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5 Benefits of Owning An Investment Residential Property

Brad Allen

The ART of Real Estate was founded with one question: What if buying and selling real estate could be a great experience? I've been asking myself that...

The ART of Real Estate was founded with one question: What if buying and selling real estate could be a great experience? I've been asking myself that...

Dec 19 3 minutes read

Passive income. Equity. Monthly rents. Tax breaks. These are some of the benefits that come with investing in real estate. If you understand the risks and are willing to do the research, finding the best places to invest in real estate could provide you with a solid income boost. Here’s a look at the benefits of real estate investing.

1. Owning real estate is a way to boost your monthly income.

You can purchase a single-family home and then either live in the property or rent it out as you wait for it to appreciate in value. When you rent to tenants, you’ll receive monthly income in the form of rent checks. Just be careful: You’ll need to research the payment histories of your tenants if you want to reduce the chance that these tenants will one day stop paying their rent.

2. Once the property has appreciated in value, you can sell it for a big payday.

Real estate is a long-term investment, meaning you can hold it for several years as you wait for it to appreciate. The challenge, of course, is that the property you purchase isn’t guaranteed to increase in value. You’ll need to invest in the right property to see those big returns.

3. Investing in real estate comes with tax benefits.

You can deduct several expenses associated with owning an investment property, including your property taxes, mortgage interest, property management fees, property insurance, the costs of ongoing maintenance, the cost of repairs, and the money you pay to market your property to potential renters. If you sell your property for more than you paid for it, the gain won't be taxed as income. Instead, it will be taxed as capital gains, which typically come with lower tax rates than income.  

4. Investment properties bring much-desired passive income.

Adding real estate to your investments boosts your diversification, which can protect you in times of economic turmoil. Say certain stocks are suffering because of an economic downturn. The investment properties in your portfolio might still be increasing in value, protecting you from the losses your other investments are taking.

5. Owning investment properties comes with other benefits that aren’t financial.

When you own investment real estate, you are your own boss, which is fulfilling to many investors. You can also make a difference in your community, providing homes for renters who aren’t quite ready to buy homes of their own. 

Just remember: Appreciation and cash flow aren’t guaranteed. You must research properties and neighborhoods to increase your odds of generating a profit. You can lower the odds of a bad investment by researching local neighborhoods to find those in which home values tend to rise. This is the part where you can put a realtor to work for you.

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