If you have a job that requires you to move around a lot or can’t figure out where to put down roots, it’s smart to rent. At the same time, just because you are a renter doesn’t mean you can’t own an investment property to earn passive income. Many tax advisers and financial experts point out that a rental property is a better investment than a personal residence due to tax advantages and other factors. Buying an investment property in Denver can give you exceptional return on your investment because of the high demand for lofts, townhouses, condos and single-family homes in the popular communities of Denver as well as Highlands Ranch, Lakewood, Aurora, Parker, Littleton, Cherry Creek and Centennial.
Realizing superior tax benefits
When you own a home that is your primary residence, you can only deduct your property insurance and property taxes if you itemize your deductions. In many cases, homeowners come out a head with a standard deduction instead. However, if you own an investment property, you get to deduct the cost of a property management company and the cost of all maintenance and repairs. Because the IRS treats owning rental properties more like a business, the tax benefits are more advantageous for the investor than they are for the person who owns a primary residence.
Having greater freedom
As a renter, you can opt for a short-term lease if you have plans to travel or only work in an area for part of the year. Meanwhile, your rental property could generate steady cash flow to supplement your income and pay for your living expenses. Hiring a Denver property management company to manage your properties means you can focus on your family and career or other business ventures without needing to come to Denver.
Letting real estate do your work
According to an article by Realtor Mag, investing in real estate is one of the best ways to achieve financial goals. Experts say no other type of investment increases net worth the way real estate does. Although stocks go up and down in value, your rental property will likely appreciate over time. While you supplement your income with the cash flow, you still own the underlying asset (the rental home.)
One last tip for people who rent their primary residence instead of owning it is to buy rental properties in a Denver neighborhood where they could imagine living themselves. Your gut instinct about what you would like often pays off. Being a renter yourself, you will have greater insight into what your tenants would appreciate. At Legacy Properties-PM, we belong to the NARPM, the National Association of Residential Property Managers. For more information on getting the help you need to manage your investment property in the Denver area, please call 720 989 1996 or contact us.