There are a few reasons homes sometimes become rental properties. Sometimes home owners have been relocated to another area, or possibly inherited a home from a family member. Other times homeowners purchase property for the sole purpose of renting it to generate additional income and build equity while someone else pays the note.
Whatever your reason is, there come pros and cons with owning rental property along the MS Gulf Coast so let’s take a closer look at each.
First the bad news:
No matter how hard you try to avoid them, there will always unexpected expenses. Always be ready for large repairs such as roof repairs and foundation crack. You should also be prepared for other possibilities such as faulty wiring, plumbing problems and boiler issues. If these problems are not resolved, or you cannot find a way to pay for the necessary repairs, you may be left without a tenant.
In the event everything with your home does run smoothly and you have tenants, there is a possibility you will encounter bad tenants. Whether they cause property damage or simply don’t pay the rent, there is a chance that you, as the landlord, can loose money or even get hit with a lawsuit.
If you are unable to rent your property, this means you’re stuck making the money mortgage payments out of your own pocket. If you can afford it, then no worries, however that is not the usual case for most landlords. Having an emergency fund is helpful but long-term vacancies can lead to trouble.
Lastly, don’t forget about the insurance. Depending on where the home is along the MS Gulf Coast, you may have different options for insurance. But no matter where you buy rental property, make sure to get good coverage for both home owners, wind and hail, and flood insurance.
Now the good news!
There are many compelling reasons to own rental property, which is why so many people do it. Not only do you own a tangible asset, you are also exercising your financial muscles in hopes of making a little extra money in the way of current income. Any monies left over after the mortgage and expenses have been paid are basically additional monthly cash. Also, along the Gulf Coast many people purchase condos as rental property and get the added benefit of having a vacation spot that someone else helps pay for when you are not using it!
If you buy in a good neighborhood, your property with appreciate and increase in value over time. This can be risky in that there is no guarantee a property will increase in value however, more times than not, properties will eventually appreciate.
There are many tax advantages to having a rental property. If you are not receiving a net cash flow from the property and use the money to pay down the mortgage and to pay for expenses, you can use this as a tax advantage. If the property appreciates, you can also refinance your loan to pull out more money tax free.
There are many things to consider before jumping on the rental property bandwagon. With a little planning and luck, you may just be one of the many who have a great experience at owning rental property.
Blog sponsored by Philip LeBlanc
Photo courtesy of Home Service Property Management