Purchasing an investment property is a big decision that offers many advantages. You’ll have the opportunity to rent it out and turn a profit, receive a regular income, and build equity at the same time. If you’re thinking about buying a home for investment purposes, here’s some valuable information that you should know.

What You Need to Know About Investment Property

1. They Offer Tax Benefits

Don’t miss the many tax benefits available to investors. You can, for example, deduct interest related to the property on your taxes. This includes everything from payments made on your credit card in the property’s interest to mortgage loan interest.

Moreover, you don’t need to factor in depreciating costs during your initial ownership year. Wear and tear only factor into account after that point, and even then, it’s a nominal amount. You can even deduct costs related to repairs and furnishings.

2. They Help Build Equity

You might not feel fully prepared to purchase your dream home quite yet, but buying an investment property may help you reach that point. As a new buyer, you can use the rental income generated by the property to support the purchase of your future home.

You might wait until you’ve secured enough cash to put down a significant down payment and continue to rent out the investment home in the meantime.

3. They Have Different Requirements

Buying an investment property isn’t the same as purchasing a home in which to live. For a start, you’ll need to put down a payment of at least 15% to 20%, instead of the usual lower percentage permissible for residences.

Plus, investment homes aren’t eligible for mortgage insurance. You’ll need to consider these points and factor them into your financial plans as you browse real estate listings.

If you’re seeking investment property in Red Wing, MN, and the surrounding areas, turn to Lawrence Realty Inc. for assistance throughout the process. The real estate agents at this family-owned business are committed to your satisfaction. Visit them online to browse property for sale in the area, or call (651) 388-4745 to speak with a representative.