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Leasing Property as an Investment Strategy

Many people believe that landlords take in a lot of income, and while this may be true for some examples, a majority must deal with ongoing maintenance, vacancies and all of the other issues associated with home and property ownership.

There are approaches to owning a property and leasing it out that will yield a good return.  Interestingly, the most common approach to investing in a leased property is connected to a real estate strategy known as “flipping.” In this scenario, an investor purchases a property in need of renovation.  They do all of the needed improvements and then lease the property to an interested party.

The lease for such an arrangement, however, closes with the option to buy.  Many potential landlords or business owners are looking for such an arrangement in order to develop their business or secure their finances.  During the lease period, the payments made by the leaseholder will cover the flipper’s mortgage and tax debts and when the tenant exercises the lease options to purchase, the flipper will have made a significant amount more than simply fixing up the property and selling it in the market.  Such a scenario also eliminates any broker fees and reduces liabilities in capital gains as well.

There are also more traditional approaches to leasing property as an investment strategy, and the majority of these arrangements are going to be in professional spaces.  This can include business offices as well as rental or storage facilities and such scenarios can be remarkably lucrative.

Of course, there are also tenanted properties that are leased entities and these too can yield a steady stream of income, but only when the best tenants are selected.  This method or approach asks a lot of commitment from the investor and can be seen more as a business than investment strategy.  If this option is selected, the owner should protect their income through landlord insurance policies as well as standard property insurance and a tax professional should be consulted in order to utilize all tax breaks available to such businesses or arrangements.

Leasing property as an investment strategy is a valid approach to creating income or profit.  It does require a larger measure of involvement on the part of the owner than some other real estate ventures, but if a steady stream of income is desired, or a higher resale value, the benefits cannot be ignored.