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The Pros & Cons of Rental Property Investing


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Although rental property investing has many advantages, it also has downsides, perhaps the biggest of which is that you will most likely have to become a landlord.  With that said, the pros still far outweigh the cons assuming you have a long-term view.  Here is a rundown of each:

Pros

  • You can use leverage to minimize out-of-pocket expenses and subsequently improve your cash-on-cash ROI.
  • Your tenants will pay down your mortgage every month, yet you are the one that gets to keep the accumulated equity.
  • You can generate some incremental income.
  • You can deduct depreciation and other business expenses from your federal tax liability.

Cons

  • Managing tenants can sometimes be a hassle, especially if you have a consistently late-payer. 
  • A property you buy could have hidden problems that do not come to the forefront until long after you acquire it. 
  • This is a long-term strategy that takes several years to optimize. 
  • Managing rental property requires a willingness to forfeit some of your free time.      

What You Need to Succeed

Like I said, the pros or rental property investing far outweigh the cons, but it is not for everyone.  You can do this if:

  • You are willing to learn by doing.
  • You have a long-term view (10 years +).
  • You already earn a regular income.
  • You have some free time.
  • You are willing to accept marginal risk.
  • You have adequate people skills.
  • You are able to complete simple home improvement tasks & repairs.
  • You have good credit.

Conclusion

Now that you understand the pros, cons, and skills necessary to succeed, your odds of success are greatly enhanced.  You can’t be a successful real estate investor if you are not prepared for the realities of it.  Now that you have the proper mindset, you can begin to delve into the nuts and bolts of the strategy; first by learning, then by doing.



One Response to The Pros & Cons of Rental Property Investing

  1. litmon says:

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