Funding your beautiful lifestyle means being smart with investments. Investment property to rent out provides a steady and reasonably predictable income, and choosing an upscale option means higher income. Of course, the initial outlay will also be higher, but if you’re in it for the long term, it could be a good choice. However, there are pros and cons to upscale investment property ownership. Weigh them up to decide whether this income-generating option is right for you.
Property Taxes Can be High – but There’s Hope
Because you’re investing in high-value property, it follows that property taxes will also be high. Sometimes, in a fit of zeal, the taxman could even set them unreasonably high. If you suspect that this is happening to you, you might be able to reduce the burden. For this, you need a legal expert with an appraisal and commercial brokerage background like Ryan J.Gibbs, a property tax expert active in all 50 US states. It’s certainly worth consulting an expert since taxes can eat a hole in an otherwise-comfortable income. If you haven’t purchased an investment property yet but are considering it, do remember to factor taxation into the equation.
It’s Passive Income – but it Does Entail Some Work.
Renting out property involves work. There are calls for repairs and maintenance, the need to find and screen new tenants when old ones move out, leases to negotiate, and more. And, since your property is as upscale as your lifestyle, you will be dealing with discerning tenants who expect service to match their high rental.
If you want to relax and enjoy the proceeds flowing from your investment property, you will need a good property management company to do the work for you. While this will make life much easier, it will mean paying fees for the service: yet another cost that may make your investment less lucrative than it seemed at the outset.
It’s Not Without Risk – but it’s a Concrete Asset.
Bad tenants can be a nightmare, but they could be the least of your worries. In the longer term, what’s upscale today, could lose value over time. It’s not just a matter of wear and tear. New buildings become old buildings, and the character of neighborhoods can change over time.
What was once a trendy shopping district, for example, could become less fashionable with time. Or, an upper-class suburb could become less attractive to prospective residents for a variety of reasons. But while absolute value depreciates, rental property depreciation can give you tax advantages you shouldn’t ignore.
Do your research well, but be aware that your residential or commercial property investment can lose value and isn’t a completely risk-free asset. On the upside, a property generally has a relatively stable value, while other investments can be much more volatile.
It Takes Time to Sell Up – but Good if You can Handle the Long Term.
Property is not something you can sell at the drop of the hat if you want to realize the best possible value. Even if you already have a buyer, it’s going to take much more time to turn your investment into cash than it would if you bought and then sold stocks and shares, for example. However, if you’re in it for the long run and don’t anticipate a need to free up your capital in the foreseeable future, it’s a relatively safe and stable investment.