The 5 Key Benefits of Investing in Long-Term Rental Property

Investing in long-term rental properties is one of the smartest decisions you can make if you’re looking to make reliable returns through real estate. There’s good reason why so many experts recommend you add a rental property to your investment portfolio. Along with the steady income they provide, rental properties can serve as a strong base for those looking to expand their portfolio in the future, or as a way to diversify for those looking to build reliable long-term gains. There are even some hidden benefits rental properties provide that make owning one a stellar investment choice. Let’s cover some of the key benefits of investing in long-term rental properties.

Stable and Predictable Income

Simply put, a steady source of monthly income is the main reason an investor would want to own a rental home. A long-term rental property is arguably the most reliable source of investment returns, because unlike stocks or short-term rentals, there is always demand for housing. They also don’t require as much work or attention as other investments, like home flips or short-term rentals. The fact that this income is so predictable makes planning for future investments easier, since you know you can rely on the money to be there when you need it.

Long-Term Wealth Building

The other thing that makes investing in rental properties so great is their potential for price appreciation. While you are already receiving returns in the form of rental income, your property can continue to gain value over time without you lifting a finger. These factors combine to make for some seriously impressive returns for investors. If you would like to maximize your returns from appreciation, be sure that you’re performing due diligence, and investing in areas that you know are in high demand and will likely see growing property values. This strategy is also great for building generational wealth in your family in the form of assets that will continue to grow over time.

Equity Built through Mortgage Payments

We also want to touch on the power of equity in real estate, and how rental properties make for one of the best ways to utilize mortgage equity. You might already be aware of how you can pull equity out of a property to finance other investments, but rental properties excel at this because you aren’t really the one who’s financing your mortgage, your tenants are. The equity you build can serve as a continuous source of funding for down payments on new properties, helping you grow your portfolio which already has a solid base in the form of a rental property.

Tax Advantages

There are some significant tax advantages you can make use of when investing in rental real estate that will boost your returns even further. For starters, many of the costs associated with running a real estate business can be deducted; this includes mortgage interest, property taxes, insurance, maintenance costs, and repairs. You can also make use of depreciation by conducting a cost segregation study. This is where you deduct all of the assets on your property, including the building itself, over the course of their usable lifespan. Appliances, furniture, and even external upgrades can be depreciated. Be sure to work with an accountant or other qualified tax professional to maximize your tax savings.

Diversification of Investment Portfolio

Another great quality of long-term rental properties is that they can be a smart way to diversify your investment portfolio, making it more resistant to market downturns. Long-term rental properties are very desirable investments, and this helps them hold their value well even in market downturns. They are resistant to the effects of inflation, and will often keep up with or outpace it. By spreading your investments out among multiple locations and property types, you can build a strong portfolio that will continue to grow even as the overall market waivers.

RCN Capital

The easiest way to save on rental property financing is to find a trusted lender that can get you the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. RCN Capital also has flexible and competitive loan options available. Are you looking to purchase or refinance an investment property?