The real estate market is shaking at the moment, with dropping interest rates and an increasing rate of foreclosures. Of course, if you have the money, now is the time to invest in real estate.
In the past, what people did was buy property that needed repair at a low price, fix it up to increase it’s value, and then sell it at a profit. Aside from the high return on investment, the tax breaks as provided by section 1031 of the Internal Revenue Code on like-kind exchanges are also an incentive.
Instead of the quick cash from flipping, people enjoy the steady stream of income through renting their property out. With a few different locations, this can add up pretty quickly.
Often, rents do not go down during a lease. Usually, if you have vetted the tenants and maintain the property then your risk will be minimal and the amount of money you make will be fixed.
The process of renting out your real estate will maintain and possibly even boost the value of your property because you will be required to ensure the place is up to standard. This means that when you do put it on the market, it will be at its highest value possible.
If you decide to rent out your real estate investment instead of selling it, there are also tax breaks one can get from the government. You can take advantage of these by keeping good records of all your expenses.
Tax breaks for landlords include deductions from mortgage interest payments if the loan is used to acquire rental property, cost of repairs, depreciation and travel expenses related to conducting business such as driving to the rental property. Other deductions can be home office expenses, insurance, and payment for professional services related to the rental property.
In addition, if you purchased the property with financing, you can opt for fixed mortgage payments. As time continues, rent will increase. Once you have fully paid the mortgage off, you will increase the value of the property.
The writer has been blogging about investing for the last five years. Additionally, the author is fond of contributing information on New York City real estate, including Roosevelt Island apartments along with Sutton Place apartments.
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