There isn't a bad time to buy an investment property per say but 2020 is shaping up to be a great year! Here are the 5 reasons why I think this year should be the year for you to buy your first
Why 2020 Is The Best Year To Buy That Investment Property
Dated: December 16 2019
There isn't a bad time to buy an investment property per say but 2020 is shaping up to be a great year! Here are the 5 reasons why I think this year should be the year for you to buy your first investment property or add another one to your portfolio.
1. Interest Rates are Low
You’ve probably been bombarded with this statement but it’s true! The reason why this is so important is because interest rates for an investment property are about 1% higher than for a primary residence. So if interest rates for primary residences are at 3.5%, you’re probably looking at a 4.5% interest rate on your investment property. But if you wait and interest rates creep back up to over 4%, you would be looking at a 5% + interest rate.
2. Recession Proof, Sort of
If you're worried about a recession happening, consider this! Typically more people rent than buy when the economy slows down. So if you’re not confident in the stock market anymore, an investment property could be a great alternative.
3. Recession = Higher Rents?
Historically, landlords have been able to command higher rents during a recession. It’s a simple case of supply and demand. The demand for rentals increase when people shy away from buying.
There are quite a few write-offs you can claim on your rental property. Some of these include loan interest, property tax, insurance premiums, maintenance and repairs, utilities, and depreciation. It’s worth noting that depreciation does not mean the value of your house has decreased. Instead, it means that the house ages each year and thus the useful life of the house wears out, even if it’s in impeccable shape. You can also write off the depreciation of improvements. For instance, if you replace the roof and add wall to wall carpeting
5. Last Chance at the 10-year Tax Abatement
The 10 year tax abatement is officially getting a facelift. Starting in 2021, all 10 yr tax abatements will get 100% of a tax break the first year and reduce by 10% each subsequent year. This means that any property that was built before 2021 are still eligible for the full 10 yr tax abatement. So if you’re thinking about buying a new construction property as an investment, 2020 is your year!
*It’s also worth noting that this bill does not affect commercial or rehabbed properties, only new construction.
For more information about investment properties, reach out to Emily at firstname.lastname@example.org or 609-605-6507
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