Even with Austin housing prices holding steady at higher
 than pre-pandemic rates, investing in a rental property can still be a good long-term
 strategy. Whether you’re new to real estate investing or this is not your first
 investment rodeo, it’s important to weigh the pros and cons of growing your
 property portfolio. <div class="se-component se-image-container __se__float-none"><figure><img src="https://quicktours-static.s3.us-west-1.amazonaws.com/agent_richtext/20230426041541.jpg" alt="pros and cons of real estate investing" data-rotate="" data-proportion="true" data-size="336px,224px" data-align="none" data-file-name="real estate investing _ rental_windflower.jpg" data-file-size="35684" data-origin="," style="width: 336px; height: 224px;"></figure></div><h2> </h2><h2>PROS</h2> 
 Forced savings account Having a mortgage that someone else is paying for you is
 kind of like having a forced savings account. Your tenant is paying into your
 account and consequently paying down the debt while the asset is appreciating
 in value, and typically at a much higher rate than an average savings account. Someone else can manage it Property management companies will manage almost all the
 work of owning a rental property like finding tenants, collecting payments,
 facilitating inspections and maintenance and repair call outs. They
 collect a small fee per month, usually around 10-20% of the rent, and send you a
 monthly/yearly statements. Passive income Ideally, the rent payment that you receive will be higher
 than your mortgage and tax payments every month. That extra income either
 becomes extra cash flow to you for relatively low effort, or you can take that
 money and pay off your mortgage faster. Once that mortgage is paid off, your
 passive income is yours to do what you want. Like, invest in another property?Income gradually increasesIf you have a fixed-rate mortgage or, even better, no mortgage at all, and you can increase your rent at the same or faster rate than inflation, your income will also gradually increase.&nbsp; Building generational wealth Investing in one property is great, but if you can leverage
 that property and/or invest in multiple properties at once (with a smaller down
 payment but bigger payoffs down the road), you’re building not just wealth for
 yourself but also&nbsp;<a href="https://david.austinmarketrealty.com/articles/its-not-too-late-to-invest">creating a nest egg for future generations</a> that will
 inherit your investments. These properties, when selected in the right areas and sparing
 some crazy disaster, will only increase in value as the years go by, increasing
 your monthly income.You have a level of control over your real estate investmentUnlike shares or bonds where the income can increase or decrease without your control, real estate investors can participate in the investment process and have more control over how much they earn. Searching for good real estate deals, negotiating on price, finding good tenants and deciding when to sell are all things that the investor can control.&nbsp; <h2>CONS</h2> 
 Managing the property yourself can be time consuming Once you have a rental home, you have to decide whether you
 are going to manage it yourself or hire a property management company to handle
 everything. Small maintenance repairs can add up both in time and money
 (although ideally the income should still cover your expenses). Managing it yourself depends on a few important factors like
 how far away it is, whether it is a short- or long-term rental, and whether you
 have the physical time and resources to handle it. Hiring a property management company might be worth the
 money if you’re not handy or the time it’s consuming is taking you away from
 other responsibilities, but of course that will decrease your monthly income. Residential property taxes Property taxes vary year to year with little to no warning.
 This can significantly impact your predictable income stream if there is a huge
 spike (like during a pandemic). Your primary residence may qualify for a
 homestead exemption to protect you from this, but there's no visible limit when it
 comes to rental property tax increases. You can, however, protest the tax rate
 and often get it reduced. We hired a local company to help us with this and it
 was worth every penny. Unexpected emergencies While most of the time your rental property will chug along
 happily without much effort, sudden expenses like a flooded house, broken air
 conditioners, or storm damage can catch you by surprise if you’re not prepared. It’s important to have a savings account with enough cash to
 cover the initial blow before any potential insurance payments. Without a
 buffer or a good insurance plan, you might be caught off guard in these
 situations and it can create substantial setbacks. Having that emergency plan
 ahead of time, however, will turn emergencies into minor inconveniences that
 you can handle. <h2>So is real estate investing worth it? </h2> Short answer: absolutely. Real estate investing doesn't have to be daunting. Owning an asset that appreciates in
 value while someone else pays it off is a proven strategy in building wealth. Like anything else in life, it’s important to know what
 you’re getting yourself into so that there are no surprises, but with the help
 of an experienced Realtor, you can make decisions with confidence and watch your investments grow.&nbsp; <a href="https://austinmarketrealty.com/agents/david-west">Contact David</a> for more information on how to grow your portfolio, or with any Austin real estate questions.&nbsp; <div class="se-component se-image-container __se__float-none"><figure><img src="https://quicktours-static.s3.us-west-1.amazonaws.com/agent_richtext/20230426043148.jpg" alt="David West Austin Market Realty" data-rotate="" data-proportion="true" data-size="120px,160px" data-align="none" data-file-name="Dave_headshot_2.jpg" data-file-size="413559" data-origin="," style="width: 120px; height: 160px;"></figure></div>

