Rental homes can be the IDEAL investment in today's market because they offer a much higher rate of return than alternatives without the volatility of ups and downs in the stock market.
IDEAL serves as an acronym to identify the advantages of rental properties:
- Income from the monthly rent contributes to paying the expenses and a return on the investment
- Depreciation is a non-cash deduction that contributes a tax shelter
- Equity grows monthly as the mortgage amortizes due to some of each payment being applied to the principal
- Appreciation is achieved as the value of the property goes up
- Leverage can increase the return on investment by using borrowed funds to control a larger asset