Owning rental properties is one of the most profitable ventures for an investor. A lot of investors have shown interest in real estate over the years because of the benefits associated with the real estate investment business. Although there are already large number of people who invest in real estate, there are still others who are not aware of the benefits of owning rental properties. These properties are also known as turnkey investment properties, which means they are completely managed by an independent turnkey company and the investors get their monthly rents.
Some of the benefits of owning owning rental properties are:
1. Monetary Benefits:
Monetary benefits are those benefits that are directly measured in terms of the cost or returns on the property. The main interest here is how much money can be earned from owning a particular rental turnkey property. It can be divided into three basic benefits:
• Cash flow: This is the money that will be left after settling taxes, debt service and operating expenses. It is the cash flow of the business and there are some things that could influence the income you can get from owning an investment property. Some of them include market competitions such as how developed is the location of your property and a sudden change in the market. In all of this, if the amount of revenue received from the business exceeds the amount of money spent, the excess is your cash flow.
• Appreciation: This is often described as the nominal increase or rise in the value of a property. When the value of a rental property increases in absolute dollar terms, it is said to have appreciated. This normally occurs if the rate of increase in the value of a property exceeds the current inflation rate in the market.
• Financial Leverage: This is the benefit received from the use of other people’s money (borrowed funds). This borrowed fund usually cost less than the return earned from its use. The investor will thus have control over a much larger investment. [Read More at Ezine…]
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