In case you might have forgotten or needed a reminder, there are many great things about being a landlord. Here are the top 9 lifestyle and financial benefits that come along with owning rental property.

1. Real Estate Appreciation – The recent economic struggles aside, the past has shown us that real estate values increase and appreciate over time. Home prices have risen an average of 5% a year since World War II, even though there were a few nerve-wracking ups and downs along the way. Also, because the property is rented out, your mortgage is being paid by the renters, meaning it’s a great way to increase your wealth.
2. Low-Risk Investment – Unlike the stock market which contains more volatile investments, the returns on real estate are fairly steady. Even with the recent hit to the real estate market, the assets (land and property) are still there. The same cannot be said for some assets in the stock market, where values can fall or even disappear entirely. As long as you can hold on to the property, any temporary decreases in value should not affect your long-term investment strategy.
3. Income - Rental property offers a great source of steady income through carefully selected tenants. Good tenants are happy to continue to pay the monthly rent in exchange for living in a well-maintained and managed property. Plus, annual rental increases are expected and continually help boost a landlord’s bottom line.
4. Diversification of Income – Owning rental property gives part-time landlords an additional source of income in addition to their full-time job. These landlords can continue to work their regular job knowing that they will have a cushion to fall back on if they lose their job. They can also continue to build up their rental property investments with plans to retire early if they choose.
5. Diversification of Investments - Just like owning rental property diversifies your income streams, it also diversifies your investment portfolio. This is of course one of the most important rules when it comes to investing. Financial planners will tell you that as you approach retirement, it’s best to shift into lower-risk investments. Real estate fits this criteria and is a great way to make sure that the cash you need is there when you need it.
6. Part-Time Commitment – When you become a landlord, you get to control how much time you want to commit. Owning just one property that’s close to home can be handled in your spare time, while still working a full-time job. As you get more comfortable managing property, it will take less time and you can purchase more rentals. You can also use property management software to keep track of your data and free up more of your time. If time is really a factor, you can hire a property management company, however this will cut into your monthly profits significantly.
7. Leverage - One of the biggest benefits of buying rental property is that you can leverage your money by using loans (or other people’s money) to purchase it. Unlike investments in the stock market, this means you can purchase a lot of real estate with very little of your own money. Unfortunately, it takes a little bit more these days, but a down payment of 20% of the value of the property should be enough to get you started.
8. Short-Term Tax Advantages – Although the income from your rental property is taxable, most of the expenses related to owning and maintaining the property are deductible for tax purposes. These expenses include mortgage interest, insurance, repairs, and upkeep, as well as business expenses such as phone calls, office supplies, accountant and lawyer fees, and more. Depreciation is another major tax-advantage. This is the ability to take an annual deduction reflecting the decreased value of the property caused by wear and tear.
9. Long-Term Tax Advantages – You can defer federal taxes even if your property’s value skyrockets because the IRS won’t expect you to pay taxes on that increase until you sell. Eventually, when you do sell, it’s best to consult a tax professional because there are various strategies you can use to decrease your tax liability.

Photo by: The Rocketeer