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It is a good time to be a landlord, house prices are still high so people will not stop renting anytime soon. Residential real estate can be a worthwhile investment if you combine the need for rental units with the chance to earn a passive income.
Being a landlord will keep you busy, you won’t just be sitting and letting the money roll in. You will want to do plenty of research before even buying a property. Below we will discuss some of the pros and cons to owing rental property.
PROS OF OWNING A RENTAL PROPERTY
- Your property is more than likely is appreciating in value over time and the rend you get will supplement your monthly mortgage and maybe some other expenses.
- As long as you keep accurate records as a property owner you are eligible for tax benefits. Depreciation costs, property management expense, and insurance are all tax deductible.
- Over time the money you earn will help you to achieve financial goals.
- If you happen to own a seasonal rental you can use it yourself for a couple of weeks and not risk the deductibility of the expenses.
CONS OF OWNING A RENTAL PROPERTY
- Resident issues are your responsibility 24 hours a day, 7 days a week, and 365 days a year. You will get the call whether it is a flooded apartment or complaining neighbors. You could hire a property manager to assist with the maintenance, but you should be aware and on top of the situation also.
- When it comes time to evict a resident who cannot pay, you have to act as a business however and have a calm level head and a thick skin.
- You have to account for the time that will be spent painting and cleaning properties in between renters.
- Another thing to keep in mind is that even when residents move out and you have a vacant property you will still have to pay that mortgage.
- The financial risk is yours.
Being a landlord will always present pros and cons to you. What you have to do is decide which pros make it worth it when you look to purchase a cash flow investment property.