There are many commonly misunderstood myths people have about owning rental properties. While owning a rental property isn’t as easy as “sitting back and collecting the rent,” it can be a very good investment when done correctly. Here are some common myths about owning rental properties.
Myth #1: I can’t afford it!
Truth: Many banks will lend to you with as low as 20% down on a rental property. You can get these funds from available cash, retirement accounts or a home equity line of credit on your primary (or other) property. On a $250,000 condo, that’s as low as $50,000 for a down payment.
Truth: Property management is actually simple to learn and do! Have you ever rented an apartment? That is all you need to do. Most Realtors will gladly provide all the forms you need, tips on running your rentals, and vendors who can handle emergency calls and repairs.
Myth #3: I can buy something for less in Florida (Texas, Arizona, Nevada, etc.)!
Truth: You can, but with lower rental rates, they will not generate the same long term returns that something in the Southern California area will. Also, we have almost no vacancy here in CA – whereas other states sometimes have 30% vacancy.
Myth #4: It’s hard to find a tenant!
Truth: With a sample ad on Craigslist – you’ll get a ton of responses. We have a housing shortage – there are more tenants than properties.
Myth #5: All HOAs are bad!
Truth: Let’s face it, HOAs have a bad rap, and for good reason. But on the flip side, HOAs minimize your risk as a landlord and provide some management for you. They also provide landscaping, insurance, repairs, and amenities that are desirable to tenants. This means can mean less work and less headaches for the property owner!
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