Tom Johnson

  • Home
  • Search
    • Advanced Search
    • Map Search
    • Get Property Alerts
    • What’s My Home Worth?
  • Areas
    • Aurora
    • Denver
    • Parker
    • Centennial
  • Featured Properties
  • Blog
  • About
    • About Tom
    • Testimonials
  • Contact

Try Our Property Search

Get Property Alerts

Read Our Blog

What's Your Home Worth

Six Reasons to Consider Rental Homes

February 17, 2017 By Tom Johnson

Investing in rental homes offers many advantages.  Single-family homes offer an investor the ability to borrow large loan-to-value amounts at fixed interest rates for long terms on appreciating assets, tax advantages and reasonable control. Some of these characteristics are not available through other investments.Rental Homes Advantages

75-80% loan-to-value mortgages are available on most residential properties up to four units. Comparatively, the stock market allows you to borrow up to 50% on a stock but if the price goes down, they will require additional cash to keep the ratio at or below 50%. If it isn’t available, your stock can be sold to satisfy the loan.

Real estate investors call getting a long-term mortgage putting an investment to bed. The fixed-rate and the 20-30 year terms are exceptions to loans for most other investments, if they’re available at all.

Real estate tends to go up in value over time. There can be a lot of variables that affect the price like supply and demand, condition and available mortgage money, in addition to the general economy.

Rental homes have several different tax advantages. The profits are taxed at lower, long-term capital gains rates for investors who have owned the property for more than 12 months. While the property is being rented, investors are given a non-cash deduction based on cost recovery of the improvements. Tax deferred exchanges can also be available if specific conditions are met which allow an investor to postpone paying the tax on the gain.

It isn’t necessary to have a partner with most rental homes if the investor can qualify for the mortgage. This allows investor control to make all the decisions that an owner is entitled such as setting the rent, making improvements and determining when to sell.

Rental real estate can earn a much higher rate of return than other available investments while providing income during the holding period. It certainly is worth investigating the possibility with a real estate professional who understands and works with rental properties.


Keep up to date on the Denver/Aurora market at

https://www.facebook.com/tomjohnsonrealtor/

Filed Under: Investment Property

Recent Posts

  • Why Your Home Inspection Matters [INFOGRAPHIC]
  • Why Buying a Home May Make More Sense Than Renting [INFOGRAPHIC]
  • Why You Should Consider Condos as Part of Your Home Search
  • What Experts Say Will Happen with Home Prices Next Year
  • What Every Seller Needs To Know About Renovating This Year
  • 4 Simple Graphs Showing Why This Is Not a Housing Bubble
  • Don’t Let Student Loans Delay Your Homeownership Dreams
  • What’s Driving Today’s High Buyer Demand? [INFOGRAPHIC]
  • The Top Indicator if You Want To Know Where Mortgage Rates Are Heading
  • How Remote Work Impacts Your Home Search [INFOGRAPHIC]

Categories

  • 1031 Exchange
  • Aurora Neighborhoods
  • Home Buying
  • Home For Sale
  • Home Improvements
  • Home Maintenance
  • Home Ownership
  • Home Selling
  • Home Value
  • Investment Property
  • Market Information
  • Money Matters
  • Mortgage
  • New Construction
  • Recommendation/Testimonial
  • Taxes
  • Uncategorized
  • VA Loans
  • Email
  • Facebook
  • LinkedIn
  • Twitter
Equal Housing
Blue Fire Group    Real Estate Websites
© 2023 Copyright
LAC
Buying Buddy    Powered By Buying Buddy ®