Owning a rental property can be a great way to create extra income. But like any investment, it comes with its fair share of pros and cons. Here are a few things to consider before you begin investing in rental properties.
Pros and Cons of Owning A Rental Property in Kansas City
The Pros:
Someone Else Pays Your Mortgage!
Exciting, isn’t it? The potential is truly remarkable when you have ideal tenants! Investing in rental properties can generate a steady income to cover the mortgage costs. A well-chosen rental property has the potential to generate ample revenue to cover all ownership expenses and even yield a profit.
People Will Always Need Somewhere to Live
Real estate is undoubtedly a wise investment choice. As Andrew Carnegie famously stated, “Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young Kansas City investor of today allocates funds towards real estate.” If Carnegie were alive today, his net worth would be an estimated $309 billion.
Income Tax Deductions
Unlock Tax Breaks for Your Rental Property in Kansas City
Managing your rental property in Kansas City comes with the advantage of deducting various expenses. Keeping detailed records and retaining receipts for potential write-offs is essential to optimize your tax advantages.
- If you have a loan on it, the interest can be deducted
- Travel and mileage costs to visit, repair, and inspect your rental property
- You can deduct maintenance and repairs. This includes everything from a new roof to replacing a light bulb.
- HOA Fees
- You can deduct any portion of the utilities you are paying for
Retire in Style
Have you discovered a home you adore in Kansas City? Perhaps it’s not perfectly situated for your work commute, or it isn’t the ideal size for your family. It’s never too early to consider retirement planning! One strategy that many homeowners use is to buy a property they love and rent it out until they are prepared to move in. This approach often allows the property to be self-sustaining financially, enabling you to retain your dream home.
Passive Side Income
If you get all your ducks in a row, and have a low-maintenance rental with great tenants, owning a rental can be excellent passive side income.
The Cons:
You Get “No Respect!”
In addition to regular wear and tear, some tenants may not prioritize caring for the property. As the property owner, you are responsible for ensuring a habitable living space, but you cannot always prevent tenant negligence. This may result in unexpected issues such as damaged walls, broken windows, or undisclosed plumbing problems.
You Might Get Sued
It’s not uncommon to face challenges in real estate investments. Disputes may arise, such as tenants taking legal action over a withheld deposit or injuries sustained on the property. Even if these claims are baseless, addressing them can be time-consuming and draining.
Additional Costs
When considering real estate investments in Kansas City, it’s crucial to prioritize proper maintenance of the property. While lease agreements may outline tenant responsibilities like lawn care or pool maintenance, it’s essential to remember that the property is ultimately your investment. Factor in repair expenses and ongoing maintenance costs before committing to an investment.
Stress
Real estate investing can come with its fair share of challenges. From dealing with high-maintenance tenants to managing ongoing maintenance and repair costs, the life of a landlord is not without its stressors. Late-night phone calls about minor issues, constant repair bills, and chasing down rent payments are all part and parcel of the rental property ownership experience. Despite these challenges, with proper management and support from professionals, investing in rental properties in Kansas City can be a lucrative venture for Faithful Home Buyers KC LLC,. Contact us at (816) 724-6679 to learn more.
Money
Imagine a scenario where the rental prices decrease while your mortgage remains unchanged. Alternatively, picture a situation where property taxes increase, but raising the rent is not an option. It’s crucial to evaluate all possibilities and ensure there’s flexibility in the rent you set. Avoid setting it too tight to prevent potential financial strain. Moreover, securing financing for a second property may present additional challenges before a bank approves the loan.
Just like any other investment, conduct comprehensive research on the advantages and disadvantages involved. Seek out a property that demands minimal upkeep and rigorously screen all potential tenants!