The Pros and Cons of Property Investment

Today, real estate investment is no longer seen as the preserve of the already-rich. More and more ordinary people are seeing the advantages of putting their hard earned savings into bricks and mortar. This kind of asset investment can be an excellent way to build wealth in the long term as well as secure a regular income – in other words you can achieve not only capital growth but also cash flow.

Getting Started in a Real Estate Investment

It’s not as easy as choosing a house in a random city and suburb, finding a tenant and sitting back and expecting the dollars to roll in. There are myriad things that can go wrong for those who neglect to do their proper due diligence, or just barrel in and try to self-manage a rental investment. One of the very first things you need to do is secure the assistance of an experienced property management company. Here at Torres Turn Key, we’ve had many successful years in the business; helping new and experienced investors build and manage their property portfolio in Rochester, NY, and beyond is what we do. If you already have a house or apartment in Rochester, NY you wish to rent out, or you’re considering a purchase with a view to creating cash flow and asset appreciation, we can help. It should be noted from the outset that this kind of investment is not for everyone, but for those who do make the leap, the rewards can be great. It’s important to go into any kind of investment with eyes open, so we’ve cut through the hype to compile this easy-to-understand breakdown of the pros and cons.

The Pros

If you’re reading this article you’re no doubt excited about the prospect of purchasing an investment property, so we’ll start with the positives. Regular Cash Flow: As long as you have a good, reliable tenant in place, property ownership is one of the best cash flow investments there is – but the key words here are ‘good’ and ‘reliable’, because bad tenants are bad news. That’s where an experienced management company like Torres Turn Key comes in. We manage every aspect of your property, and this includes finding, vetting and securing tenants with a good income and rental history. The deal goes both ways, though, and it’s important as a landlord to keep the property in good order, well-maintained and attend to any issues as they arise. Again, we take care of this so you don’t have to. Tax benefits: Naturally, this will depend on your unique financial situation, but owning real estate can not only allow you to grow your wealth in the form of equity, the income/profit is subject to a different kind of tax than regular employment tax, and it can be significantly lower over a long term period. You will also be able to make a range of deductions on depreciation, travel and other expenses. Please note: it’s important to get professional advice before making any decisions. Capital growth: While the real estate market will always wax and wane in cycles and corrections, generally, property will appreciate over time at a greater rate than inflation – and, while costs of living and rent will always increase with inflation, if you choose a fixed rate mortgage for a period, you’ll be able to reap the benefits, as your repayments remain the same. There are also often opportunities to increase the value by making improvements. Of course, capital growth is determined by the location, size and condition of the house or apartment you purchase, so for a first timer, it’s very important to get advice from an expert. Equity, equity, equity: As your mortgage is paid down every month, your net worth grows at the same regular rate. When managed properly, your tenants basically pay off your mortgage for you and this means your equity continues to increase. You control your asset: Control is extremely important for some people, and this is where investment in real estate can be extremely attractive. As long as you have a reliable property manager looking after your best interests, and good strategies in place, you can make all the decisions.

The Cons

Knowing that there are ‘cons’ to investing in real estate is paramount to understanding the big picture and making an informed decision as to whether it’s for you. There are risks: Some of the risks involved with this kind of investment include:

• Overpaying
• Purchasing at the wrong time
• Having a bad tenant
• Over-leveraging your investment
• Unexpected tax implications

The good news is that getting reliable professional advice from the experts at every step will mitigate those risks. We can’t stress this enough: talk to the experts. You need to be in it for the long term: Unless you’re in the “flipping” game, real estate investment is a long game and you need to have the appropriate mind-set and strategies in place. This is not the kind of investment you can liquidate at the drop of a hat if you need some fast cash – like shares – and the associated costs are also higher than selling shares or stocks. Bad tenants can equal disaster: There are, unfortunately, some people who are what are known in the industry as “professional renters” who know the flaws and loopholes of the system and can (and do) use them to their advantage. If you have a tenant who doesn’t pay their rent at all, if they pay late, or if they cause damage to your property, the results can be catastrophic to your cash flow. (And believe us, it’s not as easy to evict a bad tenant as you may think!) For this reason alone, it’s vital that you put your house or apartment in the hands of reputable property managers who will do all the legwork to help you find and keep a good tenant.

Torres Turn Key: Helping You Make the Most of your Investment

Now that you’ve got more of an idea of the positive and possible negative aspects of property investment it’s time to call in some expert advice – that’s us! Here at Torres Turn Key, we’ve been helping investors manage their property assets in Rochester, NY, and beyond for many years. Whether you have an existing portfolio or are a first time investor, our friendly, experienced team can assist you with advice and practical management to help you make the most of your asset. Feel free to get in touch and see how we can help.