When talking about investing in real estate, owning a rental property is arguably the most financially rewarding. The idea of buying a house or apartment and let other people live in it for rental profit may sound alluring. However, buying a rental property for income and long-term capital appreciation can have its ups and downs.
In managed properly, rental property investing is financially profitable compared to other forms of conservative investments such as such as bonds and dividend-paying blue-chip stocks. However risks are always present in property investing especially because not everyone has the ability to manage property and tenants.
There are a number of pros to rental property investing. One of which is the tax benefits. The government tax authority allows you to deduct many expenses connected with rental property in the categories of ordinary and necessary expenses, improvements and depreciation. What this actually means is that you can deduct your insurance, interest on your mortgage, maintenance costs, and physical wear-and-tear on your property.
Rental properties are nice for seasonal rentals. For example, you can rent your property seasonally and use it for yourself for a couple of weeks or months annually. This will be just a small percentage of the number of days that you rent to others at a fair market price—and still be able to deduct your expenses.
However, just like everything under the sun, there are also disadvantages of rental property. The most common problem landlord encounters is dealing with difficult tenants. There are some tenants that are needy or demanding, pay late, forget to turn off the water, and so on.
Being an owner and manager of rental properties is not for everyone. However there are some things you can do when you experience problems with your tenants more specifically when they don’t pay their rent properly.