Owning rental property can oftentimes prove to be one of the soundest investments you make. Real estate has for years been considered a more reliable investment than other types of investments like stocks because the value of your property is going to steadily increase over time — even in times of recession, the housing market has always proven to rebound in some capacity.
Though the housing market certainly has its ups and downs, the rate of return on real estate has averaged at about 7 percent nationally over the past century and a half. This is according to “The Rate of Return on Everything”, a massive study paper published in March 2019 that examined rates of return in 16 countries from 1870-2015. Of course, markets vary depending on several factors, but the Cape Fear region has proven time and again to be an excellent place to own investment property — especially in recent years.
Rental property values in the greater Wilmington area have really taken off over the past several years. Occupancy rates are at an all-time high, reporting at close to 97 percent in the first quarter of 2019. When we see this high demand for rental homes, properties can command higher rental rates and will spend much less time vacant between tenants. With the area population growing at one of the fastest rates in the nation, this trend is only going to continue.
Rental rates also typically increase about 3-5 percent annually, making rental property one of the few investments that will appreciate and provide owners a steady stream of often-increasing income.
One of the many benefits investment property owners can usually count on is tax advantages — a number of costs associated with owning rental property are tax deductible. Things like repairs, utilities while a property is vacant and professional fees (think attorneys, property managers, etc.) are all considered tax deductible.
Upgrades and renovations can also be considered tax deductible while a property is being used as a rental investment whereas they cannot while a property is vacant. Making some improvements to your investment property while it is being rented can be a great way to increase its value and help keep a little money in your pocket come tax time. Though you always want to consult with a tax professional before banking on specific deductions, rental property owners typically have some enticing ones available to them.
Another reason that the reluctant landlord may change his or her mind about renting out their home is a sudden move or change in life situation. If you've been relocated for a job or have to leave the area to handle a family issue but plan on returning, renting out your home is a great way to not only bring in some extra cash but ensure that your investment is cared for in your absence.
Having a professional property manager on your side can make owning rental property a relatively stress-free, hands-off investment. Not only do you have someone dealing with the day-to-day operations of the property, but you have the peace of mind knowing someone is looking out for your best interest whether you live across the country or across the street from your investment home.
Want to learn more about how investing in rental properties can benefit you? Reach out to the experts at Sweyer Property Management today.