Question by Kirk A: Is buying rental property a good or bad idea?
I was considering refinancing my mortgage and taking an additional 40k out as a down payment to buy a rental house. Is this a good idea? What are the advantages/disadvantages?
Answer by just_my_02c_worth
Well, most people would say that buying property is never a bad idea, however, I once read that Warren Buffet said that if you need to feed it or repair it, then it’s not a good investment. I mean look at all the hidden costs of real estate, maintenance, taxes, water, insurance, utilities, heating equipment, roof, windows, general repairs and upgrades, interest on mortgage, possible government taking by eminent domain, and you can see how any profit would be quickly erased by those expenses (that generally people don’t keep track of).
And don’t forget about tenants who fall in bad times and skip the rent. I would hire a really good investment planner and invest that $ 40K in good, solid investment vehicles such as mutual funds, bonds, and equities that will give you much more return on your investment than a rental property would.
Good luck and have fun.
Know better? Leave your own answer in the comments!
Maintenance and vacancies–
If you are handy with repairs, I’d say yes,….
If you want to deal with all sorts of crap from tenants, go ahead.
No disadvantage.. It is a brilliant Idea.. the only sure money maker is real estate.. and that is a great place to start. .Just make sure you screen the people including credit and backround checks and references as far back as possible.
Also Make sure your property is in an area that will garner the highest likely of desire for renters of a good quality.
Good Luck and go for it.
It’s a great Idea, that’s what I do. i;m looking right now for property in timmins ontario, I look for towns with low ocupancy rates
Good and bad. Its great in the fact that you will own the rental property and will be able to rent it out, which could in fact pay for the montly mortgage. It is bad in the fact that you are now a landlord and have to deal with landlord issues such as property maintenance and dealing with possibly bad tenants.
Depends on the market where you live (ie rents, could you charge enough to cover your morgage and make a profit as well)? What’s the demand for rentals in your area? Is there a college nearby and would you rent to younger students (parties can = disaster for rentals).
It COULD be a good idea. The advantages of renting out a house if of course, more money in your pocket, but if the house doesn’t seem very profitable, then you’ll end up loosing a lot of money. My family and I rented out a house once, and it was pretty good for a while but whenever something went wrong we ended having to pay for it and fix it, which we didn’t really like, and in the end to our luck the people renting the home wanted to buy it, and we were glad!
If I were you, I think I’d wait until you were in a more comfortable position financially. Remember, you don’t ever want to dive in head first.
You can definitely make money off of it, but just make sure you hire a VERY GOOD real estate firm when it comes time to rent it out. Make sure you let them know what kinds of folks you would consider renting to (ie – no college kids on spring break). I had a real estate company once stage a break in at my rental home and they took our TV and furniture.
PS – No one trust Elliot Realty in Myrtle Beach, SC.
totally do it…