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ECIL | In theory rental homes can be very good. In reality though there are a ton of issues to deal with. Finding a decent property in a decent neighborhood that can draw a suitable rent, and importantly, decent tenants is a challenge. Most will need additional capital to bring them up to code and suitability. It will depend on location, affordability, the local job market and sources of income for the tenant, and your time you can put into it. Getting a call on a Saturday night in mid winter about the furnace going out is not a good way to spend a Saturday night. Late rent payments can be hard on the checkbook for paying the mortgage, if you have one. You will need to cover the PITI (principal, interest, taxes, insurance) plus a little extra for future expenses and this can determine rent. Too high and you have a dead property. Too low and you lose money plus draw a lesser quality tenant. Every month it sits empty is a loss. Management fees can eat up any margin you may have. Then all you gain over time is equity but if there is a mortgage it is several years before you start to see the gain.
Land produces income year in and year out, it is always occupied. You don't have to deal with late payments, late night calls, inspections, repairs between tenants, or unexpected expenses like a dead furnace. | |
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good time to buy land?
