Buying an Income Property as an Absentee Investor

 

Why invest in residential real estate that you will not live in?

 

* Cash Flow: 

    Rental incomes generate positive cash flow - The monthly net proceeds     after all expenses and carrying costs on the property.

* Leverage: 

    Income properties allow for positive leveraging - a situation where the yield     to an investor exceeds the overall rate of return that would have been     realized on a property had no financing been put in place.

* Return on Investment: 

    The intention to achieve a strong R.O.I.- the dollar amount returned on an     initial cash investment expressed as a percentage.

* Capital Appreciation: 

    The potential for capital gains if the property can be sold for more than was     paid for it.

* Tax Benefits: 

    Potential for tax benefits by writing off mortgage interest against income.     Also, capital gains on reversion may be taxed at a lower rate than other     forms of income.

* Tax Benefit Potential: 

    Gained by writing off mortgage interest against income. When you sell,     capital gains may be taxed at a lower rate than other forms of income and     there may be tax exemptions if the property is the principal residence.

* Beat Inflation: Land becomes more valuable every year. As your property     appreciates, it can provide a good hedge against inflation.