Owning a rental property is considered as a safe and profitable investment option, as it remains fairly protected from the economic downturns. It may not be as glamorous or as exciting as the other investment options such as stocks, cryptocurrency, etc., but it is best for securing a regular source of income and continuous value appreciation. Owning a rental property also provides you complete peace of mind. There is no sudden rush of emotions, stress or anxiety that is are generally associated with fluctuations in prices of stocks, cryptocurrencies, and gold. If you are thinking about investing your money here’s what how you can gain from the various advantages of owning a rental property.
#1. Rental Income:
This is the bread and butter of owning a rental property. When your rental property remains occupied throughout the year, your bank balance will be constantly replenished. Even if the occupancy rate is around 80 percent, you can still generate a decent amount of income. You can use the rental income for your everyday expenses or invest it somewhere. If you have taken a home loan, the rental income can be used to pay the home loan EMIs. Another great thing about rental income is that you can expect an increment of around 5 to 20 percent every year. The increment in rental income will depend on the location of the property, the prevailing demand-supply situation, the type of property, amenities & facilities, etc.
#2. Property Value Appreciation:
All while you earn rental income on your property, the value of your property will continue to appreciate. There are very few investment options that provide you the benefit of both regular income and value appreciation. You can continue to stay invested in the rental property for as long as you want or you can sell it at the right time. You can expect appreciation in the value of the property almost every year since the property is a limited resource and the population is constantly increasing. Property prices may remain flat during certain years, but they are sure to witness substantial value appreciation in the long term.
#3. Tax benefits:
You can claim various types of tax benefits on your rental property. The type of tax benefit will depend on the type of property. For example, if you rent out your property for commercial purposes, you can claim the repair and maintenance costs as business expenditure. In case you let out your property to a tenant, you can claim the deduction for interest paid on the home loan. The property tax you pay for your rental property is also allowed as a deduction. If you claim these tax benefits in a proper manner, you can secure optimal returns from your rental property.
#4. Sell at the desired time & price:
With rental income, you will never have to rush to sell your property. You can wait till the time you get the best price for your property. Rental income will ensure that your investment continues to give adequate returns, even as you wait to sell the property. In case of other investment options such as stocks and gold, your investments are locked and become unprofitable when prices crash. Rental income ensures that you have the upper hand in every situation. You will be in a better position to negotiate the desired price with potential buyers.
#5. Investment diversification:
Owning a rental property is a great way to diversify your investment portfolio. For example, if you put your money in high-risk investment options such as equities, a rental property can provide adequate protection against investment risks. A rental property is probably the safest investment option and it provides effective hedging against investment risks. With rental income acting as an additional layer of protection against risks, you can actually afford to take more risks with equities, cryptocurrencies, and other high-risk investment options.
#6. Safety of property:
If you choose the right tenant, it will ensure that your property remains well maintained. You can manage the upkeep and maintenance on your own or you can ask the tenant to do it on your behalf. Letting out the property to the right tenant will also ensure that the property remains protected from issues such as vandalism and property frauds. This is especially true if your rental property is located in a different city or if you are living abroad.
#7. An effective backup:
Owning a rental property works as an effective backup. For example, if you face financial problems, you can use the rental income to support your expenses. You can also sell your rental property if you want. If you are living or working in a different city or abroad, your rental property can come to your rescue when you face financial problems. You can move back to the rental property and start living there until the situation improves.
#8. Lifelong source of income:
Owning a rental property means that you can continue to earn income even after you have retired. You need not worry about your advancing age since managing a rental property is fairly easy. You just have to make a few phone calls to get things done. If your tenant is smart and resourceful, they can also take care of the regular upkeep and maintenance tasks. You can also hire a property management company that will do everything on your behalf.
#9. Support for your dependents:
Owning a rental property works as a life insurance, as it can support the financial needs of your dependents. Life is uncertain and one can never tell how things may change in the future. Owning a rental property is a good way to secure the financial future of your loved ones.
To get optimal returns from your rental property, make sure you choose the right location. Properties near to major offices or industrial hubs will get you high rental income and a steady supply of renters. You also need to choose the right project that has all the essential amenities, ample parking space and proximity to bus stops and metro stations. Once you buy the property, you need to carry out regular upkeep and maintenance. That way, you can extend the life of the property and continue to get high rentals.