Benefits of investing in townhouses
Investing in real estate is a good option since it is sure to appreciate over time. One of the choices that you would have if you are contemplating of a real estate investment would be to look for a suitable, appropriate and convenient townhouse and put your money on it. Every investment especially in real estate if you are seriously looking at townhouses has its benefits and drawbacks. Weighing the pros and the cons and deciding on the best option would be your prerogative.
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It is you and your family who would live in it or if it is only an investment and you do not intend living there, then the options could change. Whatever it would be your priority would be to ensure that your investment brings you a reasonable Return on Investment (RoI) and at the end of the day and the property appreciates so that you could recoup your investment with a substantial profit.
Townhouses in the right locations have brought good returns for many hence looking for the best and procuring it would be in your best interests. Townhouses have many benefits and we look at some of them below to apprise you of how your investment would work out for you at the end of the day.
Here we would look at a townhouse investment purely to rent out and what benefits it would accrue in the short, medium and long term.
#. Cash flow
Your primary objective prior to signing on the dotted line would be to make the right calculations in asserting what you could recover as rent and what you would have to pay. If your rent recovery is $100/- your expenses in totality should be less than this amount. The mortgage, the maintenance including the Home Owner’s Association fees, taxes and other expenses should be deducted and a cash flow should be enjoyed by you.
If you are unable to create a cash flow but have to pay out of your own funds it would not be a sound investment for you at the end of the day.
#. Appreciation
Keep a finger on the pulse of appreciation and see how it is behaving. In a normal market condition properties should appreciate at a steady rate but abnormal conditions could reverse the trend and depreciate properties. To ensure that you safeguard your investment if you feel the time is right dispose the townhouse and look for a better one nearby.
#. Loan amortization
In reality when you take out a mortgage it is imperative that the onus lies with you to repay the capital loaned to you, but if you are savvy you could do so with other people’s money. By renting the townhouse out you could repay the loan amount and keep a steady cash flow and at the end of amortize, you would have a townhouse to sell and laugh all the way to the bank.
You would not only have a townhouse fully paid off with other people’s money but one that you would own without any strings attached. Many investors look for this avenue when they put their monies on a real investment whether it is a townhouse, condo or any other property.
#. Tax shelter
Investing in a townhouse would also qualify some to slip through an IRS loophole which is a clause where property depreciation is accepted by the powers that be. The IRS would allow a portion of the investment to be written off over a period of 27.5 years. This window of opportunity is grasped by many and they make a tidy sum at the time they would sell the townhouse. There would be a tax to be paid but that would be acceptable when you make more than you would expect.
#. Passive income
There are inherent issues that you as the property owner would need to ensure when renting out a townhouse or any other dwelling. You could pass this baby to a real estate management agent who would charge a fee for their services. It would still be worthwhile your time to do so as you could sit back and relax whilst collecting a passive income without much hassle. The property management agent would all the spade work on your behalf and with experience they would know how to get about it, which you would take time to master.
#. Retirement vehicle
If you are prudent and save the cash flow which after all is coming to you from what your tenants pay and the sales income from the townhouse at the end on amortize should keep your retirement years comfortable and happy. It would be a very good way to build a capital for your twilight years, which many would and you too could.
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