Owning a property can be a real pain, especially when you are still servicing a loan. Presuming it’s rented out, then comes the pain of maintaining the property and dealing with the rent collection and such. There’s also the income reporting and tax deductibles. Seems like quite a bit of work.
But there’s an easier alternative of course. Outsource it! Let someone else manage it, and you are effectively engaging them to do it for you. Of course they take a cut, but you still get rental returns. With just one property, there’s however no economy of scale. So the overheads involved can be high.
And then we have REITs. Effectively the same thing after all, but with the property manager handling multiple properties, collecting rents, while maintaining the properties. It’s diversification.
I’m quite for REITs, particularly as they can serve to generate an income stream. It’s not without risks …Read the full article →