Rental Property Basics: Part 1
In simple terms, you can only make money from a rental property if everything lines up well. Owning a rental property is always a brilliant personal financial move. A person will make good profits on the rental property when the person already has a good financial shape, don’t mind taking care of property maintenance emergencies, has some spare time in hand, and has put effort and patience in finding the right property. However, not everyone fits into this category, as some may not be in the financial position to venture into a rental property or they might not be confident in their local real estate market. Here are some rental property basics.
One of the major benefits of owning a rental property is income from renters, which offers the landlords a direct income stream. These monthly rent checks can be channeled directly into the business account. For instance, if you rent a house for $2,000 per month, you will expect a total of $24,000 every year if the property is fully occupied. I
t is almost impossible to argue with such a monthly income streaming like that. However, these are just optimistic figures and a property owner shouldn’t just dive in expecting such results, there are other factors which may affect the stream of income. There is always the income from property value growth, which is an increase in the value of the property as a result of changing demands in the area. This is always a variable thing that will always depend on the location of the property. In some areas, the value of the property may remain flat while in other areas the value may increase significantly over the course of a few years.
The other benefit of owning a rental property is the sweat equity which adds value to the property when the property is upgraded and maintained. Little things like repainting the property, refinishing the inside, adding new siding and doing some landscaping to the yard will add value to the property with less financial cost. This change allows the owner to increase the rent or sells the property at a higher price should the owner decide to sell it in future.
