There are many ways to invest your money, but buying property to rent is still one of the most reliable ways to grow your capital without taking a huge risk.
Of course, making money by investing in real estate means you need to buy property at the right time. A prime example of poor timing is the 2008 housing market collapse. After that, even properties in prime locations like Miami and Las Vegas suddenly lost a lot of money.
Nevertheless, investing in real estate is still one of the smartest ways to generate passive income and grow your wealth. However, you’ll need to do some research before diving in. For instance, you should assess the current market, look into the Top ten condo property management companies in toronto, and assess the risks and rewards of owning a buy-to-let property.
Read on to learn three amazing benefits of owning rental property in Toronto – whether you’re looking to rent it out in the long-term or short-term.
1. Generate Passive Income
Of course, the amount of rent you recoup from your rental property will depend on the condition of the property, current market valuation, and location – that’s why it’s essential to havecondition of the property the property evaluated before you purchase it.
When you begin renting your investment property, you’ll receive a reliable stream of passive income that will pay off your initial investment and guarantee years of passive income. Something to keep in mind is that the rent price will continue to increase over the years.
If you’re interested in short-term rentals, you have the additional advantage of setting your rent prices according to the season. This means that your investment can be increasingly profitable over a shorter period of time.
Purchasing rental property guarantees a steady stream of passive income – you can look forward to early retirement or increase your investments with the profits.
2. Get Tax Benefits
Once you begin paying off the mortgage for your investment property, you’ll benefit from higher profit margins thanks to generous tax benefits.
Landlords have access to significant tax deductions – such as depreciation, insurance premium reductions, repair deductions, and interest deductions. Any major repairs you need to perform on your investment property can be written off in a year, as well as any insurance premiums and interest.
Landlords with short-term rental properties may also be able to deduct the credit card interest for any property-related expenses and property taxes.
3. Diversify Your Investment Portfolio
Another advantage of owning rental property is that you can diversify your investment portfolio – especially if you invest in multiple rental properties in different locations.
On the other hand, owning multiple investment properties in the same area is risky. If the housing market crashes unexpectedly, all your properties could lose their value.
The smartest way to invest in rental property is to utilize your profits to diversify your investment portfolio. This way, you minimize the risk by avoiding having assets concentrated in one area. Investing in vacation rentals is an excellent way to own properties in different locations all around the country.