Why Tax Savings And Principal Pay-down Are Hidden Benefits To Investing In Rental Properties
By: Gregg Cohen, CEO, JWB Real Estate Companies
May 9, 2019
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One of the first things we do when a client chooses to invest with JWB, is to help them set realistic expectations for the returns they’ll enjoy on our first 30 minute phone call. We’ll take the time with each client to make sure the numbers make sense and that every client is comfortable with the return.
Two important factors go into calculating that return. For one, the tax savings our clients will receive with their investment, and secondly, the principal pay down they’ll receive. Many investors just aren’t aware of the hidden benefits of owning rental properties or are unsure of how to calculate the value in relation to their overall returns.
Here’s how both of these work
Tax savings come from the sizable write off clients get each year from a depreciating asset. Even though the rental income is taxable, the depreciation write off reduces or even completely offsets their cash flow income and that equals big tax savings each year.
The benefit is kind of like an IRA. We are able to grow your investment much more quickly because of deferring the taxes.
As far as principal pay down, this is pretty easy to calculate. Remember, by paying rent, your resident is paying off your loan for you over time. Imagine waking up one day in 10 20 or 30 years and realizing that your resident completely paid off your mortgage for you and you own the property free and clear on every property you own with us!
That is why these hidden benefits are so important and why JWB clients love this investment model so much. Want to know more? Click the button below or give our office a call at (904) 677-6777.