Understand the Basics of Owning a St. Louis Rental Property
If you’re new to the St. Louis real estate investment business you are likely looking for the right focus to get started. This often involves asking other, more seasoned, St. Louis investors for their opinions about the rental business to help build your portfolio. You’ll likely receive a split of good and bad reviews from other investors because no two experiences are the same. Here are a few pros and cons to help you get a sense of what investing in a St. Louis rental property will look like.
Great Cash Flow Source, but be Ready to Manage
Owning a St. Louis rental property will give you a good source of monthly cash flow that you will be able to do with as you please. Whether you pay for property maintenance or pay down the monthly debt with the money, one thing is for sure: you’ll likely yield more money from the cash flow than you will putting your money into a savings count and letting it appreciate. If the property is well maintained and you find the right tenants, this property will present a good cash flow that will last.
Keep in mind that once you own the St. Louis property you will be responsible for everything. This means maintenance issues, collecting rent, handling tenant issues, and finding the right tenants for the property will fall on your shoulders. You can ease the burden by hiring a property manager to keep things in order but remember that this will cut into your cash flow and your budget.
Long Term Investment, but No Guarantees
A St. Louis rental property will likely be a long-term investment, which means you’ll be somewhat protected from the fluctuations and changes that occur in the market. This is a good thing for you for a few reasons, one being that you will be able to wait until you own the property free and clear and actually want to sell the home instead of being tied to the market as you would be with a rehab property. You’ll be able to focus your attention elsewhere in you business while also saving for your future.
However, nothing in this business is guaranteed. If one tenant decides to stop paying this will leave you short on cash flow and could impact your business for months. You will also have quite a bit of your money tied up in this business so if you decide you want to get out you will be at the mercy of the market. This can be very difficult because the property value is not guaranteed to go up in the near future.
Tax Benefits are Available, but You’ll Pay More
You should hire a qualified accountant before you decide to invest in a St. Louis rental property to help you navigate the purchase process. This is because there are a number of tax breaks available to you that you shouldn’t overlook. There are write-offs associated with the expenses of upkeep alone that will save you money in the long run, so you want to be sure you catch them right away.
Keep in mind that when you purchase a St. Louis rental property you will pay more right out the gate than you will with most investment options. This is because most one or two family properties will require at least a 20-25% down payment in addition to the higher closing costs and prepaid tax requirements.
While asking seasoned investment pros for their thoughts on investing in a St. Louis rental property can be helpful, only you will know if this is going to be the right direction for you to take to build your portfolio and invest in for the long run. If you do your research and are prepared for the work that you will need to do you’ll be able to make the right choice for you and your business.