property has many benefits. My favorite benefit is the passive income it gives. More importantly is this income shows up during the homeowner’s golden years of retirement. This is when you will need it more. Social Security may NOT be available to future Americans and passive income is a great work-around it that should come to be.
It you are having a difficult time finding a single-family home to purchase may I suggest you investigate the opportunities of owning income properties. You may find many other benefits that will help you. I think you will be glad you did.
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