title:Deciding Whether to Invest in Rental Property author:John Mussi source_url:http://www.articlecity.com/articles/business_and_finance/article_5857.shtml date_saved:2007-07-25 12:30:07 category:business_and_finance article:

Finding the right place to invest your money can be difficult? there are so many investment opportunities that create a great return and generate a large profit, but there are even more that end up with very little if any return and minimal profits or possibly even losses. For the careful investor, real estate can generate a much larger return than some other investments, especially if the property purchased is used as a rental property.
Not everyone is cut out to be a landlord, however, and care must be taken to make sure that you’re not getting into something that will only lead to problems down the road.
To help you to make the decision as to whether or not you should purchase rental property, here are some of the pros and cons of buying property for rental purposes.
Advantages of Owning Rental Property
Rental property can be a great way to make money, especially if the property is well taken care of and lies in a good location. If the property is low-maintenance, then the majority of the money that is paid in rent will likely be a profit for you the profit being determined after all property taxes and other costs are paid. As long as the rental property is occupied, you should continue bringing in money? and if the location of the rental property was well chosen and is in a popular area, then you shouldn’t have very much trouble keeping the property occupied.
Depending upon where the property is located and the individuals that you rent the property to, you may also be eligible for government programs or tax deductions for opening your rental housing to low-income or special needs families.
Should your rental property begin to perform below your expectations in regards to rent, you also will still have the option to sell the property just as you would any other real estate though there may be some legal restrictions if the property is occupied at the time.
Disadvantages of Owning Rental Property
Just as there are several advantages to owning rental property, there are also several disadvantages that you should be aware of. Since you are the owner of the property, you are responsible for all taxes and costs associated with owning the property? and these are due whether you’ve made a profit from the property or not. You are also responsible for maintaining the property in a livable condition, and some of the repairs that may arise in meeting this responsibility (such as repairs to electrical systems or cleaning up of health issues) can be quite costly.
Additionally, the income potential of rental property is based on the assumption that the tenants will pay their rent on time? some tenants are constantly late with their payments, or may decide to withhold payment altogether and force you to evict them.
Landlord/tenant conflicts can sometimes even become legal matters that can become bogged down in court and cost more than the issue that started the conflict in the first place.
Of course, not all tenants will be bad? nor will all of them be good. The advantages and disadvantages listed above are intended to show you the potential for both good and bad experiences that exist when investing in rental property. Consider both carefully so as to better make your decision and to help choose your investments wisely.

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