IDEAL is an acronym for the 5 main features of property investing that make it so attractive to investors worldwide: Income, Depreciation, Equity Build Up & Expenses, Appreciation, Leverage.
In my previous posts I reviewed the first two of the 5 features that make property investing the IDEAL investment: Property Income & Property Depreciation.
Today I want to talk about Equity Build Up & Expenses.
Property Investing - Equity Build Up & Expenses
As you pay down the principle of the mortgage loan you are gradually building up your equity stake in the property. So, even if there is no increase in the value of the property over the term of the loan you still end up with an asset with 100% equity at the end of the mortgage loan term.
Expenses such as property management fees, maintenance, insurance, mortgage interest etc., are deductible from the rental income, thereby reducing your tax liability.
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