A rental property is a residential or commercial income-producing property that is leased out to tenants. It provides an opportunity for investors to diversify their portfolios, a source of secondary income for homeowners and may offer a solution for those with a home that won’t sell. Examples include apartments, houses, condominiums, vacation properties, office space and retail suites.
The main advantage of owning rental property is that it can provide a steady stream of income. Additionally, the property’s value may appreciate over time and certain expenses associated with ownership such as mortgage interest, property taxes and depreciation are tax-deductible.
As with any investment, there is risk involved with owning rental property. For example, the property can be vacant for long periods of time, which can lead to squatters and other problems. Another potential challenge is dealing with late or non-payment of rent, which can significantly reduce the property’s income.
For those considering owning property rentals, it is important to do your research. A real estate professional can help identify neighborhoods and homes with the highest potential for rental income. Some of the most important considerations include neighborhood and school quality, availability of transportation and close proximity to employers. These are all factors that can influence the type and quality of tenant, which in turn impacts the property’s revenue. Property rentals