Real estate investments have become one of the most popular forms of garnering passive income.
There are numerous ways to invest in real estate. According to numerous seasoned investors, real estate is one of the most profitable ways to grow your portfolio. That being said, this article will focus on one of the most common types of real estate investments – basic rental properties.
One of the oldest, yet most profitable, types of land ownership, rental properties are a great way to start investing if you’re considering delving into this territory. The owner, or the landlord, is responsible for paying the mortgage, costs, maintenance, and taxes of the property. Now, the landlord should charge enough rent to cover all of the costs that were mentioned previously. The landlord may also increase the charge of the monthly rent to produce a profit, but the most common strategy is to be patient and charge enough to cover the expenses until the mortgage has been paid off – which then the majority of the rent will become profit.
Furthermore, the property will also have appreciated in value throughout the course of the mortgage, leaving the landlord with a sizeable asset. Now, it’s not all fun and games when it comes to being a landlord. For one, you may have an unruly tenant that may damage your property or fail to adhere to the contractual obligations of living within the unit. Not only is this stressful, but it may also leave you with a negative monthly cash flow. It’s important that you carefully consider all aspects of this investment route as it can hurt you if you are not careful enough.