For first-time investors, deciding to purchase a rental property might be tough. Your first property acquisition can be simple, save you money, and help you build your business in the future with the help of a rental property loan.
There has never been a better moment to invest in a rental property than now, with real estate demand at an all-time high.
Advantages Of A Rental Property Loan
Complete Control
You can get complete control over an investment while spending less of your own capital with the help of a rental property loan.
The owner of a rental property has complete control over who leases the property, how much rent is collected, and where the property is purchased. By accessing a rental property loan you can leverage your capital and access ours to grow your portfolio.
Higher Income
Property values have been steadily increasing. Property values are predicted to continue to rise, implying that your return on investment will be even larger.
Home values in the United States have increased by 7.6% in the last year and are predicted to increase by another 6.4 percent in the coming year. With a stable economy, home values will continue to climb, and your rental property’s value will rise as well. More property values mean higher rent and more possible tenants, which means more ROI for you.
Tax Breaks
Buying a rental property comes with a slew of tax benefits that will save you money in the long term.
Even if your property is rising in value, depreciation is deducted for rental properties. Interest, repair charges, personal property use, insurance costs, travel expenditures, legal services, property taxes, and home office deductions are all eligible annual write-offs.
You can write off your insurance, mortgage interest, maintenance fees, and physical wear and tear on your rental property.
Depreciation may result in a nominal loss that you can deduct from other income. To put it another way, you may have a positive cash flow from rental income minus expenses but yet have a net loss for tax purposes. However, keep in mind that depreciation lowers the cost basis of a property when calculating capital gains when you sell it.
Landlords can deduct mortgage interest on all rental property loans without itemizing their own expenses. Investors can deduct other loan-related costs such as lender fees at closing in addition to interest. Contact your tax professional for further information.
Good Rates
We offer a variety of loan terms and rates to suit our real estate investors throughout the country.
For rental property financing, 15-year and 30-year plans are typical. The rental income collected from each of your tenants helps assist the real estate investor with positive cash flow on the property.
Good Investment
No more risky investments; your rental property is a tangible asset. You may take a hands-on approach to aid with profit margins and customize your investment property because you have complete control over improvements, tenants, rent, and more.
Rent is actual money; once you’ve paid the monthly expenses on the property, the remainder is positive cash-flow for the investor. The number of renters in the United States has gradually climbed since 2007, and this trend is projected to continue.
Diversification
Consider the following scenario: You have $100,000 to invest in real estate. You have a choice with a rental property loan that requires a 20% down payment: you can buy one $100,000 property in cash or five $100,000 properties with a 20% ($20,000) down payment on each.
Diversifying your $100,000 investment over five properties lowers your risk. Instead of one SFR asset, you divided the 100,000 into five assets.
Rental property loans let you diversify your real estate portfolio and distribute your capital among numerous investments.
Leveraging Increases Returns
Leveraging other people’s capital to cover the majority of the cost of a rental property can enhance your cash-on-cash returns.