LOAN PROGRAMS

RCN Capital offers short-term and long-term financing options for real estate investors. Whether you or your clients are looking to fix & flip properties or hold properties for rental income, RCN has flexible options that suit your needs.

Final loan terms may vary based on loan types, verification of application information, and other risk-based factors.

PARTNERS

RCN Capital values building strong partnerships with industry professionals because partnerships drive our success. Learn more about RCN Capital’s Wholesale Lending opportunities, including the Broker Referral Program and the Correspondent Lending Program.

ABOUT

RCN Capital is a nationwide private, direct lender. Established in 2010, we provide retail and wholesale lending options for short-term fix and flip financing, long-term DSCR financing, and ground-up construction financing for real estate investors.

Resources

RCN Capital provides a variety of resources that can help you on your lending journey. Find business partners that can help solve any investing problem, learn more about our processes and get answers to the most frequently asked questions.

Pros and Cons of Rental Property Ownership


Pros and Cons of Rental Property Ownership
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Owning rental property can be a lucrative investment, but it comes with its own set of challenges. For wholesale lenders, brokers, and referral partners, understanding the advantages and potential pitfalls of rental property investments is crucial for advising clients and structuring financing solutions effectively. Whether you work directly with investors or help facilitate funding for long-term rental properties, knowing the key benefits, risks, and financing considerations will help you provide better guidance and maximize business opportunities.

Below is a breakdown of the pros and cons of rental property ownership, focusing on how wholesale lenders and brokers can navigate these opportunities to support their clients.

Pros of Rental Property Ownership

Steady Income Stream

One of the biggest advantages of rental properties is their ability to generate consistent income. Tenants’ monthly rent payments provide property owners with a steady cash flow, which can help cover mortgage payments, property maintenance, and other expenses.

For wholesale lenders and brokers, rental income plays a key role in determining a borrower’s ability to qualify for financing. Lenders offering DSCR (Debt Service Coverage Ratio) loans specifically analyze rental income to determine loan eligibility. Ensuring a property’s rental income is strong enough to cover debt obligations is essential for securing financing for investors.

Long-Term Appreciation & Equity Growth

Over time, real estate typically appreciates in value, allowing property owners to build equity. While appreciation rates vary by location and market conditions, long-term investors often benefit from significant increases in property value.

From a wholesale lending perspective, appreciation enhances loan-to-value (LTV) ratios, making it easier for investors to refinance, pull equity, and expand their portfolios. Brokers can educate clients on cash-out refinancing strategies to help them leverage appreciation for future investments.

Tax Benefits & Incentives

Rental property owners can take advantage of various tax deductions, including:

  • Mortgage interest
  • Property taxes
  • Depreciation
  • Repairs & maintenance
  • Insurance premiums

These tax benefits significantly improve net cash flow and investment returns. Lenders and brokers should highlight these benefits to clients as part of their investment strategy, demonstrating how tax savings can offset financing costs.

Portfolio Diversification

Real estate is a unique asset class that often moves independently of the stock market. For investors, adding rental properties to their portfolio creates diversification, reducing overall investment risk.

For wholesale brokers and referral partners, rental property financing is a stable, high-demand niche. Many clients seek long-term rental financing to balance their portfolios, making it a consistent revenue stream for those facilitating real estate loans.

Investor Control Over Assets

Unlike stocks or mutual funds, rental property ownership provides investors with direct control over their assets. Property owners can influence their returns by making strategic upgrades, adjusting rental rates, and improving property management.

For wholesale lenders, control over rental income and property value directly impacts an investor’s ability to refinance or secure future funding. Encouraging value-add strategies, such as property upgrades or short-term rental conversion, can help clients enhance profitability and improve their financing options.

Cons of Rental Property Ownership

Property Management Challenges

Owning rental property requires active management, including tenant screening, rent collection, and property maintenance. While property management companies can handle these tasks, they charge fees that cut into an investor’s profit margins.

