An Investment property is real estate that you own and will not occupy. The two main goals with an investment property are to generate income through rents received from tenants of the property, and/or by rehabilitating or holding onto the property for a period of time to later sell the home for a large profit.
Investment properties can have short-term investment strategies or long-term strategies. An example of a short-term strategy would be property flipping, where you would rehabilitate the property then sell it for a profit. An example of a long-term strategy would be a long-term rental where you plan to receive rents on the property as a new income stream. Regardless of the strategy you use, it’s important to speak with a licensed loan officer that understands how to best help you achieve the goals you have when it comes to purchasing an investment property.
Investment properties do come with additional requirements, however, they are just as easy to qualify for as primary residences. Investment properties do have some added risks, but they also come with a few added benefits:
- Receive Rental Income – Set up a new income stream with an investment property. Consider properties in major metropolitan areas, near colleges, universities, or military bases, and vacation destinations to make finding renters easier.
- Investment Properties Pay for Themselves – The rents you receive on your investment property usually offset most if not all of the expenses related to the property. In many cases, positive income is produced after all expenses are paid.
- Potential Tax Deductions – Mortgage interest, property taxes, and certain other property expenses are usually tax deductible. You should always consult a licensed tax professional to determine which deductions you will be eligible to take.
- Add a New Asset to Your Investment Portfolio – Buying an investment property will diversify your investment portfolio.