Many mental health professionals are intimidated by the thought of acquiring rental property. However, there are several options (multifamily properties, real estate development, commercial real estate, etc.) for becoming a real estate investor. I found that purchasing a single-family home was easiest, and I immediately learned about four major benefits from the transaction. No. 1: Passive income Passive income is unearned income acquired with little-to-no labor. After purchasing rental property and getting a tenant, you can watch your bank account grow. For example, I bought my first rental house in my hometown of St. Louis, Missouri, for $50,000, which resulted in a $350 monthly mortgage payment. I placed the property into Section 8, a housing choice voucher program for low-income households, and rented the property for $875, generating passive income of $525 monthly. I used my passive-income profit to pay off the home within four years. I am currently earning $1,100 per month in passive income due to rental leasing increases. No. 2: Tax benefits You can take advantage of tax benefits the IRS gives to real estate investors. As a rental property owner, you can deduct the following expenses as tax write-offs:
Insurance and property tax Rental property repairs Property management and leasing fees Utilities paid by the owner HOA fees Legal and professional fees Mortgage interest expense Travel expenses to visit an out-of-town property (a big tax benefit for remote real estate investors)
Owning a rental property not only generates passive income but enables you to reduce your IRS tax burden. And the higher your tax bracket, the more you gain from having rental property. No. 3: Inheritance and wealth building With so many benefits associated with purchasing rental houses, the most significant benefit for me is the opportunity to leave an inheritance for my children. After learning about the real estate business, I reinvested my profits and purchased two additional properties for my son and daughter. The secret to leaving an inheritance and building wealth is to create a money-making and wealth-building cycle that includes buying a rental property, making a profit, and reinvesting the profits. No. 4: A global pool of renters You can place the property on the market as a rental space on platforms such as Airbnb or Vrbo. Becoming an Airbnb host is a great way to meet new people from across the country and spend more time with your loved ones while also diversifying your investment portfolio. Now that you have learned about the major benefits of purchasing rental property, you're probably wondering where to find an investment property. Fortunately, resources like Zillow, Redfin and local MLS listings are great places to start. How and where can you find affordable rental property? The answer is simple: Visit your local government housing administration website or office to see if they have a Land Reutilization Authority listing. The LRA receives titles to all tax-delinquent properties not sold at a sheriff's auction or sale. It also receives titles to properties through donations. The tax-delinquent properties are listed under the LRA and sell for $1,000 up to $60,000. You can attend a public meeting and purchase the property available for sale. After buying a "fix-up" property, you are given a specific time frame to bring it up to the housing code and place it on the market for rent. As you look to grow your net worth as a mental health professional, consider purchasing rental property.
First published in Black Mental Health Today, Spring 2023 (Vol. 7).
