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Is Buying Rental Property A Wise Investment?

Investors have a great deal of options these days. Many investors purchase single-family homes, duplexes, triplexes or fourplexes and rent them out, hopeful for a substantial return on their investment. A recent entry in USA Today's Money Watch fields the question of whether it is smarter to invest in the stock market or to purchase rental property.

Answering A Question With More Questions

The article points out that it is rarely wise to put all of your eggs in one basket by investing in a single stock, and recommends exchange traded funds (ETF) that contain a large variety of stocks. This can reduce risk.

As for the question of whether it is smarter to invest in rental property, the article has less solid advice. Instead, it points out some of the crucial elements that need to be considered. For example, do you understand what is required to be a landlord? Will you personally be able to handle maintenance of the rental property, or will you need to pay a management company? Who will your tenants be? If you are going to purchase rental property in a college area, are you willing to take the risk that there may be students who are less respectful of your property than you would like.

Do Not Overlook The Legal Aspects Of Becoming A Landlord

While the article recommends that you seek advice from an accountant or financial planner, there are legal aspects of becoming a landlord that cannot be overlooked.

An experienced real estate attorney can help you identify an ideal rental property, a process which involves determining the appropriate amount of rent based on the current rental market and other factors, and weighing the income you stand to make from the rental property against the costs you will incur, from the mortgage to property tax to maintenance and repair costs and more.

Furthermore, an attorney can work to pursue an efficient and cost-effective transaction, resolving any disputes that may arise during the process. When you become a landlord, you will likely also need the assistance of an attorney to create leases and other documents. An attorney can also apprise you of your legal obligations and rights as a landlord, and can stand beside you in the event that a landlord-tenant dispute arises in the future.

Attorney Matthew Obermeier offers free consultations about rental property real estate transactions and all landlord-tenant law matters.

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