There are just as many ways to invest your money as there are to earn it. While there are no guarantees of a return, some investments are less risky than others, particularly those that are spread out over the long term. Real estate is a common choice for many, who opt to own their own home and build equity while raising a family or buy properties with the intention of renting them out. Becoming a landlord isn’t for the faint of heart, but with a lot of research, a little luck, and some help from seasoned, industry professionals, you can be on your way to earning income and building equity in no time.
The Good, The Bad & The Ugly
There are a number of great reasons to invest in rental properties—and a few reasons not to. As with any type of investment there are risks, but most can be mitigated by partnering with the right property management company.
Key Advantages of Owning a Rental Property
- Rental Income – If all goes well you should receive a steady, monthly stream of income from which you can put towards your mortgage payment, expenses, or right in your pocket.
- Property Value Gains – Over time your rental property will likely increase in value, adding to the return on your investment.
- Tax Advantages – Depreciation costs, insurance, and property management fees may be tax deductible, so be sure to maintain detailed records.
Key Disadvantages of Owning a Rental Property
- Risky Tenants – Damage, failure to pay rent, and vacancies are risks you should consider, although a property management company can help by successfully marketing your rental company and vetting prospective tenants to significantly lessen your risk.
- Ongoing Expenses – Taxes, insurance, HOA fees, maintenance, and repairs are all the responsibility of the landlord.
- Time Commitment – Being a landlord means being on call 24/7/365. Property management professionals make it their business to handle all aspects of caring for your property, including fielding late night calls, handling rent collections, and managing maintenance and repairs.
How To Start Investing In Rental Properties
Knowledge is power when it comes to investing in rental properties, and there are a number of considerations and a great deal of information you should acquire before you begin. Here are some tips to get you started.
- Learn the market. Maximize the return on your investment by purchasing a property where there is a demand for rental homes, steady economic growth, and job opportunities to attract tenants.
- Crunch the numbers. Determine what you can comfortably afford, factoring in purchase price, associated expenses, and operating costs, and figure out how you will finance your investment.
- Assemble your team. Partner with an experienced real estate agent, reputable lender, and professional property management company to increase your chances of success.
- Select your location. You’re more likely to attract quality tenants if you choose a neighborhood with a low crime rate, reputable schools, and nearby amenities. Research the average rents in the area and determine if it will be enough to cover your payments. Property taxes, number of rental listings, and vacancy rate can all impact your investment.
- Choose your property. Enlist the help of your real estate agent to purchase a property that fits all your criteria and don’t be afraid to wait until the right one comes along.
Property Management Professionals in Queen Creek, AZ
Located in Queen Creek? How about Mesa? Or maybe you’re located in San Tran Valley? No problem! No matter your location in the Phoenix metro area, Southwest Mountain Realty is the property management company you can depend on. Whether you need residential, multi-family, or commercial property management, we’re the company your Arizona neighbors have trusted for more than 20 years.