Benefits of Investing In Income Properties
Income properties are properties intended for income generation and they can either be categorised into commercial real estate or residential rental properties. It should be noted that when a person acquires a home BMV (Below Market Value) and puts it under renovation then resells it at a higher price, then that is not considered an income property as its purpose isn’t to generate long term passive income but instead to produce a gain through a one-off sale. An income property is that which an investor builds or purchases for instance a HMO (House With Multiple Occupation) and lets it out for a certain amount of rent per month.
Income property investment is the secrete route taken by many tycoons today. Apart from the financial benefits that investors derive, these assets also come with a number of other gains. The following are a few reasons why an income property can be such a profitable investment worth taking into consideration;
Income property is a safe investment option; it offers investors protection against the risks entailed in financial markets. Many entrepreneurs are skeptical about precarious investments which may seem lucrative but equally hold the risk of losing it all. Income property does not have such perils and when built or acquired at the appropriate time and price, its worth can never come down to zero. An income property is also less unpredictable.
An investor can buy a house needing renovation BMV (below market renovation), make some slight improvement on it and enjoy higher returns over time in the form of price escalation. Research shows that the value of income property doubles up in seven years; this makes the return on investment to be eight percent, a percentage that is higher than most other investment options.
Provides Easy Access to Loans
Income property serves as the best collateral and can be accepted by any lending institution to obtain a loan. This makes it easy for an owner to raise cash fast in times of emergency.
Additional Income through Tax Savings
All income property costs be it depreciation or interests to be paid on loans are tax deductible. Tax savings mean additional income which can be channeled towards other expenditure. Therefore, it is more rational to buy an income property rather than to give free money to the government in the name of tax.
Income Property Helps to Upgrade and Climb Higher on the Economic Ladder
Value appreciation in income properties allows investors to sell their existing properties at a higher price than they may have acquired them and buy other better ones. This cycle in the long run promotes an investor to a higher level of prosperity.