The Benefits of Investing in Long-Term Rental Property

Owning rental property continues to be one of the best ways to invest your money and make a great return doing it. Besides providing owners with monthly income, it has proven to be a reliable way to protect your wealth on a long-term basis. Even in times of economic uncertainty, real estate and rental property in particular remains a profitable investment. There are even some lesser known benefits to owning rental property that make them one of the smartest investments you’ll make. Continue reading to learn more about the benefits of owning rental property, and why you should consider adding one to your portfolio.

Steady cash flow

The first and most obvious benefit to owning rental properties is their ability to provide you with cash flow on a monthly basis. Rental properties are a reliable source of income so long as you tend to them and keep the units occupied. Although they do come with maintenance costs, the average yearly return for residential properties is about 10%. The returns from this investment also come in the form of cash that is ready to be used or re-invested, unlike the returns from other types of investments.

Appreciation

One thing that makes owning real estate great is that it tends to appreciate over time, regardless of greater market conditions. This growth translates to even better returns for you as an owner, separate from the monthly income you receive from renting the property out. You can often make a sizeable return with real estate just by holding it and re-selling a few years later.

Passive income

Another great aspect of rental properties is that they have the potential to be a source of passive income for you. You can hire a property manager to take care of finding tenants and managing the day-to-day operation of your rental. It may not make financial sense to do this with a single-family property, but it can be a viable option with a portfolio of homes or a multifamily property. You’ll have to measure the cost of a property manager against the net income you receive each month to see if the numbers make sense.

Protection from inflation

Owning and operating rental property has proven to be one of the best ways to beat inflation and protect your wealth. Real estate growth consistently outpaces inflation, and it’s also less volatile than investing in the stock market. Plus since the properties are rented out, they provide consistent income each month on top of their natural growth. If you want to keep your wealth safe on a long-term basis, you should strongly consider an investment in rental real estate.

Tax benefits

There are many tax benefits that come with owning rental property which helps maximize their profitability. First and foremost, you can deduct all of the maintenance and repair costs associated with the property, and you can also deduct your mortgage interest payments. One of the best ways to save with a rental property however, is by conducting a cost-segregation study. With a cost segregation study, you can depreciate all of the assets on a property over the usable lifespan of those assets. Appliances, furniture, upgrades, and even the building itself can be included in the study. Even if your property is actually appreciating in value, you’re still able to depreciate it over a lifespan of 27 years. All these items can potentially lead to massive tax benefits, so consider working with a tax professional to maximize your savings with a rental property.

RCN Capital

The easiest way to save on a rental property purchase 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 a long-term rental property? Connect with us today.