I’m strongly biased in favor of owning rentals, so my short answer is “yes”. Read on to find out why I absolutely love owning rentals and believe everyone should.
There are so many reasons to hold rental properties including:
you get amazing tax breaks (deductions and depreciation) while you own
the tenants pay your mortgages for you
when the property is free and clear, you have major passive income coming in for life
If you rehab and resell an investment property, you get quick profit. However, Uncle Sam takes about 1/3 and you have to go out and do it all over again.
The goal, while you hold rentals, is that they pay enough rent to cover the cost of owning and maintaining until paid off. If you purchase right, this should not be a problem. There are areas of the country, however, where mortgages are higher than rents can cover. Know your local market.
The glory in holding rental properties comes when they’re paid off. There are ways to accelerate pay down so you can have them paid off in no more than 10 years and, at that point, never have to worry about working to pay your bills again.
One free-and-clear rental property is good – 10 is incredible – for a retirement that most Americans can only dream of.
So what are some of the cons of owning rentals?
They usually cost money until paid off. If they cash flow only about $300 per month, you’re going to spend that in vacancies and maintenance – often you’ll spend more.
Tenant issues. Many investors think tenants aren’t worth the hassle of owning properties. I disagree but North Carolina is a landlord friendly state. Many states, like New York, are more tenant friendly which can cost landlords a lot of time and money.
Managing either takes your time (if you manage your own properties) or costs money (if you hire a property management company). I use property management companies because managing properties is not income producing.
Ultimately, the decision is up to each investor but I highly encourage the value of owning rentals. For today, they give generous tax advantages while I still have mortgages on them. For retirement, they’re on-going non-ending income because the mortgages are paid off.
There’s no way to earn enough in a 40 hour per week W2 job to save enough to make the kind of retirement income paid off rental properties will produce. And I’m not counting on social security or medicare to be enough to take care of me in my old age.
Do you believe in rental properties? What can you add to the list of pros and cons?
My name is Karen Rittenhouse and I’ve been investing in real estate full time since 2004. We currently buy about 60 houses per year, 80 percent of which we wholesale. Our current goal is to use that income to pay off all of our hold properties.
Please check out my blog – http://www.KarensPerspective.com
I also coach and train anyone interested learning about investing in real estate.
Article Source: [http://EzineArticles.com/?Is-the-Cost-of-Owning-Rentals-Worth-It?&id=10025534] Is the Cost of Owning Rentals Worth It?