Potential Costs of Rental Property
The biggest problem with rental property is the potential costs associated with it. Something many people forget is that you still have to pay taxes, insurance premiums, utility bills and maintenance costs on a unit that is not rented. If the unit sits empty for several months you could be out several hundred or even several thousand dollars.
If you are financing the property through a mortgage you will still have to pay the mortgage payments if the unit is not rented. That means you will be paying interest even if no income is coming in. Another expense many people forget about is legal bills. Most landlords find themselves in court or a major legal dispute sooner or later and end up paying a lawyer to represent them. This can obviously cost a small fortune.
So it’s obvious that a rental unit will quickly flip from a project into a liability. The additional you invest in a very rental the additional you may be possible to lose on that. the chance of loss is just too high for a non-worker or couple that’s making an attempt to measure on a restricted financial gain.
Time and Hassle Associated with a Rental Unit
Even if you are able to handle the potential financial losses there is all the time and effort involved in renting a house or shop. If you manage it yourself you will have to collect the rents, enforce the rules, screen tenants and oversee the property. You will be responsible for maintenance and repairs as well as the bills.
Nobody likes the idea of getting up in the middle of the night to deal with a leaky roof or a clogged toilet. That is exactly what can happen. You may also have to repair, maintain and clean the unit or its yard. Would you really want to spend your retirement painting, mopping, performing miner repairs or mowing a yard? You could hire a maintenance or management company but that is an added expense.
Finally every landlord has to be prepared to confront tenants sooner or later. He or she has to be ready to enforce the rules and even evict tenants. Could you handle that? Not everybody can but a landlord has to be ready to handle those unpleasant chores.
Increased Responsibility and Liability
Something many people forget about rental ownership is the increased responsibility and liability it creates for you. If you rent out a house you could be sued if a visitor to that home tripped and fell and blamed you. You could also be liable if the house burned down and destroyed your tenant’s property.
Landlords also have to follow all the local laws associated with rentals. This includes rent control, civil rights statutes and much more. In some areas you cannot raise the rent without a vote of the city council. In others there can be restrictions on who you rent to or when.
Alternatives to Rental Property
It is obvious that rental property is simply too costly and risky for average people to rely upon for retire income. Therefore you need to look into alternatives such as annuities. An annuity provides a regular stream of income with no cost, legal obligations, hassle or added risk. There are even lifetime annuities that can provide income until a person dies. The truth is that many sources of retirement income that you can take advantage of that won’t involve getting up at midnight to unclog a toilet.
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