Are you still trying to figure out whether or not you should invest in Charlotte, NC real estate?
Here is a short list of reasons why you should:
- A rental property guarantees you passive income.
- The chances of your real estate investment depreciating in value are rare.
- There are a lot of tax benefits that come with it.
- You get to become your own boss.
Many financial advisors will tell you that investing in a rental property is a smart investment move.
They are right to tell you that. In fact, most of the richest people in the world have real estate as part of their investment portfolio.
That’s because real estate investments come with tons of benefits.
Proper management of a rental property not only increases your gross income but also the value of your investment.
Here are some of the specific perks that come with a real estate investment:
1. Consistent Cash Flow
If you’re looking to invest it’s because you want a return on your investment.
With real estate investments, money generally comes from two sources:
- Rental income.
- Capital gains or appreciation (when you decide to sell the property).
Owning a rental property not only guarantees you monthly rent payments but also profits when you decide to sell.
Basically, your net rental income comes from subtracting your monthly rental expenses from the gross rental income.
If you make $3,000 in monthly rent, and incur monthly expenses of around $1,000, your net income would be $2,000.
The best part about having a steady rental income is that you can easily pay for other expenses including:
- Mortgage payments.
- Management costs.
- Rental property taxes.
- Utility, maintenance and repair costs just to mention a few.
That means that your Charlotte, NC rental property can sustain itself. And it can help you to lighten your financial burden.
But, to make a decent rental profit from your property, you have to make sure its income is greater than its expenses.
Achieving this balance is an indicator of a successful investment.
Otherwise, if you find that your rental’s expenses are more than what it yields, you may start spending your own money to sustain the property.
And that defeats the purpose of your investment.
2. Value Appreciation
The biggest benefit of owning real estate in Charlotte, NC is its value appreciation over time.
Basically, that translates to a win-win situation for you (and your investment).
Your real estate investment will make you money (rent) and grow at the same time (capital gains).
Value appreciation is one of the many reasons that makes property investment highly attractive.
Generally, appreciation depends on a number of factors including:
- Time – The longer you hold on to your rental property, the higher your profits will be when you sell it.
- Location – Your property’s location determines how fast your investment’s value grows. Rentals in prime and urban areas often appreciate faster than rural properties.
Notably, growing and thriving property markets are always an indicator of more demand than supply.
Also, areas with limited land tend to have faster property appreciation rates.
Before you decide on your rental’s location, make sure you look out for these hints that tell you about the property’s potential.
3. Numerous Tax Benefits
Investment properties in Charlotte, NC come with many tax benefits.
If you employ smart tax strategies, you will be able to earn more from your rental property.
How do you benefit from property tax incentives?
Two words, tax deductions.
A tax deduction is an amount the IRS allows you to deduct from your total taxable rental income.
The more deductions you have, the smaller your taxable income will be. And, if that’s the case, you’ll be able to keep more of your rental profits.
So, what are these tax benefits?
The best examples of real estate tax deductions include:
- Insurance premiums
- Mortgage and home improvement loan interests’ payments
- Maintenance and repair costs
- Management expenses
- Travel expenses (must be rental related)
- Utility costs
- Professional and legal fees
- Marketing costs
- Depreciation expenses
- Property taxes
Thanks to the 1031 exchange tax benefit, you can also swap your rental property for another with little or no tax obligations.
Just make sure that you are eligible to enjoy this tax benefit (like all other benefits).
There are many reasons that can lead to you owning a rental property.
Sometimes, it could be because of temporary work relocation.
Other times, it could be an inheritance you don’t want to sell because of its sentimental value.
Or you just bought a cheap property because of its potential and you want to hold it for a while so that it appreciates in value.
Whichever the reason, you may find yourself with a vacant property in Charlotte, NC.
Unfortunately, vacant properties can be expensive to maintain. You’ll either have to hire someone to look after the property or risk leaving it vulnerable to vandalism or squatters.
Having a tenant can change everything. That’s because, regardless of how far away you are from your property, you’ll be able to rest easy knowing there’s someone watching over it for you.
Tenants will also notify you of maintenance issues before they worsen, hence minimizing your maintenance costs.
In summary, there are so many benefits of owning a rental property in Charlotte, NC.
The proper management of your rental property not only increases your gross income, but also the value of your investment.
This means that not only does your investment grow with time, but you also get to enjoy a steady flow of rental income.