Whether you’ve unwittingly acquired property through a relative’s passing or you are actively seeking to invest in rental property, you need to make a pros and cons list to decide if owning property is right for you.
Here we’ve helped you start on that list!
- Passive Income — Depending on the rental market and individual situation, there is a good chance you’ll be able make extra cash above what you’re putting into your home monthly. In some situations, the passive income won’t come until years down the road when you’ve paid off your mortgage.
To make the most out of your rental, you’ll need to be very organized about turnover, preventative maintenance, and payment enforcement.
- Building Equity — A stranger is essentially paying your mortgage for you! This is the best part about owning rental property!
- Investment that Will Pay off in the Future — Each year from 1968 to 2004, real estate prices increased by an average of 6.4% yearly. There was no decline during that 36-year period. While there will always be ups and downs in the real estate market, if you hold on to your property long enough, history tells us it will be worth more by the time you sell it.
Cash in on that investment almost guaranteed to pay off!
- Invaluable life experience — If life experience is something you care about, owning and renting out your property is a business experience you’ll never forget! It’s almost like owning your own small business. Interacting with tenants, laws, and repairs are all valuable lessons that will transfer over to other aspects of your life.
- The Hassle — Wacky, irresponsible tenants and unpaid bills always have the potential to leave you with a headache and a thinner pocket book.
Make sure you use a good screening tool to help weed out the bad tenants!
- Expensive Unexpected Repairs — Leaky roofs, faulty HVAC systems and broken toilets are just a few of the problems you will face during years of being a landlord.
Keep an extra cushion in your emergency fund for the inevitable!
While we can’t make the decision for you. If you’ve got the cash cushion and an entrepreneurial spirit, we’d say go for it!
Also published on Medium.