The Pros and Cons of Rental Real Estate

Investing in properties for rental is a great way to make money, no matter if they are studio apartments in Bristol or multiple bedroom houses with large kitchens Chichester. Many investors may feel uncomfortable purchasing stocks, but much prefer buying property to rent out as it is a physical item. Below are the pros and cons of rental real estate.

Pros

  • Current Income

When a property is rented out, the money that is left over after paying the mortgage and other expenses is the current income that goes to the owner. The property produces a monthly income that an investor does not necessarily have to work for.

  • Opportunities

Rental real estate can be purchased with borrowed funds, by only placing a percentage of the total value, and the investor will still get full control of the property.

  • Value Increase

The value of a property usually appreciates over time in stable areas, so a profit in the total value is likely.

  • Taxes

There is the potential to get tax advantages on your rental income if you don’t have net cash flow after paying expenses. Also when you sell a rental property you can avoid sales tax by reinvesting the funds into another property.

Cons

  • Unexpected Expenses

All properties have unexpected expenses, from plumbing and electrics to replacing boilers, kitchens and roofs.

  • Liability

Having someone living in their property makes the owner liable for many issues. Make sure the house is within current building regulations to avoid this.

  • Tenants

Finding trustworthy, long-term tenants is often difficult.

Leave a Reply

Your email address will not be published. Required fields are marked *