Around 50% of Denver's residences are renter-occupied.
If you're a property owner who has become an accidental landlord, you may want to reconsider selling. There are countless perks to turning a home into a rental property with the most obvious being the ability to earn rental income.
In today's post, we'll examine some of the biggest benefits of owning a rental property that Denver's accidental landlords need to consider. If you can afford to keep this property, keep reading and learn how you can use it for your benefit.
Passive Income
The most obvious benefit of renting out a property over selling it is the passive income you'll get. When you find a great tenant and look after the property, you can keep monthly rent payments coming in for years.
It's important to perform a rental valuation to determine how much you can charge per month. So long as there's demand from renters - Denver's rental market is very strong - and you price your property correctly, you should be able to find solid tenants.
Amortization
Amortization is the act of building equity in an investment by paying down debts. As you receive regular rental payments, it's basically like the tenant is paying your mortgage for you. If you add some of your money to the process, you can quickly gain equity and the property will be yours.
Tax Deductions
Another great thing about having a tenant pay your mortgage for you is that you're still eligible for tax deductions. Landlords can deduct almost all of the operating expenses for a rental property, which can save you thousands of dollars per year.
The biggest deduction is for depreciation. You can claim a certain amount for depreciation for 27.5 years (the maximum number of years the government allows for depreciation). If your home is valued at $400,000, you get roughly $14,000 in depreciation write-offs.
Appreciation
When you look at Denver's real estate market over time, you'll see steady growth in single-family homes. This appreciation is where you can really start to build wealth. Your home value could double in the next 30 years.
All the while, you'll be getting passive income from rent collection. Most homes appreciate by roughly 5% each year, so if you decide to sell in 20 years, that $400,000 home could be more like $800,000.
It's important to remember that rental properties go through more wear and tear than owner-occupied properties. You'll need to invest in maintenance and repairs to ensure it stays in good shape for the duration of your ownership.
Creating Generational Wealth
Keeping a rental property allows you to create generational wealth for your family. It's an easy way to build savings for things like college tuition and inheritances. Your children will benefit from your savvy real estate moves.
How Property Management Helps Accidental Landlords
There are thousands of accidental landlords across the country and many in Denver. These are some of the benefits of embracing your new role of a landlord, but it can still be a lot of work. If you're feeling overwhelmed by the idea of being a landlord, you can always hire property management.
At Laureate Ltd., we've helped countless accidental landlords turn their properties into real money-makers. You can leave all the hard work to us and enjoy collecting your rent payments. Contact us today to learn more.
