The Pros and Cons of Renting Your Property
Becoming a landlord sounds like an easy job, right? Simply rent your property and collect the rent every month. Well, if it were that easy, then everyone would do it! Unfortunately, renting your property is a little more involved than just collecting rent.
- Income: Renting a property can give you a nice, steady income each month. If you have good tenants, you can count on this money to add to your retirement fund, vacation fund, or ‘splurge’ fund. When you first start out as a landlord, this income may seem small, but as your build equity in your property, you will start to see an increase in revenues each month. Becoming a landlord is a long-term investment; don’t expect to see huge returns right away.
- Tax benefits: While you will have to claim taxes on rental income you collect, you’ll also be able to claim tax benefits. These include improvements to the property, replacing furniture, accounting processes, property management fees, etc.
- Security: Owning a property can give you financial security over the long term. Real estate prices will fluctuate over the years as all investments do, but you can be assured that your property will appreciate if you own it for a number of years.
- Control over your investment: Owning real estate is different than owning stock or bond. You have control over how your property is run, and you don’t have to rely on CEO’s or shareholders deciding your fate.
- Bad tenants: Everyone has heard at least one horror story about tenants moving out in the middle of the night; or worse, staying and just not paying rent. It can be difficult to evict tenants and often, they leave the home is a bad state of repair. This can be avoided, though, with thorough background checks and choosing conscientious people to rent to.
- Financial outlay: Purchasing a property is not like buying a stock; there is considerably more cash involved. Many lending institutions require at least 20% down payment on a property, so be prepared to have that cash on hand. There are also closing costs to consider.
- Maintenance: As a landlord, you are responsible for maintaining the property. This means regular chores like cutting the lawn, and clearing the snow; but it also involves major repairs like the roof, windows, chimneys, etc. This can take up a lot of your time. This can be dealt with, though, by hiring a property management company. They can even collect the rent for you each month.
Becoming a landlord is not quite as simple as buying a property and collecting rent. It can, however, be a lucrative venture if you do it right. Hiring a management company can help you become a better landlord, and help increase your profits. Don’t enter into this lightly. Consider all of your options and choose the path that is right for you. Talk to several management companies to learn about their range of services and how they can help you. Read and understand the landlord/tenant act to learn your rights and responsibilities.
Benefit National can take care of all of your property management needs. Visit the website today for more information on our range of services.