Spending your money on property, renting it out, and leaning back to watch the dollars accumulate each month seems easy enough, right? If you’re considering to invest in property, you may wonder if it’s really worth it when you’re only able to buy one – and if the monthly payments will outweigh all the administrative tasks.
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Here is a quick guide to how owning just one investment property can pay off, after all, as well as a few surprising benefits to being a landlord of the few rather than the many.
Use it as a launch-pad
Most landlords start out with one property and work their way up until they’re able to invest in multiple properties. It is actually not that common to own more than three at the same time, and the first one you choose to invest in can be a great start to building a portfolio of properties – until you’re financially free to live the life you’ve been dreaming about.
By starting small, you’ll be able to own a substantial investment for a tiny portion of the cost, which again gives you a good amount of leverage and can deliver a greater return on your investments, in the long run. Not to mention the long-term capital gains you will accumulate by owning property, even if you invested in it to turn it into a home rather than a rental property.
The short-term gains
While the initial investment and the amount of paperwork you have to through, in the beginning, can make it seem like a lot of work, rental properties are known for becoming positively geared over time.
It means that, even if you’re not bringing in as much as you’d like right now to cover your expenses, rent is likely to increase over time – and then you’ll be making more from the property than you have in costs.
Having only one property to focus on means that there’s way less work in terms of taxes, too, and you can immerse yourself into improving the one you have and make your investment pay off. Read up on tax regulations on 1031Gateway, while you’re at it, and you might be able to tackle some of those capital gain taxes as well.
Fewer expenses on repairs
A landlord’s nightmare is noisy and destructive tenants. While they are there to make your investment pay off, they can also destroy your property and opt completely out of paying rent, so that you can enjoy a lengthy conversation with lawyers instead of enjoying your investment.
The more investment properties you have, the more likely you’ll be to run into bad luck and the worst kind of tenants; choose one property, for now, and you’ll be able to keep it maintained.
When it’s well-kept and the tenants sign a lease to stay there for a while, you’ll be able to focus on other things and even start to look at expanding your property portfolio – instead of having to chase one of your many tenants who doesn’t pay on time.