Are rental properties really that great to get into?

Question

My uncle swears the rental property business is the next best thing to sliced bread. Then I hear the horror stories of tenants that don't pay their rent and how the landlord has his hands tied about kicking them out, even if it's in the contract. What is your opinion?

Answer 1

Simply put, you are buying something valuable...and someone else is paying the bills !..and any hard luck you encounter usually gets you some kind of tax break..( your loss on income prop lowers your adjusted gross income, which in turn lowers your income tax)

It may come with no major problems and it may come with a few ( bad tenants, tax increase, damage, etc). BUT no investment comes worry-free..and Real Estate usually has one of the highest returns over time ....( and very quickly you get to a profit making stage that adds to your income as your prop is increasing in value.....but it never "looks" that way on paper, so it doesn't hurt tax-wise)
If you are terrified of the problems, you go to a management company..( another write-off) let them take care of screening and/or problems. Their fee will reduce your " income" but relieve your " headaches".

Answer 2

They're a good investment after time, but you must buy right and get good financing terms. They provide a good tax benefit to offset your expenses with depreiciation of your cost basis over a 27 year period.

It took us several years of negative cash flow to start making a little each month, but the largest gain occured over the last several years when housing prices soared.

If you choose and screen your tennants carefully and understand your rights as a landlord and the tennat's rights, you should have very few problems.

There's a great paperback book out that's probably in your library called "Landlording, a handy manual for scrupulous landlords and landlords who do it themselves". I highly recommend this book.
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