Think passive income and substantial equity sound nice? That’s only the half of it. Here are five reasons to own a Santa Clarita rental property.
Most people are aware of a few of the main benefits of owning a rental property, especially in Santa Clarita, Los Angeles or even throughout California.
But there are a handful of benefits most people don’t know about, and these can make a huge impact on your overall financial picture.
Property ownership isn’t just about additional income and amassing significant equity.
It can also help you optimize your tax position, protect your assets, and increase your financial security across the board.
If you’ve been on the fence about investing in a rental property, these five key benefits may provide a more comprehensive look at what property ownership can do for your financial future.
5 Benefits Of Owning A Santa Clarita Rental Property
1. Tax Benefits
While there are obvious benefits to owning a rental property, such as the additional income, most people aren’t aware of the many tax benefits that come with being a landlord.
For example, operating expenses are deductible, including property management fees, repairs, maintenance, property taxes, insurance, landscaping and more. Certain owner expenses are deductible, as well, including your home office, continuing education or travel.
Plus, you can deduct an annual depreciation expense that accounts for the wear and tear on a rental property. Though a qualified accountant can help you with the formula to determine exactly how much you can deduct, there’s absolutely potential for significant savings.
If you used a loan to purchase your rental property, you can also fully deduct the interest paid on your mortgage loan.
Additionally, your property isn’t subject to self-employment tax like other home businesses, unless you’ve formed a business or corporation.
While these are just a few of the beneficial tax breaks and opportunities available to rental property owners, there are more, and a real estate savvy accountant or financial planner can help you maximize your tax savings, while a qualified property manager can help you maximize your profits. The result is a win-win home purchase that keeps your passive income strong.
2. Appreciation & Equity
California real estate, especially in Santa Clarita, is one of the safest investments you can make today. Home prices have been rising, and they show no signs of dropping despite higher interest rates. Coupled with low inventory, those are signs of a strong housing market that’s built to last and grow. That means appreciation is something you can count on.
As your rental property appreciates, you’re building equity you can leverage down the line. You can use it to qualify for a Home Equity Line Of Credit (HELOC), or you could see if a cash-out refinance would be a good option for you.
“Regardless of how you use that equity to your advantage, it gives you options – options you can build upon in the future,” explained Steffanie Stelnick, CEO and President of SCREM. “This is how you build a portfolio of rental properties that can create a very substantial and dependable source of passive income.”
3. Dependable Income
One of the most significant and immediate benefits of owning a rental property is the income you make from rental payments. Now, there are two variables to consider if you want to create dependable rental income:
- You need a consistent and reliable tenant.
- Your monthly rental payment needs to be higher than your monthly rental expenses.
Fortunately, these two variables are much easier to manage with the help of a strong rental market and a knowledgeable property management team. At SCREM, we screen and vet tenants with a thorough process backed by professional resources and legal counsel. Our advertising and marketing strategies are top-of-the-line and fully comprehensive, helping you attract the most reliable tenant at the most competitive price.
That means we can not only bring in the optimal rent payment for your property, but we can also re-lease your property in record time. Especially in the current Santa Clarita rental market, we’re getting new tenants placed in a matter of days or weeks.
“Our process, professionals and resources ensure that your cash flow is comfortable and reliable,” Steffanie explained. “Plus, our lease agreements ensure that your ideal rental payment is locked in for at least 12 months. What other investment gives you that kind of long-term dependability?”
4. Hedge Against Inflation
Especially when inflation is running rampant, an asset that historically and reliably increases in value is a great shield from the volatile effects of inflation. In fact, home appreciation has outperformed inflation in most decades since the 70s, according to CoreLogic, a property analytics firm.
With rental prices and home prices on the rise, buying a home makes sense because you get in at one price – and stay there. Home ownership allows you to lock in your largest monthly expense with a fixed-rate mortgage that doesn’t change for 15 to 30 years. While property taxes could rise, and occasional expenses may come up, the largest portion of your monthly payment is no longer subject to change based on the market.
“When you own your own home, your housing costs become more reliable, especially in the long-term, and that’s a great protection against the rising cost of inflation – today and for years to come,” Steffanie shared.
5. Ideal Rental Market
Even before the pandemic, home inventory was relatively low in Santa Clarita and throughout the LA area. Once the pandemic hit, the local real estate market became even more competitive and in-demand as inventory dropped lower and home prices increased at an even faster rate.
“The real estate market has been hotter than ever in Santa Clarita, LA and throughout many parts of the state,” Steffanie explained. “And as hot as the home buying and selling markets have been, the rental market has been just as strong.”
This kind of demand often has an impact on rent pricing, too. Many of our owners’ rents are the highest they’ve ever been – and they keep going up.
“If you want to try a rental rate that might seem like it’s on the high end, we have no problem trying that with you,” Steffanie explained. “We can tell you what comparable properties are renting for, but like you’re seeing in the housing market, it’s all negotiable. And many tenants are very motivated right now.”
How We Can Help
SCREM is owned by a husband-and-wife team who have combined expertise in legal, real estate and property management experience. They personally own rental properties and work with tenants, and they even own a real estate agency in Santa Clarita. Todd and Steffanie Stelnick have years of experience in every aspect of the industry, and they’ve poured that expertise into the processes and staff members that support SCREM clients every day.
Please reach out to us today to discuss the different ways you can break into the rental market and become a landlord in Santa Clarita or throughout California.
Ready to talk now? Email SCREM Vice President Todd Stelnick at todd@screm.com.
About Southern California Real Estate Management Inc.
Southern California Real Estate Management Inc. was founded in 1987, and has grown to become the largest property management company of individually-owned single-family homes and condominiums in the Santa Clarita Valley. Our locally owned and operated company currently manages about 700+ homes in Southern California. Our Team specializes entirely in residential property management.