Tag: rental homes

Home Ownership Pros and Cons

home ownership advantagesOwning a house is very different from renting. Understanding some of the key benefits and drawbacks of buying a house can help you decide if this is the right approach for your family. From the amount of money needed upfront to annual tax savings and even maintenance costs, here are some of the home ownership advantages and disadvantages.

Home Ownership Advantages

Build Wealth: For most of us, our home is our largest investment and one that increases in value over time. When you purchase a home, you naturally build equity as you make improvements and pay off your mortgage.

Tax Savings: The property tax and interest you pay on a home you own is tax deductible. This can add up to significant savings for you each year at tax time. If you make green improvements to a home you own, you’ll not only reduce your carbon footprint, you’ll get additional deductions as well.

More Control: From the ability to paint your rooms whatever colors you like, have as many pets as you want and even decide if you want to upgrade your exterior, when you own the home, you have creative control. You also don’t have to worry about a landlord selling your home before you are ready to move.

Privacy: Perhaps you don’t like the idea of a nosy landlord. You may simply want your own space that you don’t have to answer to anyone else about (except the bank). Either way, owning a home is the right way to go.

Advantages of Renting

No Maintenance Costs: If the air conditioning breaks, the fridge stops working or there is a plumbing fail, you’re not responsible for the repair work.

Lower Upfront Cost: Depending on the mortgage product you are interested in, renting can be less expensive up front than buying. Some loans, including VA loans are equal or even less than the cost of renting.

Flexibility: That downtown location may have seemed like a great idea when you rented the house. But now, a year later, you’re ready to move on. As a renter, once your lease ends, you’re free to move. A house will have to be sold or rented out before you can move on.

Affordability: In some markets, you can get more house or space for your money when renting. Buying could result in a higher monthly payment.

Bundled Services: Some rental locations provide utilities and other services, from trash pick up to lawn care. These additional services can save you time and money.

Home ownership advantages at the right time will ensure that you can build wealth and thrive in a home you own. For some people, renting may be the best option for now. It’s a good idea to regularly review your personal needs and goals. This process can help you decide which model is best for you and help you make the best possible decision for yourself and your family.

Real Estate Investments – Rental Homes

real estate investmentsReal estate investments for retirement or as “passive income” has long been touted as the way to create wealth and increase net worth. While it’s true that real estate certainly can do all of those things. It’s important to take a look at the realities and requirements of this type of investment.

Financial Requirements of Real Estate

One of the main points to understand with all real estate is the amount of “leverage” that it offers you. Leverage is when you purchase an asset by putting down a percentage of the purchase price and financing the rest. Thus, leveraging a relatively small investment for potentially much bigger returns.

In order to purchase any real estate, having the funds to purchase and maintain the property is critical. In addition, being considered “credit worthy” is important in determining the types of interests rates that a lender will offer.

Investment property financing comes with higher interest rates than purchasing a primary residence. The terms and conditions are also far more stringent. As lenders find these to be a riskier investment than home ownership.

Time Requirements of Real Estate Investments

Many people often talk about how they “just sit back and collect the rent check!” While that may be true on occasion, real estate definitely requires a time commitment.

Finding tenants and showing the property takes time at the outset of the investment. Making sure that you find the right tenant is critical. It cuts down the amount of time and effort your investment requires each year. The wrong tenants can cause damages to the property or not make rent payments. Which will greatly increase your time commitment to either take them to court or fix the issues at the property.


Property maintenance is a major time commitment that many forget to factor into their analysis. Murphy’s Law of what can go wrong, will – happens frequently in real estate. Knowing how to fix and make repairs certainly comes in handy. And if that’s not in your skill set, having the right people that can do that is certainly a major plus when something happens. That just leaves the overseeing and managing the repairs to the owner.

Legal Requirements of Real Estate

Any time there is a landlord – tenant relationship, there are certain do’s and don’ts that the property owner needs to be aware of. Missing some of these can open up legal issues that are best avoided. Luckily there are several sources online that cover the basics and speaking with an attorney that specializes in this area as well is critical.

In addition, an attorney can insure that you have the best lease for all of your tenants that protects you. The lease is the binding agreement between all parties and having a lease that protects the landlord will give the owner an additional level of security.

Real estate investments offer many opportunities for investors. Whether it’s as an additional part of a portfolio or starting a new portfolio. Knowing what to anticipate and preparing for it will make the entire process easier and far more successful.