WHAT IS AN INCOME PROPERTY
As there are a plethora of options available for people who would like to utilize their funds to get extra earnings and property investment buying a house in Miami is among the right options you may explore because several investors are tired of the stock market's volatility. Thus, it is estimated that about 50% of the people in this world become millionaires through property investments. However, contrary to belief, there are various options in which to hold property. Income property is becoming more attractive to investors looking for a better return on their money. With today's low interest rates, income-producing properties such as apartments and duplexes can produce impressive returns.
What is an Income Property?
An income property is a property developed or bought so as to earn income through renting, leasing or price appreciation and hence, generates more income than you have to pay in expenses. However, an income property can be commercial or residential property. This is exciting because at the end of each month you have money left over that you can either use to reinvest or you can spend it on your lifestyle. Thus, residential income properties are commonly referred to as "non-owner occupied." While a mortgage for a "non-owner occupied" property may carry a higher interest rate than an "owner-occupied" mortgage as lenders often view it as a higher risk.
Benefits of an Income Property:
-Capital Appreciation: Capital appreciation is the increase in value from the price of the real estate increasing. In other words, as the property rises in value, your investment value also rises. Add to that increase the effect of leverage and real estate can offer significant returns by selling in Miami.
-Monthly Cash Flow: Most properties have very little positive cash flow when purchased. As rents grow the monthly cash flow from the property also grows and hence, making house for sale in Miami profitable.
-Debt Pay down: It also help an investor to get the benefit of paying down their debt. Every dollar they pay down on their debt goes directly to their equity in the investment.
-Tax Advantages: income property has two main tax benefits that real estate provides. The first is that it defers recognizing income in the initial years. By depreciating your property, the initial tax income will likely be harmful, and you won't have to pay a heavy tax burden in the early years. The second tax advantage from real estate in Miami is that all of your investing related expenses are deductible, including the big things like mortgage interest and property taxes. However, the small things are deductible too.
However, when choosing an income property in Miami real estate, there are several things to consider. The first is the condition of the property. If you have little capital, limited time, or a need to rent out the spaces in order to make the mortgage payments, the property must be in good shape. Improvement, renovations, and repairs take time and money. Run down property may be a bargain, but when you think of the purchase price, you should add the money it will cost in delayed tenant move in and the actual cost of improving the property. Investing in real estate in Miami takes planning and consideration as it will also be at your advantage even in a depressed economy, investors stand to make good buys and profit if you’re armed with the knowledge of what it takes to invest in income property.