Many investors in New Jersey have considered rental properties as a means of investment. Being a landlord in New Jersey promises a stream of passive income and may seem a good investment at first glance. If you are thinking of renting out property in New Jersey, here are some pros and cons that you may wish to consider.
Rent from property makes it possible for you to have a predictable and constant monthly income. This allows you to anticipate mortgage, maintenance, and other monthly bills and be able to even have some money left over. Relatively speaking, this is income that is passive so it does not require you to go out and sell anything. The money will flow in even if you are away on holiday as long as you have a good property manager.
In New Jersey, you have a fairly good chance that your rental property will steadily appreciate in value. In some areas, landlords enjoy value appreciation of up to 33% in just three years. By investing in amenities in your property, you can further boost this appreciation and see some great returns on your investments.
High Maintenance Costs
Being a landlord in New Jersey does not come without some drawbacks. One of the cons is the cost of maintaining the property. Unlike your home where you are likely to take maximum care not to damage stuff, there are no such guarantees when it comes to tenants. The law in New Jersey holds that you are responsible for all maintenance costs of your rental property. This can run into hundreds of thousands of dollars and eat away into any profit that you intend to make. The law demands that you keep your property livable and so your own tenants can sue you if you fail to make these repairs. They could also legally withhold rent or leave without notice under certain conditions.
Being a landlord in New Jersey also means having to deal with difficult tenants. Sometimes you face tenants who skip payments, destroy property and are generally difficult to deal with. You might assume that the solution to this problem is to simply toss the annoying tenant out but it is not as easy as it sounds. The law in New Jersey provides very strict guidelines on the grounds on which you can evict a tenant. Unfortunately, many tenants use these guidelines to their advantage, ensuring that they are just within the limits without crossing the line. This creates a situation where your tenants are costing you money but you have no legal grounds to evict them.
If most of your investment is concentrated in rental property, you run the risk of losing your investment in case of a catastrophic occurrence. A storm or fire could set you back years and sometimes even wipe off your investments completely.