There are a lot of ways to invest in real estate. However, one of the most tried and true methods of building serious wealth in this world is through rental property investment in Philadelphia. We are going to look at why rental property can be such a powerful investment tool and how you can begin investing in rental property to start making your future more secure.
Why Invest in Rental Property?
Some people invest to get rich. Others invest to get out of a job. Still others invest so their children have an inheritance and grandkids have a college education. Whatever your reason for investing – investing in rental property can help you get there – and can be one of the quickest and safest investment vehicles around. Rental property allows you to take advantage of several distinct benefits:
Leverage – Leverage is the ability to use only a small amount of cash to purchase a much larger investment. When investing in real estate, you don’t necessarily have to pay the full amount for the property. Instead, you can pay a “down payment” and get a bank or private investor to fund the remaining. While you may only have 10-20% down (or as low as 3.5% with an FHA Loan) you are able to control 100% of the property and take advantage of 100% of the appreciation, cash-flow, and other benefits.
Security – Investing in rental property is generally considered one of the most secure investments you can make, as contrast to methods like flipping or speculation. When you buy smart* you are able to make more monthly income from rent than what it costs to own the property, and the extra monthly incomes (cash flow) can be used to cover the times when the property is vacant or needs repairs.
Tax Benefits – The government likes real estate investors, because they provide housing for millions of Americans, and as such – they reward rental property owners with tax breaks and incentives to encourage this type of investing. Benefits like depreciation or the ability to “trade up” to larger properties without paying any tax (see the BiggerPockets guide to 1031 Exchanges) can help compound your wealth even faster.
Directly Actionable – Finally, investing in rental property gives you an investment that you can directly control. When you buy a stock, you have very very little (if any) control over what the company does and how it operates. Your trust is placed 100% in the hands of Wall Street types and when things go south – your only option is to sell the stock or hang on. When investing in rental property, YOU get to actively take a role in the destiny of your property. You can maintain it, improve it, choose the right tenants, pick the right manager, correct problems, and influence local government to support you.
Rental property investment in Philadelphia can open new opportunities and lead you to the road of financial success and independence.