According to the Census Bureau, there are almost 20 million rental properties in the U.S., which is about 36% of households. The amount of growth within rental properties is not a conscience either. When owning a rental property, there are quite a few lucrative advantages that can be acquired versus just selling a home.
When it comes to owning a rental property, there are many benefits that come with the territory. In this blog post, we will outline a few of the most important benefits of owning a rental property and not selling it. Keep reading to learn more!
1. You Generate Reoccuring Income From Rent
If you own a rental property, you can generate reoccurring income from rent. This is one of the main benefits of owning a rental property and not selling it. The amount of money you can make from rent will depend on several factors of course, such as:
- The location of the property
- The size of the property
- The amenities
No matter the factors that your property possesses, creating that monthly income can be much more profitable over time rather than selling a home outright.
On average, landlords make $97,000 each year from renting out their properties. So depending on how much your initial investment was, you could easily earn it back within a couple of years.
2. You Can Get Tax Breaks and Deductions
Another benefit of owning a rental property and not selling it is that you can get tax breaks and deductions. You can deduct a variety of expenses when you own rental properties, such as mortgage interest, repairs, and maintenance. These deductions might help you save money by lowering your taxable income.
3. You Can Build Equity in the Property
Another benefit of owning a rental property and not selling it is that you can build equity in the property. As you make mortgage payments, a portion of each payment will go towards reducing the principal balance of the loan. This will increase your equity in the property. Additionally, as the value of the property appreciation, your equity will increase as well.
4. You Can Use The Property as Collateral
If you need to borrow money for another venture (or another rental property), you can use your current rental property as collateral for a loan. This is because when you own a rental property, it has a value that can be used as large collateral for big loans. This can be especially beneficial if you have trouble qualifying for a traditional loan from a bank or credit union.
Owning a Rental Property Has Many Benefits
As you can see, there are many benefits of owning a rental property and not selling it. If you're thinking about whether or not to sell your investment property, weigh these benefits carefully before making a decision.
If you're looking for further guidance in purchasing, renting, or managing rental properties in Folsom, California, give us a call here at Folsom Property Management.