Buying Income Property…Is That A Smart Investment?
You want to buy a new home and maybe it is too expensive around Silicon Valley to do so? Have you considered buying an income property instead? Some home-buyers will find security in investment properties, and agree without hesitation to buying income property. On the other hand some home buyers don’t want to be bothered with tenants and the responsibilities that comes with being a landlord.
There are advantages to owning income real estate. The biggest advantage is Tax Savings. Who really pays the most income taxes? This may be explained in this article, The Truth about How the Income Tax System Works?
What about other savings to income property ownership?
Everyone seems to want a home they can call their 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. And, there is a home, which will meet your particular needs 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.
Today’s rapid real estate market 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 the competition maybe less. That is because most home buyers do not think of income property as their home. This is a mistake and can be an 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.
Who pays for repairs and maintenance on income property?
Income properties like a duplex or triplex, through the rents collected, will eventually pay for itself. There’s nothing better than having a positive income while still be able to live in your home. And the total expenses are cut in half or more. For example it’ll 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.
Your taxes will be less too.
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 to your tenants 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.)
The bank loves you!
Banks look favorably on multi-family residences because they will qualify for additional loans secured with the cash flow your income property generates They will approve a loan 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. It’s a better risk in their eyes vs. a borrower who my lose a job at 40 and not be able to pay the house mortgage.
As you have read, owning income producing property has many benefits to the homeowner/investor. 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 66, passive income will stop your worrying.
Have you changed your mind?
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.
What to do next?
There’s an easy 3-step process for finding out more details on owing income property. From acquisition to paying NO TAXES when you sell the income property through an IRS 1031 Tax Deferred Exchange. All you need to do to complete this 3-step process is:
- Take out your cell phone.
- Look up my number (Hint 650-346-7366)
- Call me immediately
When we speak I will listen to what you have to say and if I think I can help you I will tell you so. Together we will devise a plan for you to implement and proceed to making you the next new landlord in the State of California. Go ahead and pick up that phone and call me today at (650) 346-7366. You will be glad you did.