Owning a rental property or being a landlord isn't for everyone, but if you are thinking of having a rental home here are some positive points to consider.
Real estate can be a good long-term investment; however, property condition and rentability are key.
Trust a real estate professional to guide you when evaluating whether a
specific property has a high probability for resale and can provide an
appropriate yield in rental rates. You have to do your homework before
you dive in or else you may find yourself with a “lemon” property.
Finding the right property with appeal to renters (and future owners
should you resell), the right location, and the right potential rent
rate, is most important!
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Real estate deals are out there. Bargains can still be found. There
are a declining number of distressed properties, but there are still
new foreclosure and short sale opportunities available. Work with a
licensed Realtor to stay on-top of new inventory. They can keep you
informed of potential pocket listings and setup an email notification to
alert you “just listed” homes through the (Multiple Listing Service)
MLS.
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Rental
income is likely greater than the mortgage payment. Rentals provide
more consistent return on investment (ROI), and are more stable than
other types of investments. Investment properties allow wealth to be
built slowly and rental yields continue to trend upward. Most often
rental rates more than cover the monthly mortgage rate, which can help
cover future maintenance and repair expenses to keep the property in
good condition. With property values and gross potential rents on the
rise, your property can show as a performing asset to future owners,
should you decide to sell down the road. So in the long run, property
values are likely to be more stable than the stock market since stock
market share prices fluctuate wildly.
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In some markets changing demographics show greater demands for rental property, while home ownership is down.
This cannot be said for all areas across the US, but in some markets
there is definitely a trend toward renting vs. buying. The economy
impacts individuals in many ways- one of them being employment. With
individuals and families relocating for a new job they often don’t plan
to buy right away and plan on renting. Either they have a house to sell
where they came from, they don’t know the longevity of their new
position, they don’t know their new area well enough to buy yet, or they
simply don’t have enough credit or money to buy. We also see many
renters prefer the “maintenance free” lifestyle of renting. Most renters
are not required to perform maintenance related tasks on the property.
Instead, they just call the Property Management Company or landlord to
handle it. Who doesn’t want a little less hassle in their life?
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Tax deductions- you may be able to deduct certain expenses from your income. Many
investment property owners find they are able to deduct expenses such
as, mortgage interest, property taxes, insurances, maintenance or
upgrades, contracted property management costs, or utility bills (if it
included in the rent). Also, losses from your rental property can turn
into tax relief. We suggest discussing these potential tax deductions
with your CPA before considering buying a rental home or converting your
primary residence into a rental.
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