Top 5 reasons you WANT to rent your home
Hi guys. Mike Taylor broker Owner, Red Door Property Management today I wanted to talk about the top five reasons you might want to think about purchasing a rental home or turning your existing home into a rental home.
Reason number one
Cash flow. So, this might be small at the beginning, but it will develop over overtime. And this will be passive income to you that you have to do relatively little to no work to generate this cash flow. So over time, as rents raise, as we've seen in the past twelve to 18 months, your cash flow will get greater and greater as time goes on. Most people who are the most successful in real estate buy and hold. They hold for a long period of time. They have their basis stay the same and then the cash flow just keeps going up and up and up year after year.
Reason number two
Is going to be appreciation. So, if you are in that buy and hold mentality, you're holding this for 35, 10, 15 years, that home is only going to appreciate. Homes appreciate in Indianapolis on average between three and five to 7%. But as we've seen over the last twelve to18 months, this can reach as high as 20%. Home appreciation has gone crazy in Indianapolis as well as nationwide.
Reason number three
You may want to consider renting out your home depreciation. So, this is a huge tax benefit that real estate investors get and they get to depreciate the asset that they are putting into use. And so, talk to your accountant. I'm not a tax advisor, but there are some pretty significant tax savings that you can reduce your income tax on.
Reason number four
Mortgage pay down. So also, what you're doing over time is as you have a renter in there, paying you rent, paying every single month, then you're paying your mortgage. You are slowly but surely paying your mortgage down. So, if and when you go to sell that, and like I said, 510, 1520 years, instead of owing, let's say $200,000, you've slowly paid that down. You may now only owe $100,000 on that. So, you are also getting the appreciation depreciation and the mortgage pay down.
Reason number five
Is an inflation hedge. Real estate is one of the best inflations hedges out there. So, as we have seen, inflation is a huge issue right now. Real estate prices have gone through the roof. But you know what else has gone through the roof is rents. So, this is going to protect you. Your assets going to go up, your rents are going to go up. This is a great place to invest in an inflationary environment.
So, if you are thinking about investing in the Indianapolis real estate market, consider these top five reasons of why you might want to do that.