I am strongly biased in favor of owning rentals so my short answer is “yes”. Read on to find out why I absolutely love owning rentals and believe everyone should.
There are so many reasons to have rental housing, including:
- You get amazing tax breaks (deductions and depreciation) while you own
- Tenants pay your mortgage loans for you
- When the property is free and clear, you have large passive income coming in for life
If you rehab and resell an investment property, you get quick profits. However, Uncle Sam takes approx. 1/3 and you have to go out and do it again.
The goal, while having rentals, is that they pay enough rent to cover the cost of owning and maintaining until they are paid. If you buy right, this should not be a problem. However, there are areas in the country where mortgage loans are higher than rent can cover. Know your local market.
The glory of keeping rental homes comes when they are paid. There are ways to speed up the repayment so you can have them paid off in no more than 10 years, and at that time you never have to worry about working to pay your bills again.
A free and ready rental home is good – 10 is incredible – for a pension that most Americans can only dream of.
So what are some of the disadvantages of owning rentals?
- They usually cost money until paid. If they only cash in about $ 300 a day. Month, you will spend it in vacancies and maintenance – often you spend more.
- Tenant Affairs. Many investors believe that tenants are not the trouble to own property. I disagree, but North Carolina is a rental-friendly state. Many states, like New York, are more tenant friendly, which can cost landlords a lot of time and money.
- Managing either takes your time (if you manage your own properties) or costs money (if you hire a property management company). I use property management companies because property management is not income producing.
In the end, the decision is up to each individual investor, but I strongly encourage the value of owning rentals. Because today, they provide generous tax benefits while I still have mortgage loans for them. In retirement, the non-final income continues because the mortgage loan is paid.
There is no way to make enough of a 40 hour weekly W2 job to save enough to make the kind of retirement income that the rental housing will produce. And I don’t count on Social Security or Medicare to be enough to fit me in my old age.
Do you believe in rental housing? What can you add to the list of pros and cons?