Investing in Tampa real estate provides some great opportunities for earning money and building wealth. There are two important things to remember, whether you’re a new investor looking for your first purchase or an experienced investor who wants to grow an established portfolio:
- Real estate investing makes money over the long term. You won’t get rich in a matter of months.
- There are a lot of different ways to earn money in the Tampa real estate market; you don’t have to rely on rental income only.
Let’s talk about some of the ways you can make money with a Tampa rental property.
Capital Appreciation and Increasing Value
It would be outstanding if every property you purchased began to earn you money on month one. If the amount of rent you collect far exceeds the amount you need to spend on that property, you’re going to earn a lot on rental income.
But, that’s unlikely.
Capital appreciation is the increase of a home’s market value compared to its purchase price or acquisition cost. When you factor appreciation into your investment strategy, you’ll see that it will help you earn the income you’re hoping for as the property increases in value. Tampa real estate values are going up, and they will likely continue to increase. It’s a great market with a lot of room for appreciation.
Deprecation and Tax Benefits
It’s easy to think only about the money that’s flowing in, but you also have to consider what you’re earning by taking advantage of tax breaks and especially depreciation.
You’ll need to declare all the income you earn off your rental property, but you can offset that income with any expenses related to your rental home. These may include:
- Maintenance costs
- Legal and accounting fees
- Property management fees
- Any travel expenses related to visits you made to your property
There are several others, and we encourage you to speak with your CPA or tax accountant to get an idea of what you should be deducting to limit your tax liability.
Depreciation allows you to deduct the investment and purchase costs of your rental property. Even better, you get to take this depreciation over the life of the investment instead of just in the year you purchase it. Currently the IRS has an average lifespan of 27.5 years on record for a home, so that’s the number you’ll use in your tax planning.
These things will help you earn money on your Tampa investment property, and it’s easy to forget these benefits when you’re measuring your rental income against your expenses every month.
Remember also that you’re earning this income while your tenants are paying down your mortgage. The longer you hold onto your property, the better return you’re going to have.
Invest in Upgrades and Updates
You can earn more on your investment property when it’s well-maintained, modern, and attractive to high quality tenants. If your kitchen has appliances that are 40 years old and your bathroom floors are linoleum from the 1970s, you’re probably losing good tenants. Make sure the home is clean, painted, and shows well.
If your home is new and already in great condition, don’t spend a lot on upgrades now. To really maximize your investment, you’ll want to wait until you need to begin replacing things such as floors, appliances, and fixtures.
We have a lot more to tell you when it comes to earning money in the Tampa real estate market. Contact us at Hoffman Realty to discuss other ways you can earn more on your rental properties.