Thinking of becoming a rental property owner? Then you need to consider the pros and cons of rental property ownership. Don’t undermine a potential income-producing opportunity by failing to consider both. It’s best to know all the facts before jumping in.
The big draw to becoming a rental property owner is residual income. Matching the right tenant with the right home can mean months or years of stable monthly income. And having multiple rental properties can increase this income exponentially. If you have the time and money to invest in multiple properties, it’s something to consider.
In addition to this income pro – and it’s a big one – there are other financial benefits to consider. You should consider the equity that you have in the property and the potential appreciation of the property’s value. In addition, there are tax benefits available when you invest in real estate.
While the upside to becoming a rental property owner can be great, the downside can be difficult for someone without experience owning rental property. One thing to ponder is the lack of liquidity some property owners experience after their money becomes tied up in such a large investment. Evaluate your financial position to determine if this might be an issue for you.
Also, when exploring the financial viability of becoming a rental property owner, you should consider the cost of the upkeep of your rental property. Just like your home, a rental property requires maintenance and repairs. A good rule of thumb is to allocate 1% of the property’s value per year for maintenance and repairs.
Additionally, dealing with tenants can be challenging to say the least. It is important to maintain a professional relationship with your tenants, but in real life that’s not always possible. Yet, having a personal relationship with your tenants can bring requests for favors such as more time to pay, waiving late fees, and other costly mistakes.
It can also be very time-consuming dealing with tenants and managing a property. As a property owner, you might be happy to accommodate a tenant, but if you have a full-time job, or other obligations to attend to, do you have the time? Do you have the time to schedule and coordinate needed repairs and regular maintenance tasks?
Let’s face it; not everyone is cut out to be a landlord. Whether you are considering purchasing a rental property, or you already have rental property, call on the experts at All County Heartland Property Management. We make owning rental properties easy!