Pros and cons of real estate investing

When I was sixteen,
 the last thing I had on my mind was my financial future. Yet,&nbsp;twelve
 months later I would be a first-time landlord and on my way to building what is
 now a multimillion-dollar investment property portfolio.&nbsp;Was it due to
 luck and fortune and something unachievable for most? Not at all. It
 started with a small down payment and, like fruit on a young tree, it just took
 time.&nbsp; <h2>Growing a portfolio
 on a shoestring budget</h2> In 1990 when my family
 immigrated from London to Sydney&nbsp;in pursuit of a better life (and better
 weather!), we were poor. In those early years my mum cleaned houses and my dad
 went door to door cleaning windows just to get by. They believed in hard work and
 impressed that value on my two older brothers and me. They eventually secured
 employment and were able to scrape together enough money for us to never know
 we were poor.&nbsp; In 1998, my
 grandparents both passed away and my father received a small inheritance, which
 they used as a down payment to buy their first home in Australia. It was a modest
 home that needed renovating and was about as close to being underneath electricity
 power lines as possible, but it was part of a family journey of renovating and
 selling (and renovating and selling some more) that would help me
 understand the value of real estate. <div class="se-component se-image-container __se__float-none" contenteditable="false"><figure style="width:auto; height:auto;"><img src="https://quicktours-static.s3.us-west-1.amazonaws.com/agent_richtext/20230424024059.jpg" alt="Dave West family home renovations flipping houses investment" data-rotate="" data-proportion="true" data-size="," data-align="none" data-percentage="auto,auto" data-file-name="house_renovations_dave_west_realtor.jpg" data-file-size="52876" data-origin="," origin-size="342,320" style="width:auto; height:auto;"></figure></div> My grandparents also set aside inheritance
 money for each of their grandchildren. I wanted to buy a used car, but my
 parents convinced me to put the money into something that would increase in
 value. Following their advice would become one of the best decisions of my
 life.&nbsp; My parents co-signed a small
 mortgage, and with the help of a local real estate agent, we negotiated a great
 deal on a studio apartment in North Sydney. It was small, old, dirty and in
 need of complete renovation. However, what it lacked in aesthetic appeal, it
 made up for in location.&nbsp;The studio was basically downtown in
 one of the most popular cities in the world, so we knew its value would only
 increase.&nbsp; With a minimal budget, we were able
 to make simple and effective improvements to the interior. We gave it a fresh
 coat of paint and replaced the tile with floating wood floors to enhance the
 natural light. We replaced the small kitchen with items from IKEA and scrubbed
 the bathroom within an inch of its life. After two weeks, the apartment was
 ready for a new tenant.&nbsp; <h2>Leveraging the experts</h2> To make things easy,
 we used a real estate agent to find a tenant. They handled everything including
 listing the property, scheduling showings, screening applicants, collecting
 security deposits, handing over keys, following up with move-in condition
 reports, and more. A good agent will make this process smooth and help prevent potentially
 awful tenants --- trust me, you don’t need that in your life. That same local
 agency managed our property for more than ten years, and through countless
 tenants remained a valuable resource for us. We were never
 bothered in the middle of the night to call a plumber. We received a monthly
 summary and could see the rent payments slowly chipping away at the
 mortgage.&nbsp;When I&nbsp;sold the apartment in 2012 for three times what I paid,
 it gave my wife and I a cushion of stability that led to our own family home
 and the ability to buy future investment properties.&nbsp;&nbsp; Looking back now, I
 feel lucky that I didn’t buy myself a car. It would be long gone, but my real
 estate investment was the rocket ship that launched my real estate journey and
 career.&nbsp;It not only set me up financially to grow my portfolio, but it
 also aligned me with the right mentality that helped me recognize opportunities
 when I saw them. <h2>Is it time to plant your tree?</h2><h2> </h2> It's not too late to invest. While you can’t turn
 back time and buy a house as a teenager,&nbsp;you might be in a&nbsp;position today
 to put together a small down payment and buy your first investment
 property.&nbsp;Think about how fast the last ten years has gone by, and think
 about where you want to be ten years from now. Think about what legacy you'd like to leave for your children or grandchildren. The right investment now could
 make all the difference in your retirement, your family's future and a lifestyle of more financial ease. <a href="https://austinmarketrealty.com/agents/david-west">Contact David</a> for more information on how to grow your portfolio, or with any Austin real estate questions.&nbsp;<div class="se-component se-image-container __se__float-none" contenteditable="false"><figure style="width:auto; height:auto;"><a href="https://austinmarketrealty.com/agents/david-west" data-image-link="image"><img src="https://quicktours-static.s3.us-west-1.amazonaws.com/agent_richtext/20230424024750.jpg" alt="David West Austin real estate " data-rotate="" data-image-link="https://austinmarketrealty.com/agents/david-west" data-proportion="true" data-size="109px,145px" data-align="none" data-file-name="Dave_headshot_2.jpg" data-file-size="413559" data-origin="," origin-size="673,895" style="width:109px; height:145px;"></a></figure></div>

The best time to plant a tree (or invest in property) was ten years ago, or today

ArticleDirectorySimple

<h2>Recent Articles</h2>Stay up to date with the latest news from David West by checking out the articles below.

<h1>Hero Content </h1>This is some more information.

HeroSimplev2

beds

1 Bedroom

2 Bedroom

3 Bedroom

4 Bedroom

Buy a Home

Sell My Home

cost

Under $50k

$50k-$100k

$100k-$200k

$200k-$300k

$300k-$400k

$400k+

baths

1 Bath

2 Baths

3 Baths

4+ Baths

Rent

Sell

CallToActionSimple

Get help with all of your real estate needs!

Articles

Read the latest real estate articles published by David West.

Articles | David West

Terms

Privacy

DMCA

Accessibility

Fair Housing

Recent Articles

Pros and cons of real estate investing

The best time to plant a tree (or invest in property) was ten years ago, or today

Articles

Get help with all of your real estate needs!

Company

Explore

Account