Insula Capital Group

A view of the blue colored house and the garage area

The Pros and Cons of Buying a Rental Property

The property market is booming, and now is the perfect time to take advantage of this fantastic opportunity. Buying a rental commercial or residential property is certainly a life-changing decision, but you need to weigh in all the pros and cons.

Nowadays, most people choose to rent a property rather than buy it. Here’s what you need to know before you make the final call:

Advantages of Buying a Rental Property

The following are the advantages of buying a rental property:

1. A Smart Way to Build Connections

The US real estate market heavily relies on the quality and reliability of connections between brokers, investors, buyers, and sellers. Buying a rental property can help you make smart offers and positively interact with the seller.

Don’t be afraid to speak up if you find anything in disrepair. A better way to present a smart offer is to couple it with a property review report that backs your bid. Have an honest conversation about it with the seller. Make sure you have a qualified hard money lender by your side!

2. Increased Property Values

When you own a rental estate, you profit from any increases in the estate’s intrinsic worth. Institutional factors like population increase, national financial outlook, and urban regeneration all influence land price inflation.

While significant property value rises aren’t guaranteed, you can improve your chances of profiting from land market rise. This can be done by reviewing historical datasets and expected emerging trends for prospective rental properties before making a purchase.

3. Tax Benefits

Most rental expenditures, like loan interest, maintenance, property amortization, and even insurance costs, are allowed as tax exemptions by the IRS.

Rental units also allow for a 1031 conversion, which is a powerful instrument for accumulating wealth. Although the latest tax code may abolish this, it’s important to consider the possibilities. This legislation permits the sale of a rental property without reporting investment income as long as the proceeds are used to purchase another real estate.

Disadvantages of Buying a Rental Property

The following are the disadvantages of buying a rental property:

1. Liquidity Issues

Property investment is a non-liquid investment. Completing a deal may take a few months, even in the strongest marketplace.  You may not get an optimum deal if you need to sell quickly because of an emergency or some unforeseen circumstance.

2. Tenants Who Are Difficult to Work With

You can end up with renters who can cause trouble despite your tenant screening efforts. They might be pushy or demanding, miss payments, or neglect basic maintenance. To avoid this, you can include a section in the normal contract form that specifies the tenancy restrictions.

Contact Insula Capital Group for Real Estate Financing Services

If you’re looking for flip loan financing options and hard money loans from private money lenders, consider working with us at Insula Capital Group. We offer real estate financing solutions, investment home loans, hard money construction loans, commercial bridge loans, and more.

Contact us today for hard money loans in New York.