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| Buying Prescott Income Property and Residential Real Estate |
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Purchasing real estate is an effective long-term investment strategy.
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There are several types of residential income-producing real estate, each offering different levels of revenue potential and carrying varying degrees of risk.
The most basic of these types of real estate include:
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- Duplex (two units)
- Triplex (three units)
- Fourplex (four units)
- Rooming house (many rooms with shared kitchens and bathrooms)
- Low-rise apartment building
- Mixed-use commercial and residential
- Properties that need to be fixed up for resale
Whether you are an investor who is looking to purchase a property that nets you a profit each month or a home buyer who wants to find a smarter way to bear the cost of home ownership, we have the information you need.
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Buying Prescott Income Property as an Absentee Investor
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| Why invest in prescott real estate that you will not live in? |
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Cash Flow: Rental incomes generate positive cash flow - the monthly net proceeds after all expenses and carrying costs on the property.
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Leverage: Income properties allow for positive leveraging - a situation where the yield to an investor exceeds the overall rate of return that would have been realized on a property had no financing been put in place.
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Return on Investment: The intention to achieve a strong R.O.I.- the dollar amount returned on an initial cash investment expressed as a percentage.
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Capital Appreciation: The potential for capital gains if the property can be sold for more than was paid for it.
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Tax Benefits: Potential for tax benefits by writing off mortgage interest against income. Also, capital gains on reversion may be taxed at a lower rate than other forms of income.
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Tax Benefit Potential: Gained by writing off mortgage interest against income. When you sell, capital gains may be taxed at a lower rate than other forms of income and there may be tax exemptions if the property is the principal residence.
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Beat Inflation: Land becomes more valuable every year. As your property appreciates, it can provide a good hedge against inflation.
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Buying Owner Occupied Income Property in Prescott
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| Why choose to own and live in a building with tenants? |
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Cash Flow: Rental incomes generate cash flow from other units in the building. That income can lower or completely offset property expenses and carrying costs.
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Location: Income properties may allow individuals to live in neighborhoods that they may otherwise not be able to afford by reducing the monthly carrying costs of mortgages.
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Accommodations: Inhabiting an income property may allow individuals to live in a larger or more luxurious unit that costs less than if they were renting the same unit.
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Mortgage Eligibility: A lender in assessing eligibility for a mortgage may use the income from a property and allow buyer to purchase a much larger property..
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Capital Appreciation: The potential for capital gains if the property can be sold for more than was bought.
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Tax Benefit Potential: Gained by writing off mortgage interest against income. When you sell, capital gains may be taxed at a lower rate than other forms of income and there may be tax exemptions if the property is the principal residence. Also, you may be able to get a depreciation benefit on the rented portion of your property (check with you tax advisor).
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Beat Inflation: Land becomes more valuable every year. As your property appreciates it can provide a good hedge against inflation.
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Gain Experience: Managing properties and tenants in Prescott or any other place requires many skills including negotiating, background checking, advertising and marketing, contract writing, escrow management, handyman, and many more. Starting with a property that you live in is a great start and you can be "on top" of things.
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