If you are looking to make long-term gains with your money, you should consider investing in housing. While homes are expensive and it takes time to find the right one, you can make some serious cash. Of course, there are some downsides you must consider. With this in mind, here are three pros and three cons of investing your money into houses and becoming a landlord.
Use money you don’t have: With real estate, you can borrow hundreds of thousands of dollars and buy a piece of property. This is an amazing benefit that other investors don’t have. Think about it, if you want to buy stocks, bonds or invest in a business, you will need to put out your own money. On the other hand, if you want to buy an apartment building or duplex, you won’t need to put down hundreds of thousands of dollars. Then, you can make money easily. Think about it this way, if you buy a 500,000 property, you can make a lot of money and only put 10,000 dollars down.
Taxes: When investing, you will want to save some money on taxes. This is hard with some investment decisions. On the other hand, if you buy real estate, you can write-off plenty of costs. Then, at the end of the year, you can receive a nice deduction, and you won’t overpay to your city, state or the federal government. This is a huge advantage when compared to investing in other asset classes.
Constant income: Finally, if you buy houses and rent them out, you can enjoy a steady cash flow. This is a great advantage for someone who is looking to retire in the near future and wants to collect money every month. In the end, if you own a few small houses or condos, you can receive thousands of dollars a month, all with little effort.
Dealing with tenants: If you deal with tenants on your own, you may have to field calls at two in the morning from angry or frustrated renters. This can cost you a lot of time and money. For this reason, if you are not around often or don’t feel like dealing with people all the time, you may want to consider investing in something other than houses. Remember, appliances break, and people will call you in the middle of the night.
Not liquid: If you buy stocks or bonds, you can sell your investment any time you feel like it. However, if you buy a house, you will take weeks, if not months to sell your property. This is especially true if you have renters as you can’t kick them out when you want to unload your property. If you have a long-term outlook this is not a big deal. But, if you want to move quickly or buy other assets, you should think twice about buying a house.
Potential huge costs: Finally, if you buy a house, you may end up with large repair bills on your hands. When opening the door to your place, you may find damaged walls or old appliances. While you can write these costs off and lower your tax burden, you will still spend a lot of cash. If you buy an old place, you will spend even more. Either way, this is something to consider as you won’t always just bring in the big bucks with not work.
With these three pros and cons, you can determine if real estate investing is right for you. In the end, it has made a lot of people wealthy. On the other hand, plenty of people have made mistakes and lost a lot of cash.
Tulsa Property Managers is a Jenks property management company offering professional property and real estate management, consulting and sales services throughout the Jenks and Tulsa, Oklahoma area.