If you are a landlord who is blessed enough to have ownership of multiple properties, you should be happy. Why? Because you have the option to live in one house and rent out the other. Sure, you could choose to sell one and earn some instant cash. Renting it, however, is more worth it. Don’t believe it? Read on.
The Low Down
Sure, anything good in life has its pros and cons, and renting a property is no different. Let’s start with the baddies first.
- Risk of a lousy tenant
Getting your rent on time is never a guarantee, even if you have signed a lease agreement with your tenant. Like many landlords you may need timely payment so you can use the money for other obligations but that doesn’t mean that you’ll get rent on time like clockwork. Furthermore, some tenants may damage your property. While the security deposit is there to cover for the damage but if the damage is extensive, then there are issues.
- Consistent involvement
If you have managed to rent out your property, at some point, you will have to visit it. Even if you are more of a “hands-off” landlord, you will still have to go and check up on the property eventually. Sooner or later, it will need repairs. You will have to meet your tenants and ensure your tenant hasn’t sublet. You’ll have to do some paperwork, unless you hire a property management company to do it for you. Basically, you will have to make time-consuming efforts on your part that you could have avoided.
- Taxes and Insurance
Oh, and did we forget to mention, you will have to pay rental income taxes and insurance regardless of whether you have tenants or not. The worst part is that these fees are not insignificant. These costs can affect profits considerably, especially if there are no tenants.
Heads up, here are the goodies. Although these are legitimate issues when it comes to renting, the positives of doing so, easily outweigh them.
- Income from tenants
No one can deny the fact that a consistent stream of income is a great achievement. Usually, after the initial period of settling an agreement, tenants do pay up monthly because the lease binds them. When you look at the income annually, you realize that your tenant is a decent source of income for you. In the long term, the rent will keep increasing, and you will continue to profit from your rental property. All the while you still get to retain ownership of the property; it is a win-win situation.
- The Growth of Property Value in Burbank
As time passes, the demand for properties in any particular area changes, which further leads to changes in property value. These changes are dependent on the location and area of your rental property. Generally speaking, property value tend to increase, and usually pegged with inflation rate in the area. If the property is in an area where growth is poor, the real value of your property may not change. However, if you have a property even in areas like Beverly Hills or Studio City, then the chances of beating inflation is considerably high.
- An abundance of Renters
The best part about being able to let out your property for rent is that there is no shortage of tenants. In this day and age, a landlord does not have to work too hard to find a tenant. There are excellent property management companies and software that allow you to do so very easily. Even just placing an advertisement in the newspaper or on a website will get you responses within days. Due to high demand, you can charge high rent that is comfortable for you and cover expenses you incur (like the taxes and insurance). Plus, you are leftover with some profit to spend as you please!
Sow as You Reap
You may have been advised to sell your extra property but guess what? You have an alternative that is even better than earning hard cash. Selling your property will get you instant money, but you will lose out on a long-term investment opportunity. Why lose your hard earned investment when you can have a consistent income stream. So now that you know renting your house is worth it, what are you going to do about your rental property?