Investment property is a great way for you to earn some passive income. However, rental properties and being a landlord requires a lot of active work. You should weigh all of the pros and cons before you decide if you should purchase an investment property. Our team here at Beach Loop Realty has compiled a list of pros and cons to help people of the Bandon, Oregon area decide rather or not investment property is the right choice.
This is the most obvious and most immediate benefit of rental property. It’s also the biggest reason why many people decide to purchase an investment property. Profits from rental properties can allow you to renovate the property, purchase another property, or diversify your investment portfolio.
Property Value Growth
When you own a property, you benefit from any gains to the underlying value of the property. Value growth is largely dependent on variables such as population growth, economic standing, and surrounding developments. While property value growth isn’t guaranteed, you can increase the chances that your property value grows by doing an ample amount of research on your property and the area surrounding it. If the area surrounding your property continues to develop, there’s a high chance that the property value will skyrocket.
Owning property helps tremendously come tax season. There are a number of tax concessions you can claim for managing and maintaining a rental property. You can claim annual loan interest and origination fees as tax-deductible expenses. The following expenses also include tax-deductible components:
- Maintenance and repair work
- Property condition depreciation
- Legal fees
- Travel expenses
You are eligible for these deductions as long as you can justify a relation to managing your rental property.
There is a relatively large risk factor involved when purchasing a rental property. It is a non-liquid and non-diversified asset, meaning it’s prone to rapid declines in tenant demand and value. A rental property is a significant concentration of assets for the average investor and every risk-factor should be heavily considered.
Reliable, long-term tenants can be hard to come by and are highly valued by rental property owners. As a landlord, it’s nearly inevitable that a percentage of tenants will either be late on payments or won’t pay at all. This can lead to weeks or months of lost income. The eviction process can also be long and costly as you also have to factor in the time it may take to find a new tenant.
Investing in a rental property takes a lot of work and requires active management. As the owner, you will need to find reliable tenants, maintain property conditions, order repairs, and conduct regular house inspections. If you do not want to worry about the active management that goes into property ownership, you can delegate these tasks to an external management company.
Consult One of Our Experienced Agents
If you’re still debating rather or not buying investment properties is a smart choice for you, our team of experienced agents here at Beach Loop Realtor can help. We can offer our expertise to help you make an informed decision. We also have years of experience in the Oregon real estate market.
This means that we can provide helpful information about homes, property, or business spaces that are on the market. We can help you find a property that will return a profit for you. Give us a call today to find out if we make a perfect fit!