There are various ways to invest your time and money and one of the best ways to ensure a good financial future, is to invest in property with the intention of earning consistent revenue from it.
But what are the motivators for investing in real estate income property? Is it just about the income?
As an owner of an income property, you are able to profit from holding and renting commercial or residential real estate.
While the property generates revenue, it also appreciates in value over time and later on down the road, provides you with the opportunity to sell it, for hopefully, a substantial profit.
An income property is one of the best ways to use real estate as leverage to build significant wealth. When done correctly, investing in rental properties provides numerous benefits.
We will explore five top motivators for investing in an income property. But First, let’s discuss the biggest motivating factor, the real reason WHY you’re pursuing these types of investments.
The Biggest Motivator – Know Your WHY
Simon Sinek wrote a great book called “Find Your Why: A Practical Guide for Discovering Purpose for You and Your Team.” He says that knowing what motivates you at your core, will impact your decision-making and ultimately your success.
I feel that the first step in your journey is to know at your core why you are interested in becoming a real estate investor.
In the 12 years that I have been a real estate investor, my main motivation for choosing income properties has been to achieve financial freedom.
At the core of it, however, is my desire to feel security and stability, which is what will allow me to have the most enjoyable and meaningful life.
Real estate investments have changed my life. I want to share this skill with as many people as possible and help them transform their lives also.
I have run successful businesses for over 25 years and I’m now convinced that real estate is the safest and most solid type of investment.
Because wealth is a mindset, if you feel abundant appreciation in your life, your bank account will also appreciate.
Achieving a clear mindset is an essential component of being an excellent real estate investor.
Therefore, you should ask yourself WHY you are interested in this path.
Besides the obvious reasons of having money to feel stability, there are other reasons that motivate investors. Let’s explore five top motivators for real estate investors to buy income properties.
My Top 5 Motivators For investing in Real Estate
#1: Tax Write-Offs
Some entrepreneurs say that it is not about how much money you make, but how much taxes you can write off. Knowing what expenses you can write off when you file for taxes makes a huge difference in your bottom line.
As a real estate investor, you may write off the following expenses:
- Travel costs
- Interest paid on mortgages
- Interest paid to credit credit cards for expenses related to the property
- Property maintenance and repair costs
- Professional and legal fees
- Property taxes
- Depreciation of the property
All of these items add up to a huge sum! Knowing how to navigate your way through tax season correctly will maximize your profits. Connect to tax professionals that dedicate themselves to optimizing the annual profits of real estate investors.
They will know how the real estate industry works and how to precisely help you as an income property owner.
#2: Assistance With Mortgage
The most sought-after type of loan is a 30-year fixed-rate mortgage. The loan’s interest rate is fixed, meaning it will stay the same for the whole 30-year term. In the first 15 years of the loan, more money is paid toward interest than principal.
However, each year after that, the interest and principal are paid closer to a 50/50 split. When you hold an income property for a long time, you will be able to have the tenants pay down on the loan principal resulting in more wealth in your pocket.
The goal here is to use the tenant’s rent to pay off your mortgage and build equity. By decreasing the amount you owe on your mortgage, you will be able to access your equity through a refinance, which you can use to buy more real estate.
Also, when you sell the property, the accumulated equity will be considered profits.
#3: Monthly Income
You can start generating rental income by placing tenants in your investment property. After you pay all monthly expenses, the money that is left can go directly into your bank account.
As a property owner, you will have monthly expenses including maintenance, repairs, vacancy costs to name a few. After paying all expenses, your goal is to have a monthly gross profit.
The whole point of having an income property is to generate profits every month. It is crucial to analyze your numbers correctly and create a comprehensive and accurate projection of what to expect on a consistent monthly schedule.
#4: Real Estate Appreciation
One of the most amazing parts of investing in real estate is that you can leverage yourself in a big way by borrowing most of the money that you need to purchase the income property.
By using a small amount of your own money and borrowing the rest, you give yourself the opportunity to use that leverage to purchase a property at a higher price point. This opens up many opportunities for growth.
You can see how significant this type of leverage is by following this example:
Let’s say that you invest $10K of your own money on a $100K property and that you borrow $90K from the bank. Now, let’s pretend that the property will appreciate by 5% each year for the following 10 years.
The appreciation of the property will be based on the $100K asset, not the $10K you invested. This means that after 10 years, you can exponentially multiply your $10K investment simply by using the power of leverage.
#5: You’re the Boss
One of the most gratifying aspects of being a real estate investor is that you are in charge of the whole operation.
You will decide exactly which type of property you will purchase, what type of tenants you will have, how much rent you will charge, how you will manage the property, and for how long you will keep it.
Certainly, if you decide to invest in stocks and bonds, you have control over which ones to choose, but you still have to trust someone else to manage your investments properly.
That is not the case with income properties as you are able to have complete control over the investment from beginning to end.
You can also design your life the way you want it. Perhaps you choose to live on the property and manage it yourself. Or maybe you want to be a long-distance owner and let a management company take over your vacation rentals.
Being able to make your own decisions is one of the biggest motivators that drive people to become real estate investors.
It is completely liberating to have control over your life without the hassle of doing things on someone else’s terms.
What is Your Motivation?
There are many more motivating factors to invest in an income property. The ones mentioned above are just five of many other reasons why having a rental property is beneficial.
After reading this, you probably have a better idea of your main motivators to become a real estate investor. Find out why you truly want to embark on this journey.
Ask yourself what is at the core of your motivation for making the effort to become the best at your craft.
Knowing what motivates you at your core will be the driving force to help you overcome any challenge. Once you start to learn more about real estate, you will realize that an income property is one of the best investments you can make.
Established investors know that having income properties makes a huge difference in their bottom line.
So, what motivates you deeply at your core?
Whether you are just getting started or have been doing real estate deals for a while, I hope the knowledge I am sharing on this blog can help you take your investment portfolio to the next level.
This website is full of free guides and other resources to help you gain the knowledge you need to thrive in any real estate market.
Reach out to me directly, I would love to hear about your experience so far and what you envision for yourself in the near future.
I’m always willing to help anyone, if I can, achieve financial freedom through real estate.
Leave a comment and tell me which top five motivators for investing in an income property excites you the most and why. I also want to hear about what drives you at your core.
Thank you and have a great day.