There are four basic benefits to owning an investment property.
- The equity in the property will increase cash flow
- Equity increases as tenants pay down the mortgage
- Most likely there will be a profit from the increase in value
- There is a tax benefit: expenses and depreciation can be a plus
However, with the benefits also comes education and understanding of what all is involved in owning an investment property.
Even with cash flow from tenants, there will be repair and maintenance costs. It is also important to learn the local taxation rates for the area, property insurance and other fixed costs.
Location is critical depending on the type of desired goals for the rental: vacation rentals need to be in an area people want to visit; student rentals need to be near universities; long term rentals need to be near residential communities with amenities nearby.
No matter what type of investment, each has its own risks. You must prepare for changes in the tax rate of the purchase location. It’s important to completely vet and choose the right tenants to avoid any expensive repairs or eviction expenses. If you don’t have the time to manage the property yourself, then a management company will need to handle all the services and issues that come along. Expenses can easily overshadow any income if not properly planned for and budgeted.
Be sure to use an experienced real estate agent who knows how to advise and guide you according to your plans and expectations. We at Whippet Properties of Florida have agents to help you select the right investment for the proper purpose.