Buying a property of one’s own either for self-use or rental purposes is an investment that benefits people always. Many homebuyers even choose to let out the properties they bought for rent and continue to stay in the rental accommodation. There may be multiple reasons behind this such as work commitment, studies, the comfort of living, etc. However, renting out an apartment/flat has its own advantages and disadvantages. Here we figure out some pros and cons of letting an apartment/flat for rental purposes.  

Benefits

While investing in rental real estate yields good rental returns in the future, the income from tenants is the main advantage of renting out residential properties.

The property owners can also avail tax benefits. A tax deduction is applicable for rental expenses such as depreciation costs, insurance, property management expenses and others. The owner can cancel the income earned from rent by displaying these rental expenses and the amount left after tax deduction from the net value is an additional income.

Besides, the property appreciation is more for rental categories and that will add value to the asset. This will also safeguard against inflation and other monetary issues.

Renting out a property is also beneficial when it happens to move to a new location due to many reasons like a job, higher studies, etc. One can just rent out the property than selling it since it involves a lot of time and effort with hectic selling processes. Letting a property for rent and finding out new accommodation for rent is simple in India.

The rental property will also gain additional value with the sweat equity-maintaining and upgrading the apartment/flat. Renovating the house with painting, refinishing interiors, including new side, and landscaping will do more favors. This will help increase the rental value of the house and the net property value while selling.

Drawbacks

Income tax issue: Renting out an apartment/flat and staying closer to the workplace may attract an income tax in case the tenant stays for more than a year.

Tenants: Not every tenant is easy to handle, some may cause problems and may even refuse to vacate the house when needed or might cause damage to the property. This is a serious obstacle for owners. There is also responsibility for owners to check the background of tenants and assure they are not involved in any illegal or anti-social activities. Overseeing this will land in big trouble. There is also a risk of not getting tenants at all while the property will be left empty without generating any income.

Insurance fees & other costs: Irrespective of tenants possessing the house, the cost of insurance on property, property taxes and the cost of association fees with the property will be there.

Repair & maintenance: Issues are involved in regular maintenance, cleaning, remodeling and any repair works. Late rental payments, secret pets if not allowed, and squabbling neighbors are some other issues that are associated with renting out an apartment/flat.

Some preventive measures that homebuyers should adopt before letting out a property for rent.

If you are planning to live in a rented apartment/flat and let out your property for rent, it is necessary to calculate the rental cost that needs to be paid and the expected rental income from the property along with commuting costs. Also, check the tenants’ prospects before letting out an apartment/flat for rent to him/her. Research about neighborhoods should be done for the rental estimate and setting the price. The rental agreement is an essential document that needs to be signed after finalizing the tenant. All clauses with regards to paperwork and payments to association need to be clearly mentioned in the agreement to avoid any hurdles in the future.

Investing in rental properties and living on rent- each has its pros and cons. It is the homebuyer’s decision to choose the best with regards to their preferences.

Are you the one looking forward to investing in rental properties or searching an apartment/flat for rent, sign up with Sulekha to find your desired property.