Are You Really Ready To Buy Rental Properties?

Watch the various television shows and infomercials and it can seem like investing in rental properties is the way to go to make a certified fortune. Rental properties can be lucrative, but there are definite downsides.

Most people have a particular view of rental properties. They buy a property, stick a renter in it that covers the financial nut of the owner and then sit back and collect money in the form of rent. As the property appreciates over time and the mortgage is knocked down, the property grows in value. Ah, wealth building! This rosy picture, however, leaves out some stark realities.

There can be a host of problems when you rent a property. The first problem is finding a renter that is mature and responsible. The endless stories of renters trashing properties can put any Halloween Story to shame. Throw in tenants that don't pay on time or have to be physically evicted and you can see how renters quickly can be an issue.

The next issue that can arise is the quality of the property. Simply put, you have to maintain certain standards. If you are living in the property, you might let things like a dripping sink remain unfixed for a few weeks. In rental properties, you have to get them fixed quickly. If the toilet tank explodes in the middle of the night, the tenant is going to call you. This leads us to our next issue.

Repairs can be simple or repairs can be costly. Regardless of how it goes with a particular problem in the property, you are responsible for it. If the problem is fixing a small sink leak, the cost is negligible. If the problem is something more costly such as a mold issue, you can run into a cash flow problem.

One obvious solution many investors use is a management company. The company takes care of late night calls and so forth. This can help you get some sleep, but you are still ultimately responsible for paying for the repairs. That might be a bit more difficult given the fact you now must also pay the rental company.

So, should you invest in rental properties or not? Only you know your temperament. Evaluate the benefits and negatives and make your choice with your eyes wide open.

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