It is an ideal time to invest in rental property
Bob Walker / SFGate / October 12, 2012 / link
Q: What kind of property would you say is the best real estate investment to make in the current market?
A: If you’ve done a rent versus buy analysis and decided buying is the answer, then a principal residence is on the list of best investments.
For those who already own their own home and are fortunate enough to qualify for a loan or are able to pay cash, now is absolutely the best time to invest in residential income property. The perfect storm of historically low interest rates, difficult lending qualifications, increasing household formation and steady job prospects have renters scrambling to find housing. Rental rates have increased dramatically over the last year as tenants compete for scarce rental offerings. It is now common for landlords to receive multiple applications in just one showing and be able to pick and choose from many very well-qualified prospective tenants.
In addition to diversifying your investment strategy, residential investment properties also offer a number of distinct advantages. First, there’s the ability to capture future property appreciation as housing continues its recovery. Second, if fixed rate financing is used, mortgage payments remain constant while inflation continues to drive rents higher. Third is the ability to reduce your taxable income by depreciating the value of the structure over 27.5 years. But always be sure to check out personal tax issues with a tax accounting professional.