If you’ve been planning to venture into the world of real estate investing, you’ve already heard a lot of good things about rental properties and perhaps you’ve already drawn to the idea of becoming a rental property owner.
The greatest advantage of owning a rental property is that you make your own decisions. From the moment you bought your property for rental, you’ve already become your own boss. You choose what property to invest in, what tenant you will rent to, how much you will charge in rent and how you will manage and maintain the property.
This type of investment is unlike investing in stocks or mutual funds. Well, you might be allowed some freedom, in that you are able to choose the stock or mutual fund to invest in. However, you are still allowing someone else to manage and control your money.
Another advantage of investing in rental property is appreciation. You can purchase it using a small amount of your own money, while borrowing the rest, often four to twenty times more, from a lender. This is called leverage. If you purchase a property using significantly more debt than equity, the investment is said to be highly leveraged; this is also known as positive gearing.
If you allow tenants to occupy your rental property, you will be able to receive income thru rents. However, you will need to shoulder all the maintenance cost of your property and the money left after paying your expenses will be your profit.
However, the biggest disadvantage of rental property is the possibility of tenants not paying their rents. This is also known as “tenant risks.” Tenants are never a guarantee to pay their rent. Some tenants won’t pay regularly, and others won’t pay at all. You’ll be out several months of rent and also the time spent dealing with their non-payment and eviction.
If you want to learn how to properly manage your tenants, this article is perfect for you: https://www.perthnow.com.au/lifestyle/personal-finance/landlords-must-take-care-when-managing-tenants-themselves-ng-db848d89527cd6f1552f720dc5052599