What makes a good investment property?
A good investment property typically features strong rental demand, positive cash flow potential, favorable location factors (job market, schools, amenities), and long-term appreciation prospects. Key metrics include cap rate (typically 4-10% is considered good), cash-on-cash return, and potential for value-add improvements.
How much should I save for a down payment?
For investment properties, lenders typically require 20-25% down payment for conventional loans. However, this can vary based on property type, loan program, and your creditworthiness. Some investors use creative financing strategies like owner financing or private money loans with different down payment requirements.
What are the tax benefits of owning investment property?
Investment properties offer several tax advantages including deductions for mortgage interest, property taxes, operating expenses, property management, and depreciation. The Tax Cuts and Jobs Act also introduced new benefits for real estate investors through qualified business income deductions.