7 Reasons To Keep Your Property

Becoming a property owner and leasing it to tenants is becoming a more popular investment option for around 22 million people in the United States. Although there are concerns about the housing market, the prospects look good for those thinking about starting or maintaining their position as a landlord. Even though selling is still a reasonable alternative, the perks of renting frequently surpass the benefits of selling real estate. Here’s the reasoning:

1. Long-Term Equity

The selling price of your home depends on your mortgage situation and the state of the housing market. However, current trends show ongoing growth in the housing sector, with the average sale price of existing single-family houses rising by 81% in the last ten years. Homeowners who become landlords tend to see substantial profits and extra income as rental rates keep climbing.

2. Long-Term Profit

If you are able to regularly lease your home for an amount that exceeds your mortgage and additional costs, you will build up profit in the long run. Nonetheless, this situation is not assured for everyone, leading property owners to depend on yearly tax advantages, an increase in property value, and options for refinancing to balance any losses they may encounter in the short term or monthly. Furthermore, selling your property when the market is strong can result in significant gains from your original investment.

3. Tax Shelter

Having a property for rent provides several tax benefits. You are allowed to subtract numerous costs, such as utility bills, maintenance, mortgage interest, and property taxes, to name a few.

4. Avoid Loss in a Down Market

If the local market faces a decline and it’s not a good time to sell your house, you can choose to keep the property and rent it out until conditions are better for a profitable sale.

5. Protection Against Inflation

Having a rental property is not just a safe investment; it’s also a profitable asset that can produce income even when inflation rates are high. Its value increases during inflationary times and provides steady cash flow from rent, no matter the state of the economy. All in all, it creates a beneficial situation for investors.

6. Forced Retirement Plan

At certain moments, we might find it challenging to consistently set aside funds or contribute monthly to our retirement savings. In contrast, investing in a rental property requires a dedication to ongoing administration and upkeep, ideally lasting throughout retirement. Unlike traditional retirement accounts such as IRAs, SEPs, or 401(k)s, a rental property can offer higher returns through increases in value and regular income over the years.

7. Tax-Free Cash Flow

By using your investment and taking advantage of deductions for depreciation and mortgage interest, you might achieve tax-free income from your rental property. It is recommended to speak with a qualified tax expert to investigate ways to reduce taxes on your income and postpone taxes on capital gains, especially if you intend to sell your property later through a 1031 Exchange.

8. Vacation Property

You can choose to use your investment property as a getaway and lease it out when it’s not in your use. This effectively gives you a complimentary vacation residence, as the income from rentals can help cover your costs while you’re away from the home.

Rental Demand for Single-Family Homes is Increasing

There’s a noticeable resurgence in the rental market. With increasing demand and limited supply, landlords have the opportunity to raise rental rates in line with regional increases. Here are some statistics and reasons behind this trend:

As of early 2013, over 43 million Americans were renters, and it’s projected that the number of renter households will increase by between 4.0 million and 4.7 million in 2014.
The number of single-family homes expected to be rented across the U.S. by 2015 is over 40 million, marking a significant 185% increase from the approximately 14 million rented in 2013.
Despite rent increases in today’s rental market, 40% of people choose to rent and continue renting because they enjoy the lifestyle.
There has been a notable surge in buy-to-rent purchases, particularly among homeowners who own more than one property.
Home prices are expected to rise half as much in 2014 due to an increase in supply coming onto the market. Tight credit conditions are expected to persist due to ongoing unemployment or underemployment, further driving demand for rental units and replenishing the rental market.

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