Purchasing your first home is an exhilarating moment and a huge life milestone, but with all the excitement comes the financial side. Homes are expensive and require monthly mortgage payments, property taxes, unexpected repairs, home updates, and more.
Many people consider purchasing an investment property before buying their first home to help with their financial commitment. Let’s dive into a few benefits below.
The biggest benefit to buying an investment property before your first home is the monthly cash flow they provide. Purchasing an investment property and finding tenants to rent it out can provide a steady stream of income that can help you save up for future investments, like your first home.
Another huge benefit is building equity. Investment properties allow you to get your foot in the door and build equity until you can afford to purchase a home in the neighborhood you want. As a property owner, you can eventually leverage enough cash for the home you want and have more opportunities for mortgage loans.
Owning a rental property also comes with many tax benefits. One of the biggest tax deductibles for property owners is interest, including on your mortgage loan or if you use a credit card.
Other tax benefits include:
- Operating expenses
- Cost of repair
- Use of personal property
- Travel expenses
- Legal services
Increase Your Wealth
While real estate investments can require a lot of dedication and patience to be successful, they can increase your overall wealth. Real estate investments appreciate over time, which is excellent for your future wealth when you sell the home.
If you have any questions about purchasing an investment property before your first home, reach out to us! We are always here to help.