I found the following article on ArticleSnatch. The author makes some good points for those thinking of getting into or increasing their investment in the real estate investment game.
Currently, it's tricky to see precisely why a person would want to put their money in the rental property business. Yet having the serenity that arrives from one of your occupants having signed your lease agreement can deliver good dividends (both financially and emotionally).
Paying attention to the news and our government informing us how challenging it is even to remain alive, let alone bloom can become a genuine downer! Recall before the decline when real estate was the finest investment you could obtain?! Naturally, all things move cyclically, they always have and always will, so know that things will be on the upswing once more. So, moving forward, let me give out you six situations why you ought to invest straight away and to be ready for the big rebound when it happens!
- Recurring Monthly Income * If you invest at this point and do it smartly by doing some simple arithmetic, you will ensure that you have more funds remaining at the end of the month than the amount you use. If the rental earnings from your lease agreement is greater than your costs, that is a great situation.
Positive cash flow is a present that continues to give regardless of whether you are doing anything for it or not. A couple hundred dollars each month may not seem like a lot of money, but when you have several payments that quantity rolling in that you have received just by being a property owner, what seems like a small amount of income, will over time, really accumulate nicely.
- Security * Similar to children that rely on a particular blanket or pillow for a sense of harmony and security - contemporary events have shown that adults are the same. Adults like to feel powerful and that there are other possibilities when fiscal times get tough. Owning a rental apartment and having a signed lease agreement will give you the same sense of security because you know no matter what the circumstances in the world, there will always be several financial options to give you some monetary security.
- Depreciation * Even though individuals from both the Democrats and Republicans complain about our political system, with real estate they grant a yearly tax break for the amount you lost on your property. Simultaneously, while you can take a loss on the value of your rental property, the actual value of your property is going up. Although real estate has depreciated recently, when the worth of your property decreases, you pick up that depreciation whether the value is increasing or decreasing.
- Capital Gains * when you procure a property and its value increases while you own it, the IRS requires you to pay a particular tax on that dwelling after you sell it.
The advantage is, this tax is not due until after the sale is made. Another advantage is that you can usually expand the duration of time that is required to pay that tax even after you sell it if you know how to work it.
- Appreciation * Over the long run, the amount of real estate will always go up more than it goes down. This is usually a factor of supply and demand. As the property goes up, so does your net worth.
And note, if you have done your math correctly, you are receiving a positive cash flow while your net worth is going up. It's a great win-win. And lastly, if you purchased your rental property at a nice price, it's going to increase at an even greater rate all things equal.
I choose to see the stream of monthly positive cash flow as a down payment on the cascade of income that will come my way by way of appreciation. You can use this increased value and obtain a Home Equity Line of Credit to procure another fantastic rental property or anything else you want.
- Pride in Ownership * Remember the moment you purchased your first car? It could have been the biggest pile of scrap on the block, but it was yours. Imagine how amazing it would be to own your 1st rental property? Your 2nd? Your 3rd? Imagine having those lease agreements signed and creating lots of positive cash flow. It's hard to top the sensation of accomplishment so many other people can only dream about.
So, regardless of the economy, if you do your research, you can find a terrific property, have a tenant sign your lease agreement, create positive cash flow for yourself and ride out the tide. Security comes from the confidence that you realize it's all cyclical and you will be positioned appropriately when the tides turn.
And with a lease agreement in place, your tenant will feel peace of mind too!