Is a Rental Property Right for You? Here’s How to Decide


Longboat Key, Florida | August 2nd, 2019 – According to the National Association of Realtors, beachfront properties and lakeshore homes are the most popular choices for vacation rental purchases. That makes Sarasota and her islands, Longboat Key, Casey Key, Siesta Key, Lido Key, and Bird Key, prime locations for your rental property investment.


Economists believe investment homes, like vacation homes and full-time rentals, will remain steady. Meanwhile, Forbes has named the Sarasota-Tampa area among the best in Florida to own a rental property.


With more startups launching in Florida than Silicon Valley these days, people are relocating here, and there’s plenty of money to be made in local real estate rentals. Before launching your own rental property business, here are some considerations to help you decide whether it’s the right choice for you:

Is a Rental Property Right for You? Here’s How to Decide


Pros


Here are some pros to rental property investments:


● Money. Perhaps the biggest reason most people leap into the real estate investment business is that there’s decent money to be made. For many people, a rental property can be a reliable way to supplement or even replace your full-time income.


Of course, you’ll need to be wise about the property you choose. Entrepreneur.com experts recommend starting small, especially if you’re a first-time landlord. If you enjoy property management, you can always grow from there. Additionally, think outside the single-family home “box” and consider multi-family units, which can often generate even more income.


● Vacations. If you purchase a vacation rental property in Sarasota, one of the pros is that you’ll be able to use it for a beachfront getaway when it’s not rented out. One crucial bit of advice is to go easy with this. After all, you’ll never make a profit if your property is continuously off the market because you’re staying there. Instead, consider vacationing during the off-season. That way, your home is available to renters during the in-demand months when you’ll potentially make the most money.


● Tax breaks. Just like other income, you’re required to report your real estate earnings on your tax return. However, the IRS provides tax breaks and deductions for rental property owners. For instance, you can deduct mortgage interest, operating expenses, and even repairs or property maintenance.


Cons


Owning a rental property takes a lot of effort, patience, and dedication. Here are a few downsides:


● Effort. Rental property management is a lot of work and can be stressful at times, especially if you’ve never been a landlord before. The cost of maintenance and repairs can add up, and not all tenants will care for the property. However, you can reduce stress by hiring a property manager. They’ll coordinate with local contractors and handle logistics for you. For best results, hire a property manager that offers 24/7 support and upfront pricing.


● Taxes. Although you’ll get tax deductions for running a rental property, you’ll likely need to hire an accountant to ensure you get the maximum number of deductions. Luckily, you can sometimes deduct your tax preparation fees as an expense for your rental property business. Additionally, a professional accountant can help you sort through the tax implications involved with eventually selling your property.


● Losses. Unfortunately, not all rental properties make money. According to the Washington Post, the best way to ensure your rental property is profitable is by doing some simple math. By making sure the amount you pay for the home is less than 80% of what the property is worth after repairs, you’ll be more likely to make your money back — and then some.


The Bottom Line


Although a rental property can be a wise investment, it’s not for everyone. However, if you have prior landlord experience or have hired a trustworthy property manager, owning a rental can be a worthwhile investment. Carefully weigh the pros and cons to determine whether a rental property makes sense for you. Because every situation is unique, it’s never a bad idea to consult with a real estate attorney, an accountant, or a financial advisor before making your decision. That way, you’ll know whether a rental property investment will bring you additional stress or extra income.

 

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