When it comes to investing money, many of us get hesitant, whether we are talking about buying stock, starting a business or purchasing a property. And it’s not surprising because big money is involved, as well as your time, effort and sometimes personal liability.
At Bay Property Management Group, we are no experts in the stock market or joint ventures, but we know a great deal about income properties and why they are a good investment.
5 Ways You Can Benefit from an Investment Property in Philadelphia
1. You get supplemental income
That’s exactly what it sounds like: your daytime job is not your only source of income anymore. Of course, you will need to allocate money for paying the mortgage, utilities and other rental-related expenses, but in the end you will be left with a profit. It might be small in the beginning, but as the property gets paid off, market prices climb and your expenses decrease, you are in for a hefty pay-off. However, be sure to make careful calculations before you invest in a property: the last thing you want is to end up with more bills than you have money to pay for.
2. Your property will increase in value over time
This is not guaranteed, but it’s a general tendency if your property is located in a good stable area, such as a city or a fancy suburb. The value increases due to increased demand or inflation. That’s why you should be very selective about the location of your income property. As a Philadelphia property management company, we recommend consulting with real estate experts to get a better idea about prices and value appreciation.
3. You have control over your investment
Can you control shares and stock market? We don’t think so. Quite the opposite, the stock market is so unpredictable, it makes owning shares almost a gamble. The real estate market, on the other hand, is quite stable and gives you more control over your investment. By renovating the house, adding a pool, a fence or other feature you can increase your property’s value, so that you can charge more rent or jack up the price for resale.
4. You can build a good relationship with the bank
If you prove you can make timely payments on your loan, it will greatly improve your credit history and will help you obtain future loans. You should have no problem investing in another income property if your first one turns out a success.
5. You can claim tax deductions
Owning and paying off a rental property qualifies you for various tax deductions based on expenses, depreciation, interest and points. Expenses may include traveling to and from the property to conduct business or do repairs, maintenance costs, agent fees, etc.
These were some of the pros of investing in an income property. Stay tuned to learn about the cons. And if you ever decide that managing your Philadelphia rental property is too much work, contact us and we’ll help you out.
photo credit:John Baker