Enter your email address for weekly access to top multifamily blogs!

Multifamily Blogs

This is some blog description about this site

The Positive and Negatives of Owning A Rental Property


Investing in property is no small affair; investing in property and deciding to rent is even scarier. However, knowing exactly what you’re getting yourself into in advance can help save a lot of headaches. So, before making your final decision, take a look at what the potential benefits and downfalls of renting a property.

The Pros

When weighing out the pros and cons of renting your property, the advantages seem to be slightly outnumbered by the disadvantages. However, the pros are more powerful, and if you put in enough time and energy into research before investing, it can pay off. Property is always in high demand and often much more predictable than other markets. It makes it a long-term investment that you can benefit from for years to come.

Perhaps the most motivating factor is a monthly rent. Such a stable income is hard to argue with, as occupied property means monthly rent checks that go straight into your account. Monthly rent can also help settle your monthly expenses if you’ve purchased a property with the help of a bank loan.

Another big plus is property value growth over time. Your property value increases, and you can bring in so much more income over the years without you investing more. However, this is where proper research is vital. If you invest in an upcoming area, your property can experience a significant rise in price.

There are also many tax benefits you can claim and take advantage of to deduct your costs annually when owning property for rent.

The Cons

After reading the pros, we can take a look at the risk factors that can potentially turn into cons.

First of all, you can never guarantee that your tenants will make rent. Even though you can always change tenants, you will lose several months’ rent and time over their eviction. Furthermore, there is still the possibility that even though your tenants pay rent regularly, they might ruin your property. Additional costs can occur depending on the amount of wear your property will experience, not once but every time you change tenants. On that note – make sure you set a security deposit is not a bad idea at all.

The monthly cost of the tax is something you need to be prepared for when your property isn’t being occupied and is something that will have to come directly out of your budget. Even though interest and mortgage are fixed, the tax can especially present a risk in this case, as it can rise over time.

Most importantly, the most significant delusion people tend to have about renting property is how much time is spent being a landlord. Between needy tenants that require constant repairs and visits, there’s a lot of paperwork that needs your constant attention such as insurance and monthly installments. In general, owning property is an active investment of your time, even though it might appear otherwise at first. If you feel like dealing with all this is too much, consider hiring a property management company.

Every market has its pros and cons, but being aware of them makes all the difference. You will make a profit from your rental property but only if you manage things well. Knowing what you can expect when it comes to renting, and what the best and worst scenarios are, gives you a chance to weigh out your options and plan.

Rate this blog entry:

Leave your comments

Earlier today I took part in the monthly Grace Hill chat, this one focusing on student housing. Unfortunately, I was busy with other projects so I wasn't able to devote a lot of attention to it, but I did notice something odd about the chat. Normally, the Grace Hill chats, although very informative, usually end up focusing 90% on apartment marketing and only 10% on resident retention topics. I understand that the questions are user driven, but it always bugs me that we spend so much time on the ...
How many of you apartment managers, apartment personnel, investors, contractors are going to the Denver Apartment Association Trade Show at the Merchandise Mart on May 20, 2009? Not many? A Few? None?With today's economy, it's more important than ever to get the best value for your money? Am I right? So IF you are going to the Trade Show; and IF you want a Reputable Vendor who can assist you with your cabinet, countertop, or custom casework needs, then you need to stop by our booth #414-Fro...
What is more important to you as an apartment investor, owner, or contractor doing a remodel in a rental property?Is everyone only looking at price now because of our economy? Or do some people still give credence and importance to quality of materials, loyalty to the vendor they are getting a bid from, timeliness of receiving the bid, the delivery, and installation? I would really like to know what is more of the  driving force in the market. We have seen a large upswing in people wan...