In terms of real estate debates, there is perhaps none bigger than the constant “Rent vs. Buy” debate. The answer to that age-old question often hinges on the current state of the market, where the prospective renter/buyer is in their life, and what their work situation is like at the moment.
Nowadays, more and more people seem to be choosing the rent option. With so many people choosing to rent, it seems like it would be a wise idea to combine the two options and own rental property.
If you’ve been thinking about moving into the rental property business, we’re going to run over some of the pros and cons below.
Pro-There Are More Renters Than Ever
As shown in the link above, more and more people are opting to rent instead of buy. While everyone may have their own reasons for renting (moving soon, don’t have a permanent job, etc.) more and more people are renting because they see home ownership as being too expensive.
So, this means that as a rental property owner you’re likely to have plenty of tenant options lined up.
Con-Marketing Can be Tough
Unfortunately for you, this likely means that there are plenty of other places in the area looking to attract tenants. You’re going to have to go further than simply planting a “for rent” sign on the curbside.
As a rental property owner, you’re going to have to wear more hats than simply being the landlord. Figuring out an effective marketing strategy can be time-consuming and costly if you’re not careful.
Pro-You’re Your Own Boss
No matter what kind of rental property you’re owning, whether that be apartments or single-family homes, you’re the one who gets to set almost all the parameters. You get to set your work hours, determine which tenants come to your properties, and find your own contractors.
With you being in charge, no one is going to tell you where to be or where to go when it comes to your office hours and big decisions.
Con-The Job is Unconventional
While you do get to set your own hours, not everyone will abide by them. If you’re taking the handyman tasks upon yourself, a washing machine might decide to break at midnight and your tenant has no idea what to do.
Some days you might have little to nothing to do, instead knocking out a few sudokus over the morning. Other days, you might be up from 5 AM until 11 PM at night. Be prepared to have plenty of highs and lows with your position.
Pro-The Job Has High Earning Potential
They’re called real estate moguls for a reason! Even though you might not reach that status, owning rental property can be a very lucrative business with the amount of passive income that comes in each month.
Even if you don’t have your eyes set on wealth, plenty of people use a rental property in order to save up for retirement or use that rent money as an extra bit of retirement income. Property is always seen as a great investment, and you’re bound to have a high return with continued work.
Con-Getting Started Can be Costly
Most people save up to buy one house in their lifetime and may never consider buying a second one or rental property. Property is expensive, and it can be hard to get your foot in the door.
Obtaining a rental loan is tougher than a home loan, as you’ll likely have to put at least 20% down in order to satisfy the lender or bank. With a rental loan, you won’t be able to qualify for PMI as well.
That’s why most people end up having to bring in a family member or business partner when they want to make such a purchase.
Pro-You’re More Than a Landlord
Let’s end on a positive note, shall we? As a landlord, you’ll be much more than someone who simply collects the rent check. You’ll be able to meet people from all walks of life, improve your handyman skills, become a better money manager, and put on plenty of other hats during your time.
Many people that become landlords say the job is quite rewarding, much more so than financially. That’s not to say there aren’t ups and downs along the way but if you’re looking for a new career, there’s a lot that can go right here.