Rental Income Property – Advantages and Disadvantages of Ownership!
Money is the primary reason why people invest in real estate, and typically the first thing people think of when they consider owning rental income property.
It is true. One of the advantages of owning income-producing property is that income generated from rent can be quite considerable if a property is bought and managed correctly. When a real estate investor does not overpay for a property, can keep expenses down, the apartments rented, and the building maintained to an optimum level, a real estate investment can make the investor money—even at night when sleeping!
Perhaps not as much as tenants typically feel the landlord is making. Most tenants believe that the owner is doing nothing but making money. But tenants never see real estate tax bills, water and sewer bills in most cases, bills to repair the building, and other costs associated with rental property ownership such as management services and secretarial work, advertising, or legal council.
There are other reasons for owning rental property. You may want to increase your net worth or take advantage of certain tax incentives, or simply desire to gain a sense of achievement. These are possible in the world of real estate investment.
Okay, what about the disadvantages associated with income property ownership?
Foremost, the amount of work involved. Unless the real estate is a piece of raw land and no one cares whether the grass is cut, property ownership is labor intensive.
When someone else lives in your property and pays you rent to live there, you can count on spending some time and effort maintaining and improving the property. The more apartment units you own or are responsible for, the more work you can count on. The more units you own or manage, the more responsibility and liability you have to make sure the rental units and property are safe for residents and visitors.
The bottom line is that real estate investing can, and does, make money. But it takes money, and it takes work.
Just remember, life is a series of trade offs. Owning rental property can be a profitable and interesting business, and if worth the cost to you, then it is an investment opportunity you dare not miss.
Author: James Kobzeff, August 15th, 2007
