The Advantages and Disadvantages of owning a Rental Property

Earning passive income through rental property is one of the easiest ways of earning income and is highly popular in London. Almost everyone who owns more than one house tried to give out at least one on rent so that a regular source of income is generated and keeps on going for a long time. Rentals in London are quite high in most of the areas and as a land owner, it will be a great time to put your ideal rental property to some use.

However, before you let out your property on rent, here is what you should know. We have listed out some of the advantages and disadvantages that you must know in advance.

Advantages of Owning a Rental Property

  • It is a good source of passive income. You just need to look for some good tenants and you are sure to receive income from time to time. You do not have to invest much in this regularly but regular income is almost guaranteed.

 

  • Renting out a property provides a sense of financial security. Long term rent in London will give you income even when you are not earning well from your regular job.

 

  • Your property will always be an option when you are in an urgent need of money. When you need funds in an emergency situation, you can sell off the property and use that money wherever you need.

 

  • For those who are short of space whenever there is a party at home or their primary residence is under repair, you always have a second option of staying. Thus, you will never be without home when you have a spare property like this.

 

  • Enjoying the appreciation in the value of property is possible in the best manner only when you have put it out on rent. You can increase the rent as per the prevailing market rate and enjoy the effect of inflation without waiting for too long.

 

  • Investing in property ensures that your investments are diversified. They are not just restricted to banks and other forms of financial market. This ensures that you are not largely affected by the financial market crunch.

Related Article:

rental property4 Steps to Maximising your Rental Income

Whether you currently own rental properties or you are just starting out in your real estate endeavours, knowing how to maximise your rental income is crucial in today’s real estate market.

It’s easy to get stuck in a routine of bill collecting and tenant turnover but you could be missing out on significant profits. With the right planning, you can increase your rental income with very little effort. Read more

 

Disadvantages of Owning a Rental property

  • Since the investment in a property is not a small one, a large amount of funds are concentrated in your property which leaves you with little money for other investing options.

 

  • You do not know the tenants personally. Thus, it is always a risky deal as they might turn out to be fraudulent people who run away with your belongings or without paying your money. Also, if they have come with these intentions, they might submit fake documents with you making it even more difficult for you to catch them.

 

  • Having a property investments requires too much of additional expenses. Some of them include taxes that are paid to the government, insurance policies that are taken at various levels and the fees that is paid to the broker to look for a tenant.

 

  • Renting out of property might demand too much of your time. You will have to meet various prospective tenants and interact with them. You will also have to answer too many questions related to the rent and property which is not possible if you are extremely busy.

 

  • Not all tenants will be able to take care of your property in the right manner. They might cause some harm to your property which will invite a huge bill for getting the things repaired and back to normal.

 

  • The market rate is not under your control. Even if you want to charge more rent, you cannot do so at times because similar property rents are quite similar in that area.

 

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