Rental investments are a great way to diversify your income and build wealth over time. Many people are under the false impression that owning rental real estate can be difficult and expensive, but this isn’t always the case. In fact, according to William Schantz, smart investors know that there are ways to make wise investment decisions without too much trouble at all.
When it comes to rental investments, people hold several misconceptions about them that may make you think twice about pursuing this route. Fortunately, in this article William Schantz will clear up any doubts you have about rental investments so you can be confident that they’re right for you!
Top 5 Misconceptions Busted By William Schantz
There is No Money Down Investing
William Schantz suggests that, no matter how good of a deal you get on your rental property, it doesn’t mean you won’t need some cash to make your purchase. In fact, most rental properties will require a down payment of at least 10 percent, and more often, 15 percent or more. So don’t think that just because you found a great deal means you can buy without having any money to put down on a property!
Returns are over 15% a Year
On paper, rental properties sound like great investments because they tend to increase value over time. However, it’s important to remember that unlike stocks and bonds, which you can sell whenever you want at market prices (plus or minus commission), real estate is a physical asset that must be sold at a certain price point. That means you’re subject to whatever conditions your local market provides. If your rental property is overvalued, it might take years to catch up with market demand.
There is No Management Hassle
Some people believe that rental investments are a no-hassle way to make money. This is a common misconception among individuals who think I won’t have to do anything if I invest in real estate. While you will have more time for relaxation as an owner of rental properties than you would as a homeowner with a mortgage payment, it still takes time and effort to be an effective landlord.
Remember that there is no easy way to make money!
There is No Tax Deduction
Perhaps you’ve heard that rental investments are bad because they don’t offer tax deductions. It’s true that as long as you live in your home for at least two years out of a five-year period, you can write off some of your rent or mortgage payment on your federal income taxes. But if you aren’t eligible for these tax deductions, it doesn’t mean that renting is a financially unsound decision.
Vacancy Rates Don’t Matter
Think again. You might think that your tenant’s ability to pay is all that matters when it comes to renting out a property, but vacancy rates are just as crucial, as per William Schantz. If you have a house with an abnormally high vacancy rate and low tenant-paying capabilities, you may be better off waiting for something better. By researching rental properties before buying them, you can ensure that there aren’t any problems in advance of your purchase. If there are any issues (like very high vacancy rates), you can immediately take action and avoid wasting time or money on a poor investment.
When looking at potential investments, consider taking some time to talk with other owners about their experiences; by learning from others’ mistakes, you can make smarter decisions yourself.
William Schantz Recommends Thorough Research
Rental investments are a valid way to make money. However, if you want to be successful with it, you need to do your homework and manage your investment property appropriately.