For wholesale brokers and lenders, loan approvals often consider property management expenses when evaluating a borrower’s financials. Brokers should educate clients on whether self-management or hiring a professional is the better option for their financial situation.

Risk of Vacancy

Periods of vacancy pose a financial risk, as they result in lost income while expenses (mortgage, taxes, insurance) continue to accrue. Even in high-demand markets, rental properties may experience turnover gaps.

How Lenders & Brokers Can Help:

  • Recommend that clients maintain a vacancy reserve fund.
  • Offer bridge loans or lines of credit to cover temporary shortfalls.
  • Help investors analyze market vacancy rates before acquiring rental properties.

Unexpected Maintenance & Repairs

Every rental property requires maintenance, and unexpected repairs can be costly. Roof damage, plumbing issues, and HVAC failures are some of the most expensive problems property owners face.

For wholesale lending partners, maintenance costs are an essential part of risk assessment. When structuring loans, lenders and brokers should ensure clients have sufficient cash reserves to cover emergency repairs.

Dealing with Tenants

Tenant issues—such as late rent payments, lease violations, or evictions—can be a major headache for property owners. Bad tenants can lead to property damage and legal complications.

Brokers & Lenders Should Advise Clients To:

  • Conduct thorough tenant screening.
  • Set aside funds for legal fees in case of eviction.
  • Work with professional property management services to reduce tenant-related risks.

Illiquidity of Real Estate

Unlike stocks or bonds, real estate is an illiquid asset. Selling a rental property can take months, and market conditions may not always be favorable.

For wholesale brokers and lenders, structuring cash-out refinance options or HELOCs (Home Equity Lines of Credit) allows investors to access capital without selling their properties. Educating clients about these financing options ensures they have liquidity when needed.

Other Key Considerations for Wholesale Lending Professionals

Understanding Client Investment Goals

Before recommending a financing solution, brokers should ask:

  • Does the investor seek short-term income, long-term appreciation, or both?
  • Do they plan to self-manage or hire a property manager?
  • What is their risk tolerance regarding vacancies and market downturns?

Tailoring financing options based on client goals strengthens lender-client relationships and improves loan performance.

Evaluating Financing Needs

Not all rental property investors have the same financing requirements. Some may seek long-term, fixed-rate financing, while others prefer short-term bridge loans before refinancing.

Loan options to consider:

  • DSCR Loans (Debt-Service Coverage Ratio) – Ideal for clients relying on rental income to qualify.
  • Cash-Out Refinance Loans – Allows investors to extract equity for future investments.
  • Portfolio Loans – Useful for clients managing multiple rental properties.
  • Bridge Loans – Short-term financing for rental property acquisitions.

Assessing Local Market Demand

Rental market strength varies by location. Brokers should analyze:

  • Average rental prices
  • Vacancy rates
  • Tenant demand trends
  • Upcoming local developments

Providing data-driven insights helps investors make informed decisions and improves loan performance.

Encouraging Smart Exit Strategies

Every rental property investment should have an exit strategy. Brokers should advise clients on options such as:

  • Selling the property for capital gains
  • Refinancing for better loan terms
  • Converting the rental into a short-term vacation rental
  • Using a 1031 exchange to defer capital gains taxes on a new investment

Having an exit plan mitigates risks and maximizes returns.

RCN Capital: Your Trusted Partner in Rental Property Financing

The easiest way to secure rental property financing is by working with a trusted wholesale lender that offers competitive rates and flexible terms.

RCN Capital specializes in:

  • Long-Term Rental Loans
  • Short-Term Fix & Flip Loans
  • New Construction Financing
  • Bridge Loans & Portfolio Loans

Our experienced loan officers and in-house underwriting team make the funding process fast and seamless. Whether you're a broker, referral partner, or real estate professional, RCN Capital has tailored solutions to help you grow your business.

Connect with us today to discuss how we can help with rental property financing solutions!