Major Investing Benefits You Can Reap
from Investment in Rental Property PART 2
Why do so many successful investors choose investment in rental property? Let us reveal to you the powerful benefits of rental property investing in this Part 2 of our Guide to Investing in Rental Property.
Have You Read Part 1? If No, Click here for Part 1 of this Rental Property Investing Guide.
4. Losses from Your Rental Property are Partly Covered by Tax Reliefs
Your investment in rental property offers an unique brand of protection benefits that are rarely found in other investment types.
When your mortgage payments and other property expenses such as property repairs and utility bills exceeds your rental income, you will end up with losses and a negative cash flow. The good news is that when it comes to investing in rental property, these losses can be counted as tax deductions against your taxable income.
Although you are granted tax reliefs for your rental property losses, it's never a good idea to use rental property investing purely as a tool for minimizing your taxes. Just like all other assets, investing in rental property should make economic sense for you and bring in a positive net income.
5. Property Values are Less Risky and Volatile Compared to Share Prices
Shares are liquid investments which means you can buy and sell them very easily and quickly. That's why compared to investing in rental property, share prices can fluctuate very wildly - It is quite common for the share price of a company to change as much as 5% in just one day.
On the other hand, the property market is less volatile because a lot of property investors view their real estate as long term investments.
Buying and selling properties also takes more time and effort - A seller needs to find the right buyer and the buyer needs to find a lender who is willing to grant him a property loan.
When you are rental property investing, you share the property market with a large pool of home owners. This actually protects you from overnight market crashes and massive sell outs that you see in the stock market. The reason for this is that home owners tend to hold on to their own homes regardless of the market condition.
6. Regular and Passive Income from Your Investment in Rental Property
When you compare the cash flow from rental property investing to other popular types of investments, your rental income tends to be a lot more frequent and stable. Instead waiting for share dividends or bond coupons that only pay once or twice a year, you can expect rent from your tenants every month.
Most rental property investors will receive rent from their tenants every month. On the other hand, bonds usually pay interest every 6 months while shares dish out their dividends each year. If you are gunning for even more frequent income, you can have a week to week tenancy where your tenant will pay you rent every week.
This benefit makes investment in rental property appealing to people who require a more regular cash flow and don't want to tie their money for a long time.