Would it be worth it to have a rental property while you rent yourself if you know you can make money on that property? What type of problems could occur from rental properties other than upkeep, and dealing with tenants who may not pay?
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Based on the most helpful WSO content, owning a rental property while renting yourself can indeed be a profitable venture, provided you've done your due diligence and the numbers work out in your favor. However, there are several potential issues you might face, beyond just maintenance and tenants failing to pay. Here are a few:
Unexpected Repairs: Older properties, in particular, can come with a host of unexpected repair costs. For instance, a cracked cast iron sewer pipe, common in properties 50-60+ years old, can cost anywhere from 2k for a small leak to over 10k depending on how involved it is.
Legal Regulations: Laws related to lead paint and cracked plaster can be a real pain, especially in older properties. Yearly inspections with the housing authority will place all the repairs for damage to property done by the tenants on you, the landlord, to fix.
Tenant-Related Issues: Unchecked tenants can cause a lot of wear and tear to the property. In extreme cases, you might have to deal with significant property damage, such as from a tenant trying to cook meth over a gas stove or hosting a large party.
Market Fluctuations: Real estate markets can be volatile, and property values can decrease. This could affect your rental income and the overall profitability of your investment.
Over Leveraging: Many people go into real estate unprepared for the realities and over leverage themselves. It's crucial to ensure you have a solid financial plan and buffer in place.
Remember, real estate is a good business to be in, but it's essential to be prepared for the realities and not overextend yourself.
Sources: Anyone own any property on the side?, Anyone own any property on the side?, The Fallacy of Homeownership as a Vehicle for Wealth Creation, The Fallacy of Homeownership as a Vehicle for Wealth Creation, First Real Estate Investments: Benefits of Forming an LLC or Direct Ownership
I think so but it seems people on here are extremely risk averse
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