Forget the fact that you will have a permanent place to vacation in one of America’s most beautiful coastal settings – Gulf Shores Alabama, owning a vacation rental has a great number of very positive and lasting benefits.
If you’ve been on the fence about taking the plunge, here are six reasons why owning a Gulf Shores Rental Property is right for YOU!
1) Tenants will pay down your mortgage for you.
It’s True. As a property owner, the rents you collect should more than offset the monthly mortgage you are paying. Any rental funds received in excess of the mortgage due is profit. Remember: by the time most 30 year mortgages are at their halfway point, more than 50% of the total payment is paying off principal. Using your total receipts to overpay your mortgage can be a very powerful dynamic in building family wealth.
2) You get steady cash flow and income.
Whether you channel all your rental income toward making accelerated mortgage payments – or, you make minimum payments and pocket your profits – rental properties can generate steady and significant income. Nationally, fewer and fewer younger Americans are buying homes and rental markets are universally bullish – especially in desirable and seasonal destinations.
3) The Tax Benefits are substantial.
There is an array of rental property tax deductions available to individuals when investing in real estate properties.
• Interest. As a landlord, you can deduct the interest from mortgage payments associated with the purchase of the investment property.
• Repairs. You can deduct the cost of the repairs in the year they were carried out.
• Depreciation. When the rental property is providing income, depreciation allowances are a significant tax benefit to owning a rental property and can be used for years to come.
• Insurance. These premiums are deductible when calculating net income on the property.
4) The Value is almost certain to grow.
The appreciation of properties in seasonal and resort areas is not necessarily a given – but, the odds are in your favor. Additionally, one of the unique things about investing in real estate is the inherent “leverage” in the structure of the investment. You can buy using a small amount of your own money (maybe 20% or less of the purchase price) and borrow the rest. Very few opportunities offer this kind of leverage. You can reap the benefits of a property worth several hundred thousand dollars for just a fraction of that total amount.
5) You are in Control of when to sell.
The relative health of the real estate market is the only real arbiter impacting your decision of when to sell. Most experts would encourage holding the property for the “long term” – but, because of the likelihood of appreciation, you are likely to sell for more than you paid. Whatever strategy evolves, the decision rest entirely with you.
6) You will have a property in an amazing destination.
You can always move to Gulf Shores, Fort Morgan of the Orange Beach area! If you get tired of being a landlord or grow jealous of tenants spending time in this beautiful setting, you will have a place to move into with very little notice! We think THAT is a pretty amazing “PLAN B” !
Give the area a visit and see why we think this area of Alabama is one of America’s best kept secrets. We would appreciate the chance to help guide you toward the perfect investment property.
The tips given in this article do not constitute financial or tax advice. All financial situations are unique. Consult a bonafide professional advisor to see if real state property ownership is right for your situation.