Have you ever dreamed of owning real estate? Have you heard the stories of regular people just like you that have become millionaires by investing in real estate? Becoming a landlord can be an exciting and rewarding experience. We will focus on four ways that you can benefit from becoming a landlord.
- Passive and Residual Income
The fundamental law of earning money says that you must put forth some type of labor or service in order to get paid. This is true in practically every sector in the economy. There are few ventures you can endeavor upon that go against this rule. Real estate happens to be one of those sectors.
Passive income is money earned from ventures that require little or no ongoing effort. Residual income refers to discretionary funds at your disposal after you have satisfied your scheduled financial obligations.
If a rental property is managed by a property management company, it is seen as passive income. The amount of residual income involved is determined by how much rental income is left after satisfying monthly expenses related to the property.
- Tax Benefits
If you are a landlord, there are a variety of tax benefits that you can enjoy. As the tax code currently stands, it is peppered with laws designed to benefit the real estate owner that rents out their home.
Among these benefits we have:
- Depreciation: Landlords of residential property are able to deduct the price of their rental home for a maximum of twenty-seven and a half years.
- Interest: Landlords are able to deduct interest payments made on rented property. Deductions are also available towards credit card interest payments for home-related expenses.
- Repairs: Any repairs and updates made to the rental property are tax-deductible.
- Home Office: If you have rental property and meet certain requirements, you are able to write off the expenses related to the operation of your home office.
- Travel: Travel expenses incurred subsequent to anything pertaining to a rental property are tax-deductible.
- Starting Your Own Business
If you have ever wanted to start your own business, real estate investing is the perfect business for someone who wants to start simple and build up from there. You can move forward with a business plan that shows the measure of your potential success at the very beginning.
Unlike other businesses that begin uncertain because they are dependent on marketing and consistently finding new customers and clients, real estate has a built-in barometer for potential success that determines the monthly and annual profit from the beginning.
- Pathway to Self-Employment
If you are looking to fire your boss, real estate investing is the perfect option. Investing in real estate allows you to start humbly and scale up from there. If you want to start with a single property and stay at your job for a while, that is always an option. You can also rent to own real estate and eventually quit your job.
There are more benefits of being a landlord that is not listed here, and also much more to consider before venturing into this sector. Do your due diligence before taking on this investment.