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What are the benefits of owning rental property?? 1) Cash flow- Obtaining a positive income from the property while still covering monthly expenses is important and usually the most important, when analyzing a purchase.
2) Equity build-up - through payments on the loan, this is why a shorter pay off is preferred on the loan if possible.
3) Appreciation- As property values rise, equity is built up, which adds to the net worth of the investor.
4) Tax Shelter- Expenses incurred on the property are allowed as deductions against income from the property in most cases. Tax law changes have severely hurt real estate investment and depreciation schedules are now spread out over 27.5- 31.5 years. Tax shelter alone is not a good reason to invest in real estate as it was in the early 1980’s. However with the recent trend of uncertainties in the stock market and low returns or losses, Real Estate is at an all time high on investors lists due to its "real" nature and that the investor can see and control the investment!!
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