Investors who are putting off buying a property can have a lot of reasons for not buying. The real estate market is currently on the rebound from one of the largest drops in U.S. housing history. There are positives and negatives in any investment. Those who ask is it a good time to buy an investment property should weigh the good and the bad to help with decision making.
3 Pros of Buying Rental Homes
1. Guaranteed monthly income
2. Little to no self-management
3. Eligibility for tax benefits
Monthly Income is Guaranteed
Renting a property involves the collection of rent. This collected rent is returned to the property owner as potential income. The positives about rental properties would not be complete without a mention of the residual monthly rent. Some landlords raise rent prices each year in effort to squeeze more out of a property. Buying a property with a tenant under contract can give you a solid source of monthly income.
Rental Properties Can Be Simple to Manage
Most new investors are surprised to learn the a large percentage of owned real estate by experienced investors is in out of state properties. What can help a property to be successful is a day-to-day management schedule. Because properties can be easy to manage, there is little to no self-management required. Buying a home that includes professional property management is good for freeing up your time.
Rental Homes Can Have Tax Benefits
It is best to have a qualified tax attorney explain any tax benefits that a rental property will provide. There are however eligibilities that a home could qualify for under the current tax code. Your personal business formation for owning rental property could make you eligible to receive IRS tax exemptions. All rental income is taxable although some of it can be retained after exemptions and tax breaks are applied each tax year.
3 Cons of Buying Rental Homes
1. Upfront purchase price
2. Repair expenses
3. Tenant turnover
Investment Properties Require Upfront Money
The way that you buy a property will be up to you. The price that you pay will depend on the seller and the budget that you've arranged. All rental homes require upfront cash or financing at the time of purchase. A person who does not have a large budget to buy a property could find other ways to invest in a rental. Getting more than one buyer together to invest is a common way to cut down the initial investment needed to buy into a rental home.
Investment Homes Sometimes Need Repairs
As the owner of an investment home, you're appointed as the landlord. You can hire a property management company although you're still responsible to pay for most repairs. The types of repairs that need completed can depend on many variables. The age of the home, tenant damage and the weather patterns available each year. Paying for unforeseen repair expenses is a downside to owning a property. Hiring contractors for reduced rates could be one way to ease the pain of repair expenses.
High Tenant Turnover
Turnkey homes are one type of rental that include a paying tenant in place. This helps to start earning cash at the time of purchase. One downfall to rental property investing is when turnover is high. All rental home owners will experience a turnover of tenants at some point. Working with a property management company can be one way to reduce tenant turnover. Monthly rent modifications, upgrades to the property and better tenant screening during the review process can help keep turnover lower.
Buying Homes in Jacksonville, Florida
The property investment solutions that are listed on this website provide a turnkey rental opportunity to investors of all levels. There are more than 300 properties in the JWB company portfolio that are managed for investors. The rental home solutions that can be found using this resource are meant to takeaway frustrations getting started with rentals. More details about Florida rental properties can be obtained from this resource online.