There are many issues that you need to consider before deciding that you want to buy or sell real estate. While it can be an effective way to make money both now and in the future, there are many potential headaches that you could have to deal with as well. Let’s take a look at the pros and cons of buying and selling real estate either as a side hustle or as a full-time job.
Make Money in Many Different Ways
One of the advantages of being in real estate is that you can make money in a variety of different ways. For instance, rental properties can generate two sources of income at the same time. Each month, you get a rent check from a tenant, and that serves as a sort of dividend for owning the home. At the same time, you can benefit from the fact that the home will likely appreciate in value each year. If you choose to sell the home, you can potentially stand to make tens of thousands of dollars.
Not All Deals Pan Out
One of the headaches of buying or selling real estate is that not all deals come to fruition like you thought they would. In some cases, a bidding war may push the price of a home beyond what you were willing to spend. Sudden changes in market conditions or a sudden change of heart from a buyer or tenant could result in a home not selling or remaining vacant.
You Can Keep Properties in Your Family Forever
If you are looking for a way to solidify your family’s financial future, you can pass down homes, condos or other properties to your children or grandchildren. To make it easier to manage your holdings, a property management company can collect rent checks, screen tenants and take care of maintenance.
This may make it more likely that future generations will want to keep these properties in the family. For added legal protection, consider putting your real estate holdings inside of a limited liability corporation (LLC). Real estate experts like Craig Nassi may be able to further explain the benefits of doing so.
You’re Responsible for What Happens to a Property
One of the downsides of owning a home or apartment complex is that you are responsible for everything that happens there. This is true whether you manage it directly or have a property management company do so for you. Therefore, you may want to have general liability or landlord insurance to cover the amount of any judgments entered against you or your holding company. As a landlord, it is your right to evict tenants who damage property or otherwise cause harm that you have to pay for.
You Can Get Tax Breaks for Upgrading Rental Properties
Whether you own an apartment complex or just a couple of duplexes, you can reduce the cost of maintaining a rental property through state or federal tax breaks. It may be worthwhile to consult your attorney or tax adviser to determine if you qualify for a particular write-off or credit. You can also talk to people such as Craig Nassi to learn more about the general tax benefits of owning a rental property.
Buying or selling real estate can be worth doing if you are willing to put in the time to learn how it is done. It is critical that you develop relationships with real estate agents and others who can help facilitate quality deals. It may also be a good idea to take classes or get a mentor who can help you learn what it takes to be successful in real estate.
