Rentals are the most common way to get started in real estate investing. Renting an investment property will generate passive income over a long period of time and provide the means for you to reinvest into additional real estate purchases and expand your portfolio. But as with any venture, there are a number of pros and cons you should consider before you purchase a rental home. Here’s what you need to know about being a landlord.
The ability to earn passive income is what draws many investors to rental properties. Be sure the rent you charge is enough to cover expenses, such as mortgage payments and maintenance costs, while ideally making a profit.
Landlords may benefit from a slew of tax deductions available for investment properties, including business deductions, the cost of property, depreciation, and mortgage interest.
When you hold on to a value-increasing property, you are building equity and creating financial security. Not only do you benefit from the income produced from rent but also from the future appreciation of the property. A double blessing!
Though rentals are great sources of passive income, they demand a lot of attention and involve multiple steps that are anything but passive. Some of your workload will include marketing your property, screening applicants, communicating with tenants, coordinating repairs and maintenance work, collecting rent, and filing eviction when needed.
If you own more than one property, consider hiring a property management company to handle the day-to-day operations of your rental homes as tasks will inevitably pile up.
Just as the tenant must take good care of the property, the landlord has also a set of obligations toward tenants, such as providing a safe and habitable living space. This means adhering to all building codes, performing necessary repairs, maintaining common areas, and keep utilities in working order.
If you fail to comply, a tenant can take legal action against you. Make sure you know what your obligations are regarding both the law and the lease agreement.
Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more.