The 4 Amazing Financial Benefits of Rental Properties!

Rental Properties are the ultimate slow-burn, addictive, real estate investment strategy. They allow you to make money in several different ways, all at the same time. Once you acquire your first one, you won’t be able to stop!

A buy & hold strategy involves purchasing and holding a property with the intent to rent it to a tenant. The best rental properties deliver both monthly cash flow as well as long term appreciation.   But in reality, there are even more benefits!

Rental Properties have 4 key financial benefits:

1. Cash Flow: Your monthly income, net of all expenses.   This is generally the priority for us and most investors.    You get enough cash-flow from enough properties, and you never have to work again!

2. Appreciation: The increase in value of the rental property over time.  If the stock market is giving you 5%-10% but you can buy a rental in a neighborhood appreciating 10%-20% then putting your money in real estate sounds like a pretty good deal!

3. Principal Paydown: Each year you hold the property, part of the principal owed on your mortgage is paid down using the tenant's rent payments. This dynamic will consistently increase your equity in the property every year.  For a $200K, 5% interest, 30yr fixed mortgage, this principal paydown starts at around $3000 per year but can reach over $7500 a year in the last 10yrs of the loan.

4. Depreciation: You can deduct depreciation from your annual rental income when you report your taxes. This will reduce your ultimate tax burden on the annual net income from your rental properties.   On our rental portfolio, depreciation ends up reducing our taxable income by around 67%.