The Denver real estate market finally appears to have peaked. Pending sales were down nearly 3% over the past year. Sellers are starting to drop their asking prices and mortgage applications are down.
These statistics are leaving many property owners wondering if they should sell now. They want to capitalize on record-high home prices before they start to rapidly decline.
However, there are many arguments for holding your rental property instead of selling it. Read on to learn about the benefits of earning passive income through an investment property. Explore six benefits of maintaining your rental investment through these tumultuous times.
1. Maintain a Revenue Stream
Many economists are forecasting a recession in the fourth quarter of 2022 and in the following year. The U.S. Federal Reserve is aggressively raising interest rates to combat extraordinarily high inflation. While these moves are necessary, they are certain to curb consumer spending and bring on an economic downturn.
Millions of people are going to lose income as a result. By maintaining your investment property, you keep revenue flowing into the bank account. This is critical for staying afloat during a recession.
2. Tax Benefits
Tax benefits are a primary reason why people get into real estate investing. Your property can help keep taxable income lower.
There are several possible tax deductions related to property ownership. These include mortgage interest, state and local property taxes, and closing costs.
3. Increasing Wealth
Real estate investing is a certain strategy for increasing wealth. By acquiring valuable assets, you are becoming richer over time.
This is because real estate is known to appreciate in value over the long run. Also, as you pay down the mortgage principal, you are building equity in the property and building wealth. Cash buyers see this benefit immediately and can capitalize on price appreciation right away.
4. Home Away From Home
Many property owners use their investment properties for cheap getaways. These savvy investors offset the cost of their weekly vacations.
The trick is to purchase a property that is close to a beach, lake, or mountains. Then, you can rent it to vacationers for the vast majority of the year. Lastly, ask your property manager to block off a few weeks each year for your family to use it.
5. Home Office
So many people are wasting money on commutes and office space. As a landlord, you can establish a home office instead.
This is convenient and efficient as you shave hours off your day going into an office. Also, some home office expenses are tax deductible and lower your taxable income.
6. Offset Inflation
Inflation is one of the biggest stories in the country right now. The cost of goods is rising drastically and wages are not keeping up.
The good news is that home prices are increasing rapidly as well. By remaining a property owner, you are minimizing the impact of inflation.
Six Reasons to Hold Your Rental Property
There is a strong case to be made for holding your investment property. It is a tried and true financial strategy over the long run.
During this time you are building wealth and offsetting the impact of inflation. If you want to learn more about managing a rental property, contact us today to speak with a professional.
