Top 10 Benefits of Investing in Long-Term Rental Properties

Top 10 Benefits of Investing in Long-Term Rental Properties

There are all sorts of advantages to investing in real estate beyond the potential return an investment can provide for you, and one of the greatest asset classes to invest in is long-term rental properties. Aside from being a consistent source of income, they can be a smart way to diversify your portfolio, and you can make use of tax advantages and other benefits like equity built over time. They can even become passive income streams for investors looking for a more hands-off approach. Continue reading for our list of the Top 10 Benefits of Investing in Long-Term Rental Properties.

Wooden house and magnifying glass with a checklist

#1: Stable and Predictable Income

Let’s start with the most obvious benefit first. Rental properties are one of the most stable and predictable sources of income due to rental revenue. Housing will always be in demand, so instead of risking your wealth on the stock market or spending time managing an Airbnb, you can take a more consistent approach with a long-term rental investment.

#2: Long-Term Appreciation

Rental properties also have another aspect that contributes to their return, which is appreciation over time. Real estate tends to grow in value year-over-year, mostly because there is always going to be good demand for housing. Your return can become very impressive from a combination of both rental income and appreciation.

#3: Equity Built Through Mortgage Payments

Time is also on your side when it comes to the equity you build in a rental investment. The rental payments you collect each month will contribute to the amount of equity you have in the property, which can easily become liquid capital through a refinance loan.

#4: Tax Advantages

Another huge benefit of operating a rental property is all the tax advantages that come with it. You may already know that the expenses associated with your real estate business (like maintenance costs and mortgage interest) can be deducted, but did you know you can also benefit from depreciation by conducting a cost segregation study? This is where you depreciate all the assets on a property over their usable lifespan, and it can lead to massive savings for investors.

#5: Diversification of Investment Portfolio

Acquiring long-term rental property can be a great addition for those looking to diversify their investment portfolios. Real estate tends to be a safer investment than stocks or other alternatives, while also providing surprisingly consistent returns. By investing in different markets, you can also reduce your risk exposure and mitigate the effects of market downturns.

#6: Hedge Against Inflation

Rental properties can also serve as the perfect hedge against inflation. Real estate typically grows in value over time, and that means it often keeps up with our outpaces the rate of inflation. Even in economic downturns, rental property tends to hold its value well, and may continue to grow despite the condition of the greater markets.

#7: Control Over The Property

One of the great benefits of owning a rental property is that you have a lot of control in your investment. Not only do you get to make renovation decisions which can potentially boost your revenue, but you also have a hand in the tenant selection process. You can make use of a good tenant screening process to help ensure you have a smooth time managing your rental property.

#8: Flexibility in Exit Strategies

There are also quite a few options to choose from when it comes to an exit strategy for your investment. Aside from just holding onto the property for long-term income, you may be able to refinance it and use the proceeds to fund another investment. Or, you may want to sell the property, and collect the return you have built over time through appreciation.

#9: Opportunity for Passive Income

Rental properties present a unique opportunity in that they can be completely passively managed. Hiring a good property manager means that maintenance, tenant issues, and vacancies are all dealt with appropriately, leaving you time to tend to other investments. This also opens the door for you to make investments in lucrative markets away from you and manage them remotely.

#10: Potential for Generational Wealth

An often-overlooked benefit of investing in real estate is the potential for creating generational wealth for your family. A rental property is a long-standing investment that can be passed down through your estate and to future generations. You can begin to secure your family’s financial future by investing in real estate today.

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?