Unlock Passive Income With the Long-Term Rental Strategy

Investing in long-term rentals is a proven method for generating income and building wealth over time. The right property, when managed correctly, is also one of the few assets that can provide passive income. Investors may also benefit from tax write-offs and appreciating property values to further their returns. Are you looking to start investing in rental properties and begin the journey to financial freedom? Continue reading for our guide on unlocking passive income with the long-term rental strategy.

What to Know Before You Get Started

Research and planning are the name of the game before diving into an investment. Long-term rentals provide consistent returns for investors, but they also require regular upkeep and maintenance. For these reasons it’s important to be familiar with the basics of real estate investing and property management, however you will also need to take time to conduct market research. Identifying high-demand areas and properties with room for growth will make all the difference in your investment’s returns. You can also take a look at how key statistics like property values, population growth, and rental pricing have changed over time to get an idea of the direction a particular market may be headed.

Finding the Right Property

There are a few criteria to consider when selecting a property for your long-term rental goals. In order to ensure a healthy level of rental demand, you should choose a property in a desirable area that has access to amenities such as good schools, shopping districts, and transportation options. On-site amenities can also affect rent, so you should evaluate these features to see if they’re worth the extra investment. Finally, you will want to make sure to order a professional home inspection before moving forward with a purchase. This will allow you uncover any major issues that would eat into your returns, and help you avoid bad investments.

Managing Your Investment

In order to keep your investment running smoothly, you need to ensure you have the proper systems in place for managing it. It starts by creating a comprehensive lease agreements where you can outline your specific policies on security deposits, late payments, pets, and subletting. You will also want to take time when selecting tenants; be sure to follow a thorough screening process that involves both background and credit checks. Finally, make an effort to stay in regular communication with your tenants and address their issues in a timely manner. Knowing that they are in good hands will keep your tenants happy, and dealing with maintenance items right away prevents them from growing into larger problems.

Passive Income

The way to turn your rental investment into truly passive income is by hiring a property manager. They can handle day-to-day operations of the property, including maintenance, collecting rent, and filling vacancies, leaving you with much less to worry about with your investment. Of course, you will need to compare your net income to the cost of management services to see if they’re financially viable, but sometimes you can purchase a rental property with management already in place. It will also help to take a look at comparable rentals in the same area as your property to ensure you are charging a competitive price for rent, as you may need to adjust pricing in order to make management feasible.

Long-Term Wealth Building

Finally, we want to provide some tips for building wealth over time with your rental investment. Operating a rental property comes with all sorts of hidden benefits. Many of the expenses associated with your property, such as operating costs and mortgage interest, can be deducted. You may also benefit from conducting a cost segregation analysis, which depreciates the value of the assets on your property over time to bring you tax savings. Be sure to work with an accountant or another tax professional to maximize your deductions.

The equity you build over time can also be incredibly useful. Taking the time to find good market means your property will appreciate while building equity, which can all be taken out with a refinance loan and put towards other investments. You can also typically reinvest these returns at a tax deferred rate. All the while you will be continuously generating revenue from the property’s monthly rental payments.

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?