Do you ever think of buying a house or an apartment and then renting it out for income? It’s quite a good way to increase wealth. However, before jumping into the deal, let’s break down the good, bad, and some tips that will help you to decide whether it’s the right move or not.
Pros of a Rental Property:
1. Additional Cash Flow: Consider a scenario in which every month, due to owning the property, there comes a situation where you receive a check in the mail. Most of the time, tenants will be paying for living in that property. It can give you a steady income on top of what you are earning at work. This extra money can help pay for your mortgage on the property, add some extra to your savings, or even treat yourself to a lovely vacation.
2. Value Appreciation: Houses and apartments are likely to become more expensive over time. Therefore, if you can buy a property and hold on for some time, you may be able to make some profit from selling at a later date.
3. Diversifying Your Investments: Putting all your eggs in one basket isn’t a good idea. The property will add something different to your investment mix. This can help protect your money from loss if the stock market dives.
4. Tax Breaks: The government may give you some tax breaks if you have rental property. You get to keep more of that hard-earned money!
Things to Think About (Cons):
1. Large Upfront Costs: Buying a property typically requires a down payment, which is a heap of cash paid at the start unless you have a great deal of money put away. Further, closing costs will be paid. And of course, who knows the repairs or renovations that may be due later?
2. Being a Landlord Requires a Commitment of Time: Institutions for rental properties don’t run themselves! You’ll have to find tenants, screen them for good fits, fix things when they break, and deal with problems as they crop up. Sometimes, this can be very time-consuming, more so if you are operating or even managing multiple properties.
3. The Market Can Change: Like with everything else, the real estate market goes up and down. If you sell during a downtime in the market, you may not get back the amount you originally paid for your property.
4. Not as Liquid as Stocks: If you want cash in a hurry, you can generally sell some stock quickly. However, it takes time and effort to sell a piece of property.
How to Succeed as an Investment Property Owner:
· Research: Understand your rental market before laying out a penny in investment. What rental return can one charge? What are the vacancy rates? The answer to these will help you in being mentally prepared.
· Location, Location, Location: Just as with buying a house for yourself, the location of a rental property will really matter. Target areas that have a high need for rentals and good potential for future growth.
· Crunch the Numbers: All those doable income estimates are great. But make sure you pick a property that will produce enough rent to pay for a mortgage, taxes, repairs, and other expenses.
· Consider a Property Management Company: In case you do not have time or the inclination to deal with tenants and repairs by yourself, you can appoint a property management company to do things for you.
Finding a Perfect Property and Managing it Too:
Be it a rental property or the dream home, Real Estate Dekho could be your partner in crime. They have myriad properties listed and hence one can choose as per their preference under one umbrella. Furthermore, Real Estate Dekho is going to provide property management services and save one from all the hassles involved with it—finding tenants, collecting rent, and carrying out repairs.
Remember that if any income-generating investment offers vast benefits, then it is an investment in real estate. On the flip side, though, it’s not suitable for everyone. Therefore, using these pros and cons, weighing between the two, doing your research, and using resources like Real Estate Dekho will go a long way toward enabling you to make an informed decision on becoming a landlord or not.
