I've always been curious but...

It seems to me that a lot of people think they might like to own some residential rental property. There are many good reasons top do this. An investment rental property has five distinct financial benefits

1.Equity Capture
This is a fancy way to say that if you buy at a discount you have already made some money on paper. While this may be the case it's important to realize it may be awhile before you liquify this captured equity.

2.Cash Flow
You buy the house, fix it up and find a tenant. They go to work everyday and at the end of the month they write you a check.
Done correctly, it will be for significantly more than whatever payment you may have on the property. This type of income just seems to make people happy.

3.Deductions
If you make more than $10 an hour you should, in my opinion, have a CPA. If you are going to add rental property to your portfolio they should be knowledgeable about this business. There are a lot of deductions than can be taken the most significant of which is probably mortgage interest. Even if you have the cash to buy a property it could very well be a better strategy to leverage it at today's historically low interest rates.

4.Appreciation
It will appreciate. Someday. Hopefully sooner than later.

5.Depreciation
Ask your CPA about this one. It's the best part.
With a few properties you can offset a significant amount of income.

If you are interested and would like to know more, like the best way to find discount properties, post a comment or email me.