Some people believe that if you purchase a piece of property with the intent to rent that property that you have found a pot of gold. You can find a renter, collect the income and pay off the mortgage all at the same time and that is a good thing. However with the good comes the bad. This article will lie out some of the risks and benefits of using rental property to fund your retirement.
Taking The Plunge
If you are serious about wanting a rental property and are willing to take the plunge you will find that a rental property will offer you a great way to earn some extra income each month once you are retired. Many rental properties in a middle class neighborhood can give you an extra income of $200 to $1000 extra per month once the mortgage and all of the expenses are paid.
Benefits Of Rental Properties
There are many different benefits to discuss when you are considering a rental property investment to help fund your retirement each month. Of course the most positive benefit is that you will generate an income each month. The amounts of income will depend on the amount of rent you choose to charge and how much the mortgage and expenses are every month. Another advantage is that you will have tax benefits. Everyone likes to have a tax deduction every year and a home/rental property will give you the perfect one. And a third benefit is that you will be able to increase the amount of rent that you are charging throughout the years and over time. Of course if you have a long time renter they might not be so happy with that benefit to you. It will be a disadvantage to them.
Disadvantages Of Rental Properties
With every advantage you will find a disadvantage. The first of the disadvantages that will come to mind is the expenses and the upkeep of the property. Often times these expenses can add up especially if you have tenants in the property that do not take care of it. Once they vacate the premises they can leave you a large mess to clean up and often times many costly repairs to be made. A second disadvantage and this one is a major one is tenants that do not pay their rent. Sometimes these tenants are known as deadbeat tenants. This can be a rough road to overcome and will often involve a court hearing and court fees. And the last disadvantage is a big one. It is the risk of having an empty home/unit. Even if the unit is empty with no one living in it as the owner you will still be required to make the monthly mortgage payments. Without the income from a tenant this responsibility will fall completely on your shoulders and can be a rough one if you rely on that extra income each month.
If you decide that a rental property investment is a good purchase for you there are many things that you should consider but one of the most important is that you should focus on finding a single-family home in a good school district. These are the two most important items that a renter will look for. Once you find that you should do your homework and get the proper inspections if all turns out well you are on the road to be a landlord so be prepared to have phone calls for repairs at all hours and be ready to fight with deadbeat tenants. However not all tenants are deadbeats. There are more good than bad ones.