What is investment property?
Investment property is real estate property that has been purchased with the intention of earning a return on the investment, either through rental income, the future resale of the property, or both.
What are the advantages of owning an investment property?
1. Potential for Cash Flow: Investing in rental properties can provide a steady stream of income through rental payments.
2. Potential for Appreciation: The value of an investment property can appreciate over time as the local market conditions improve, which can lead to capital gains when it comes time to sell.
3. Tax Benefits: Owning an investment property can provide tax benefits, such as deductions for repairs and maintenance, mortgage interest payments, and depreciation.
4. Leverage: Investment properties can be purchased with the help of borrowed money, which allows investors to purchase a property with a smaller down payment.
5. Passive Income: Owning an investment property can generate passive income, meaning you don’t need to be actively involved in managing the property.
How do I pay for an investment property?
The most common way of financing an investment property is with a mortgage. To qualify for a mortgage, you need to have a good credit score and sufficient income to cover the monthly mortgage payments. You can also consider other types of financing such as home equity loans, lines of credit, private loans, or cash.