I can’t really wrap my head around it, you can have a tenant in there that maybe covers the mortgage, but it’s not really a good investment if you’re not getting a return?
Even if you use 500k to buy a property cash, wouldn’t that money be better off in the market?
In: Economics
A big piece of this are all the tax advantages that you get from an investment property. You get to write off things like depreciation (even though it is usually an appreciating asset), the mortgage interest, insurance, property manager, etc., which all together can decrease your tax liability, rather than increase it. Another way of saying it: Even though you’re making money from the house (even if it is a small amount) it’s very possible to get uncle sam to think that in the total, you’re making less money because of the property, so you get a lower overall tax bill, and get to keep more of the money you make from your normal job.
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