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Seller’s Guide: The Benefits of a Rental Property

Investing in rental property?

Renting out a home comes with numerous benefits. It’s a viable source of income, especially if you know your way around the rental market.

Here are some reasons why you should go for it:

1. Passive income
Passive income refers to cash earned through minimal work or involvement in the enterprise that generates it. You’ll profit from the property for as long as it’s occupied, and on the presumption that tenants will pay on time.

This lets you supplement your main source of income, or be more selective about the kind of work you actively participate in. It also gives you more time for non-work-related pursuits such as creative projects, spending more time with family, graduate school, and so on.

2. Appreciation
Property values change along with the landscape of the area. New commercial developments, socio-political events, fluctuations in the economy, and real estate trends are just some of the factors that contribute to property values.
Rental property in prime locations and up-and-coming neighborhoods is often a good investment. Property values in such areas are likely to increase over time, especially as new infrastructure and developments are introduced.

You can expect to see an increase in income as property values rise in the area. You’ll be able to charge a premium for rental property in sought-after locations and desirable neighborhoods.

3. Sweat equity
Sweat equity refers to value added to a piece of property through manual labor, often at a low cost. This involves maintenance work such as repainting the exterior and interior walls, and doing simple landscaping, for instance. This also includes making minor upgrades to the home.

These changes let you charge more for rent. You’ll also be able to sell the property at a higher price in the future if you decide to do so. If you need help selling property in Tennessee, feel free to call (615) 642-6677 or send an email to [email protected]

4. Leverage
It’s possible to buy rental property using borrowed funds. This means that you can have full control of the property and its equity by paying only a fraction of its total cost. Moreover, the property you choose to invest in secures debt, but not the remainder of your assets. In other words, while you may lose your rental property, you won’t stand to lose your own residence.

5. Tax advantages
Income generated from rental property can be tax free if you don’t receive net cash flow once expenses have been deducted. In other words, the mortgage on the home is being paid off and you possess a greater portion of the rental property’s total value instead of just controlling it, but you don’t pay taxes on the money that’s doing this on your behalf.

Rental property is often a solid investment that generates substantial income. The financial windfall that it can potentially bring to your life will allow you to pursue other interests – business or otherwise – or simply sit back and watch the fruits of your labor.

Just make sure to choose the right home in the right neighborhood. Feel free to view our online listings here.