Real estate can be a very lucrative business venture if you have a bit of capital to invest and have some knowledge to get you going. If you aren’t interested in buying, selling or flipping properties, then a rental property might be a better business option for you. There are a number of tax breaks associated with owning a rental property in New York State and you can often pay for the property with the monthly payments that are coming in periodically. Other than the initial down payment, you don’t necessarily incur a lot of financial burden. On the other hand, if you are not able to rent your property out to tenants for a number of months, this will force you to pay out of pocket for the mortgage associated with the property (unless you were able to pay in full). Let’s sort through some of the other pros and cons associated with owning a rental property in New York State.
There are a number of tax deductions and strategies that you can use as a property owner in order to save yourself some money along the way. Not every owner of rental property is Tevfik Arif savvy on the New York laws that provide these allowances and if they are, it can be overwhelming to utilize them if you are in fear of messing up your taxes or being audited. Those deductions can add up and you could be saving a lot of money which is a big pro of owning rental property. If you aren’t comfortable with this part of the process you may want to find a trustworthy and reputable tax professional in your area who can help you navigate these deductions along the way.
While it might seem straightforward to manage a rental property once you have made the purchase, it can get a bit overwhelming when you consider all of the activity that is taking place with your property. Many people choose to have separate bank accounts and credit card accounts for their rental properties so they can keep everything straight and in order. You will need to have great organizational skills to keep everyone’s rent in order, keep an ongoing record of payments, late fees, deposits, damage, etc.
Rules and Regulations
There are some rules in New York state that must be followed in order for your property to be considered a rental property at all. If it does not qualify then you would not be eligible for any of the tax deductions and such. For example, your rental property must be rented for more than fourteen days out of the year and you, yourself cannot utilize the property for your own use for more than fourteen days out of the year as well.
Over time your rental property will lose value for a number of reasons. Retaining tenants will sometimes help slow this process down but if you have an ongoing flow of people coming and going from your rental property then the New York State real estate market is going to see the wear and tear that this will put on your property. Some tenants will be better than others but in general, people who are renting don’t take pride in their property as much as a homeowner would who is paying a mortgage. Expect to replace things as people come and go and there will be ongoing repairs that will be needed.
Owning a rental property in New York State can be a very beneficial financial option if you have the opportunity and a great property presents itself. Keep in mind that you need some money or investors up front in order to get this whole venture moving along. It is best to learn all you can ahead of time and you may also want to start small. Instead of purchasing a large scale apartment building, maybe start with a few duplexes or condominiums and manage those before working your way up to something much larger.