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The Pros and Cons of Owning A Rental Property in Michigan

Owning an investment property is a great idea if you want to get extra income. But it also has some pros and cons related to it. In this blog post, we will discuss a few things you need to consider before investing in rental properties:

The Pros of Owning a Rental Property in Michigan

1. Someone Else Pays Your Mortgage

The idea of someone else paying your mortgage sounds excellent. It depends on your tenants. By having the rental property, additional income would be generated that you can use to pay off the mortgage. With the help of the right rental, you will generate enough income to pay off the mortgage and the payment to maintain the property and the profit aside.

2. People Will Always Need Somewhere to Live

Real estate is a significant investment. As stated by Andrew Carnegie, “Ninety percent of millionaires become so by owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate”. If he were alive today, he would be worth $309 Million.

3. Income Tax Deductions

On a rental property, you can deduct everything; you just keep the record and keep everything in written form.

  • If you have a loan on it, the interest can be deducted
  • Travel and mileage costs to visit, repair, and inspect your rental property
  • You can remove maintenance and repairs. This includes everything from a new roof to replacing a light bulb.
  • HOA Fees
  • You can deduct any portion of the utilities you are paying for

4. Retire in Style

If you have found the home you love and dream about, it is away from your work commute. You should purchase that property and put it on rental. So that when you retire, you can move to your dream home. Until you don’t start living there, you can get lots of profit by putting it on rental. This is how you can achieve your dream home and spend life after retirement there.

5. Passive Side Income

If you get all your ducks in a row and have a low-maintenance rental with great tenants, owning a rental can be excellent passive side income.

Cons of Owning a Rental Property in Michigan

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1. No Respect

Apart from the usual wear and tear, you are supposed to take care of the home and always keep it in living condition. But the tenants living there wouldn’t take care of the property as you could do. You wouldn’t be able to take care of the home as you cannot visit it every day.  You cannot control what they do or how they take care of the things while living there. You have to manage all the tasks, from a hole in the wall to the faulty plumbing you are unaware of.

2. You Might Get Sued

It happens a lot as people can claim security deposits or repairs you had to cover, but you didn’t. This doesn’t sound like a big issue, but it requires a lot of energy and time to deal with it.

3. Additional Cost

To keep the property in liveable conditions, it needs to be appropriately maintained. The lawn must be mowed regularly, pools must be kept clean, and maintenance is essential as it is your investment. 

Before investing, you should consider the yearly costs needed for maintenance.

4. Stress

It is quite evident that being a landlord is stressful. If you’ve got high-maintenance tenants, you should be ready to hear them out at any time 24/7 as they might see a bug and call you straight to fix it. In addition, if the rental gets down for some time, you are still supposed to pay for the maintenance.  Whereas some tenants aren’t punctual and you got to chase them every month for rent.

5. Money

Some situations might occur that can put you in challenging scenarios like what if the price of the rental drops and mortgage remains the same, and you are not in the situation to increase the rent? You should be prepared for worst-case scenarios and make sure you have some wiggle room from the rent you are charging. 

Don’t get it so close that you have to face problems in the future. In addition, financing the second property could cause more issues before a bank can help with the financing.

Wrapping Up

Before making any investment, make sure you know about all the pros and cons. Try to find a property with low maintenance and do thorough research on tenants before starting this process.

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