Is investing in property worth it? This article would help you understand the pros and cons of investing in rental property
People often ask about the risks and benefits associated with owning a rental property. Some people ask if investing in rental property is a wise investment decision or not.
Yes, owning or investing in rental property can be very beneficial. Though it should be noted that stocks and bonds still remain the best way to increase wealth. It can be quite beneficial in many ways to purchase a rental property.
This investment, like every other investment, comes with benefits as well as risks. To give a detailed answer to the question about investing in a rental property or not, we must examine the pros as well as the cons of investing in one.
Here are the pros of owning rental property.\
- A permanent source of monthly income: owning a rental property can be a source of income, especially if the rent you receive is more than the expenses you incur monthly to maintain your property.
- Diversification: if you do not want to place all your eggs in one basket, you can easily diversify by investing in rental property. This will save you from being broke when things do not go well in your other investments.
- Profit: When you purchase a property, you can easily resell it after some years. You can make a profit of as much as 100% on your original investment. For example, if you buy a property of $100,000 and pay $20,000 as a down payment, you can resell at $120,000. When you deduct the realtor fees and other expenses, you would have made almost 100% profit on your $20,000 down payment.
- Rental properties are fixed and visible: another great thing about owning a rental property is that they are tangible investments. You can visit your property whenever you wish and maintain it yourself. This is not the case when you invest in stocks and bonds, for instance. For some investors, being able to see their investments brings a sense of assurance and peace of mind.
- The opportunity to make a change: the property investment world is littered with bad landlords that take advantage of their tenants. You can be an agent of change. Buying a property will give you the chance to contribute your own quota to humanity.
- Owning a property can be very tasking: purchasing, maintaining, repairing, and selling properties take a lot of time, energy, and resilience.
- High maintenance cost: this is especially true if you are a busy person with little or no technical know-how. You need to employ the services of a property manager. This will cost you 10% of rent added to half of the first month’s rent.
- The down payment is high: the down payment needed to purchase a rental property usually runs into thousands of dollars. This is not the case if you wish to invest in stocks and bonds.
- Some tenants can be difficult to deal with: as a rental property owner, you have to deal with tenants some of which will be inconsiderate, rude, and difficult. There is also a chance of facing a lawsuit if someone gets injured on your property.
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