28 May Mortgage-Related and Additional Benefits of Becoming a Landlord
At City Creek Mortgage, we’re proud to offer quality mortgage purchase programs to a wide variety of buyers and their varying needs. Our mortgage brokers work with everyone from first-time buyers to experienced real estate flippers, plus another group that’s growing in popularity every year it seems: Potential landlords.
If you’re interested in real estate investment or are already involved in some area here, becoming a landlord may hold several benefits. Let’s look at several of the reasons why more and more people in this situation are considering renting out their properties.
For starters, as long as your credit and other basic financial factors are in good shape, getting financing for a loan when you plan to become a landlord tends to be a breeze. Property rentals are considered relatively safe investments by most lenders, and the kinds of homes that are usually used for rentals are single-family homes or multi-unit apartments – both easy to finance.
Generally speaking, lenders are highly willing to offer funds to those in these situations. They know that not only will the borrower’s own finances assist with repaying the sum, but proceeds from the rental will provide another revenue source.
Profit and Equity
The simplest reason many people choose to become a landlord? To make money. If you get the math right and charge the proper amounts while providing the necessary services, you’ll turn a nice little profit each month – money you can use to pay down the mortgage, invest in other properties or several other areas.
In many cases, borrowers use this additional profit to build equity in the home. Paying down the home faster opens up several potential areas, from buying additional property to having funds in reserve for repairs or other needs.
Another long-term use of rental property funds? To begin building and adding to retirement funds. In fact, many people begin renting out properties in the years just before retirement hits, then hire a property manager when retirement age comes – allowing for continued profits even once you’re not working.
Finally, becoming a landlord comes with several potential tax benefits as well. There are several tax deductions that might be available, including interest paid on the mortgage, depreciation, repairs on the property, and even insurance premiums purchased for the rental. Several of these areas are those you wouldn’t normally be able to take advantage of in most standard mortgage situations, and there’s no addition cost for these beyond the duties you take on as a landlord (or duties you pass on to a property manager if you choose to hire one).
For more on why becoming a landlord might make sense for you, or to learn about any of our landlord-friendly mortgage programs or other mortgage services, speak to the staff at City Creek Mortgage today.