Posted in Mortgage & Finance

Thinking about investing in real estate?

Purchasing a property to rent it for ongoing income can be a very smart financial move. It can also be a disaster if you don’t know what you’re getting into. By taking the time to understand the pros and cons of buying rental properties, you can make a wise decision as to whether rentals are the right investment for you.Benefits of Buying Rental Properties

Let’s look at the good news first. A significant number of people choose to invest in rental properties because for them the benefits outweigh any drawbacks. Some of the benefits of investing in rental properties include:

  • Buying a rental property can provide you with income every month. Landlords can rent out their spaces at a price higher than the cost of the mortgage and gain a profit each month. Once the property is paid in full, almost all of the rental income is going to be profit. If you get a bank owned property at a low cost then you can start generating income fairly quickly.
  • A rental property is generally a stable long-term investment. As a rule, real estate values go up. This means that you can sell the property later on and generate a profit that way. In the meantime, you get that rental income.
  • It can help with your taxes. Even if you take a loss on your rental property right now, it may end up benefitting you financially. The loss counts as a deduction on your taxes so you reduce the taxes you pay on other income. Later on, hopefully, you will sell the property and recoup those losses.
  • You can feel proud about owning a home. In a time there are so many foreclosed homes for sale, the American dream of home ownership can really seem like just a dream. People who purchase properties and become homeowners, including people who opt to be landlords, can feel pride in the ownership of a home.

Drawbacks of Buying Rental Properties

With all of those great benefits, why wouldn’t you buy an investment rental property if you could? Well, it’s not all peaches and cream. There are drawbacks and you need to be realistic about them if you are considering buying a rental property. Major drawbacks that may deter you include:

  • A rental property means that you will have tenants. This can be wonderful but it can also be a hassle. You need to find tenants that will pay their rent on time and keep your property in good working order. If they don’t do this, you will need to go through the process of evicting them and finding new tenants.
  • A rental property may also mean that you do not have tenants. If the rental market gets bad, it may take you several months to even find a tenant. You will still have to pay the mortgage on the property even though you aren’t gaining an income from it, which can be taxing on your finances.
  • You have to keep the property maintained. If your own heat goes out on a holiday weekend, you can opt to layer up and get in front of the space heater until the more affordable weekday rolls around and you can get a maintenance guy. If your tenant’s heat goes out, you need to deal with it immediately. Having a rental property means that you must be available at nearly all times for your tenants (or hire a property manager to do so) and invest the time and money to keep the property maintained.

The best way to think of it is that buying rental properties is a part-time job. It requires some work and sometimes you don’t want to do it. However, it usually pays off in the end. Thinking about investing I can send you a FREE list of foreclosure properties around the area.



Thank you for being here. I'm a Real estate agent with Keller Williams Signature.I hope that you can visit my website whether you are looking for homes for Sale or buy or just as a source for real estate information.

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