Many people have made a fortune by investing in properties, while many others have lost it all by making the wrong choices in the same field. Here are a few key points of becoming a landlord.
One of the biggest advantages of becoming a landlord is that you can generate a regular income by renting the place out. Inflation will increase the rent over a few years. At the same time, the property rates would appreciate and give you better returns as compared to any other investment. If you have taken a loan to buy the property, the money from the rent can be adjusted into the loan installments. Buying a property would give you a sense of long term security. You will also get tax deductions for the interest paid on the loan. Further, if you feel uncomfortable renting the property out, you can sell it as well.
A major disadvantage of investing in a property is that the down payment would eat away a substantial portion of your savings. Buying a property requires a lot of money and once you invest it there, the amount would be locked in. You will also be liable to pay property tax every year. Then there would be the periodic expenses. These would include painting, repairing leaking faucets, maintenance of HVAC systems, etc. You will be liable to pay capital gains tax when you sell the property. Further, even a month of vacancy may affect your mortgage payments. You will have to make sure your property is always rented out. You will have to spend time in finding the right tenant. If you get stuck with a bad tenant, he would stop paying the rent and may cause damage to the property.
Make sure you never let out a property without signing a rent-lease agreement. This way, you can spare yourself a lot of troubles down the line. It is strongly recommended that you do some market research before making the investment.
If you want to know more or want to sell a rental property, do get in touch with us.