How Long Should You Hold Investment Property in Coolidge, AZ?

Investing in rental property in Coolidge, Arizona, is one of the most lucrative investments for financially savvy people. It can often withstand the test of time, hedge against inflation, and actively earn profit as the property appreciates. Learn how long you should hold a rental property in Coolidge, AZ, and the surrounding Phoenix area.

Learn how long you should hold a rental property in Coolidge, AZ, and the surrounding Phoenix area.

But one of the most commonly asked questions real estate investors have is, how long should you hold an investment property?

How Long Should You Keep an Investment Property?

The search and purchase of an investment property is a long one. It can take months or even years before you settle on a rental property that meets your financial goals. So, how long should you hold onto your investment property once you’ve found it? We recommend keeping your investment property for at least five to ten years. This time period gives your investment enough time to appreciate, go through market cycles, and qualify for tax benefits when you do decide to sell it.

How Your Investment Property Makes Money

There are two ways a residential rental property will make an investor money.

Rental Income
Property Appreciation

When rental property owners decide to lease to tenants, they will collect rent each month to both cover expenses, such as the mortgage and utilities, and earn a bit of profit. This is an excellent way for your investment property to start earning profit right away! The second way an investment property makes money is through appreciation over time. A general rule for real estate is that it will become worth more over time. This could be due to the area’s growing popularity or the housing market. So, when it comes time to sell your property, you will hopefully sell it for more than you bought it. While appreciation is not guaranteed, it is the goal for many real estate investors.

Benefits of Holding an Investment Property for 5 to 10 Years

Now, you may be wondering why this magic time frame for holding an investment property is between five and ten years. It’s because you’ll have the opportunity to experience these lucrative benefits.

Hedge Against Inflation

If you’ve gone to the grocery store lately, you’ve likely noticed that inflation has a tight grip on our economy. In fact, from July 2023 to July 2024, inflation was 2.9%. Now, let’s not forget that challenging period in June 2022, when inflation reached 9.1%. One way to fight inflation and come out on top is by investing in rental property. Even as prices rise over the years, your real estate investment will likely keep up with that inflation. So, you’ll get your money’s worth when it comes time to sell it in the present economy!

Property Appreciation

Holding onto your real estate investment for five to ten years allows the property to appreciate and to go through market cycles where you may see dips and increases in value. Generally, real estate will appreciate between 3% and 6% annually, with a national average of 4.8%. For some context, if you purchase a property for $100,000 and hold it for ten years, it could amount to around $160,000 with appreciation. And that’s without any renovation! Let’s take a look at the real estate market in Coolidge, Arizona. From 2017, the average home cost $112,000. In 2024, the average cost is $289,000. That’s more than doubled in less than ten years.

Gain More Equity

If you purchased the investment property with financing, the longer you hold onto it, the more equity you will build by paying down the mortgage. Why is this good news for investors? It means you can borrow against the property for additional investment ventures. It also means you keep more profit when you sell the property.

Long-Term Capital Gains Treatment

Investors will also be able to take advantage of tax benefits, such as long-term capital gains treatment. When owners sell a property after just a year of holding it, they can pay 37% in capital gains tax. Whereas an owner who has held their investment property for at least five years will pay between 0% and 20% in capital gains tax.

Limited Transaction Costs

Let’s face it; buying an investment property is expensive - and it’s not just the property itself! Various fees are involved in buying and selling property, from agent fees to closing costs to title searches. Investors who decide to hold onto their rental property can limit these transaction costs by selling and purchasing property every decade.

Maximize Rental Income and Cashflow

During the five or ten years of owning your rental property in Coolidge, you’ll also benefit from earning monthly rental income. So, on top of waiting for your property to appreciate, you’ll be cashing in checks each month! Plus, your rental income can increase over these years, depending on the real estate market. If these last few years tell us anything, you could increase that rental income yearly. Renting out your investment property is an excellent way to achieve immediate ROI and get the most out of your real estate investment.

Capitalize on Your Coolidge, AZ Real Estate Investment with Stratton Vantage

When you decide to maximize your real estate investment by renting it out, make sure you have a reliable property management company like Stratton Vantage on your side. Our team of real estate professionals is at your service to ensure your property is maintained and repaired when needed, your tenants are happy, and your rental checks are deposited each month. Earn recurring revenue while maximizing your investment with Stratton Vantage’s superior services. Request your free rental analysis today to see how much your investment property in Coolidge can earn monthly.