There are a number of ways to make money by investing in the world of real estate. Our property managers oversee residential rental properties throughout the Phoenix Metropolitan area for our clients who are invested in long-term rentals. These can offer great returns over the entire span of time that you own the property, if handled correctly. There are three main areas where these property owners make money from their investment. They include:
- Cash Flow
- Tax Benefits
Investing in rental properties can require some money upfront, but over time the returns will be worth it if you purchase the right properties and are patient.
Investing Benefit #1 – Cash Flow
Investing in a rental home is all about cash flow, or the amount of money that is available to you from rent after any expenses you may be paying to maintain the property. When you’re looking for an investment home to purchase, pay close attention to the rent-to-value ratio. If you’re unsure, talk to your realtor or property manager for help with a rental analysis. A great way to ensure cash flow is by investing in the right property that may be below market value and make repairs and renovations to increase the value and choosing homes that will give high rent-to-purchase price ratios. This could definitely take patience!
Investing Benefit #2 – Appreciation
Appreciation is the increase in your property’s value over time. This change can occur for any number of reasons, including increased demand or depleting supply. But be careful when it comes to speculating about the growth of the value of a residential home. Making assumptions about appreciation has led many investors into a bad situation when the market tanks unexpectedly.
Investing Benefit #3 – Tax Benefits
The tax advantages of owning real estate are incredible. The IRS allows most expenses associated with rental properties to be deductible or to be depreciated. You can depreciate the property as well. While your entire mortgage payment cannot be deducted, the interest you pay on a rental property can be deducted.
To find out more, talk to your tax professional.
There are numerous opportunities out there for those people who consider investing in rental properties around Arizona. Having a strong team behind you to help find the right properties and manage the every day details can greatly help you become a successful real estate investor. If you have any questions about finding a property or would like a free rental analysis, contact our experienced team of Arizona property managers today.