Pros and Cons of Purchasing Investment Property
Suggested meta description: Deciding to purchase rental property should not be taken lightly. Learn the pros and cons of purchasing investment property to guide your decision.
What comes to mind when you think of investment property? Do you think of easy income with little work involved? Or do you think of unexpected costs and never ending maintenance? Whichever comes to mind, a real estate investment is not something you should take lightly. Owning rental properties might be great for one, and terrible for another. There are distinct pros and cons to purchasing rental properties. Before you take the plunge and purchase property to rent out, know what you're getting yourself into.
With proper management, owning rental property can be very lucrative, and you can make a lot of money. Benefits include:
Perhaps the most obvious benefit of owning a rental property is the income the property (or properties) provides. A single property that rents for $1,000 a month can net you $12,000 in income. Additional properties can generate even more than that.
Rents pay your mortgage
Use the aforementioned rental income to pay your mortgage. This can be a double benefit to owning rental property, making it even more attractive. If you own enough rental property for long enough, you can possibly eliminate your mortgage.
Rental properties are considered to be stable investments, ones that hold their value over time, and can even grow in value based on improvements or property reassessments.
People always need housing. Even if the economy completely collapsed, people still need a place to live. You will never not be without renters.
Most home repairs are minor when they are needed. Many minor repairs can be taken care of by tenants quickly. More major services an be hired out. Rental buildings for the most part don't need much maintenance.
When you own income property, you can claim significant tax deductions.
As you can see there are numerous advantages to owning rentals. Like anything, however, owning investment property is not without its downsides.
And Now, the Disadvantages
Wear and tear
Rental properties tend to have higher maintenance costs than a homeowner occupied property. Tenants often do not treat rental properties as well as they would treat their own. This can lead to higher repair costs, as well as a greater time investment on your part.
Finding qualified renters
If you run a credit check on applicants, you may not find qualified renters. You may have to deal with individuals who lie on their applications about their creditworthiness, and the like.
As the landlord, you will be expected to take care of repairs and maintenance, collect the rent and handle any tenant concerns. This can be time consuming, particularly if you own multiple properties.
You'll find plenty of homes for sale in albuquerque, that can make perfect rental properties.
You'll want to carefully weigh your options when considering the purchase of a rental property. What sounds great on paper can end up being a great deal of work. If you have thought about becoming a landlord, make sure you educate yourself about the pros and the cons of owning rental properties. Don't rush into this decision blindly. Educate yourself and learn the facts.