Advantages and Disadvantages of Owning Rental Property

The real estate business  does sound as an immense way to make good money, but the reality is otherwise. It isn’t as easy as purchasing a nice location and getting the right tenant. There are some points, which are worth considering before placing a ‘for rent’ advertisement in the paper as well as for buying the property.

Let’s discuss some of the advantages and disadvantages of owning rental property providing the landlord a nice profit and later concluding it in a summary.


advantages of owning rental property

There are extensive advantages of rental real estate. One of them since owning a real estate is as similar as owning a concrete asset. It can be used at the time of need and can be thrown when one is unhappy with it.

There are many people who have no uncertainties for investment in real estate, but on the other hand, they have a bumpy feeling investing in financial tools.  This is just a matter of their mind since both the poor stock and poor rental property have the equal potential of losing the money.

Given below are some of the pros of Rental Real Estate:


Appreciation refers to the increase in the worth of the property which takes place with the passage of time. Although it is not definite in all cases but owning a property preferably in urban areas has a good chance of appreciation. In light populated areas, appreciation occurs due to common inflation.

Tax Rewards:

If one doesn’t get net cash flow after the expenses are subtracted, the leasing/rental income can be made tax free. This shows that the advance has been paid, and one owns even more than the actual worth of the property, which is also tax free. Besides this, another way of  pulling out the tax free money is by refinancing  the loan in case of appreciation of the property and reduction of the interest rates.

Furthermore, if one sells the property and then further reinvests in another property, taxes can be avoided.


Leverage in rental real estate may refer to buy a property with the borrowed capital, hence only a small fraction of money of the total cost can provide hold of the whole property. Compared to the other assets, property locks the debit the most.

Existing  Income:

The lease money which is left after the advance and other concerned expenses that have been paid is known as the current income. It is the monthly cash flow/income which the one’s property makes and one doesn’t have to work for it.


Although there are many advantages of the  rental real estate as mentioned, but they are off course, followed by some disadvantages too.

Unpredicted Expenses:

The less expensive operating cost may include things like plumbing or boilers, on the other hand, if there comes unexpected big expenses such as defective cabling, terrible foundations, compromised roofing. They lead to pay heavy for the repairs. If one is unable to pay for the above mentioned repairs, the resident might be dissatisfied and leave and hence the owner would re rent the property at a lower price than before.



The money that one is getting in doesn’t mean making the payments from his own pocket but the emergency funds are really helpful when it comes to long vacancies with less trouble.  Furthermore, if one hasn’t arranged the rental property emergency fund, it can result in a mess and a mess as great as paying the rent to the cruelest property-owner of all times, i.e. the bank.

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One Response to “Advantages and Disadvantages of Owning Rental Property”

  1. There would always positive advantages when owning a property. Aside the fact that it is a profitable investment it has also good implication on managing your property with the correct strategies in the market.

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