There is never a shortage of people looking for a place to live in New York City, particularly Manhattan. This is an interesting fact that property owners should know since it is a factor they should consider when contemplating converting their apartment into a rental property. This idea has its own benefits and drawbacks, which is why it is necessary to weigh all the pros and cons prior to deciding whether or not it is in fact a good idea.
Pros
Income Potential
One of the most apparent advantages of having a rental property is the fact that you can earn passive income each month without doing much. Rental rates in Manhattan, especially in high-end areas such as the Upper East Side, Upper West, and SoHo, are astronomical. Having an apartment for rent means you can earn up to about $5000 or more, depending on the type of property as well as its location.
A significant number of New Yorkers these days realize the income potential of having one or more rental properties. In fact, you can start with just one apartment and parlay the income of that property to acquire more apartments for rent in the future.
Low Risk Business
If you already have a property sitting unoccupied, turning it to a rental apartment is by far the least risky business venture you can engage in. Since the investment (property) already exists, there is not much capital required to start reaping the profits. The only thing left to do is hire a broker who will find the right tenants for the apartment.
Cons
Risk of Property Damage
While most lease agreements include clauses regarding property damages, whether superficial or structural, there is no guarantee that the tenant/s will follow through. Renting out your apartment to other people means taking on the risk of property damage, which can cost a great deal of money and time to repair. It is best to discuss this thoroughly with your broker and let it be known that you are extremely meticulous as to the kind of tenants you want renting the place.
It is imperative to ensure that you only lease out the apartment to responsible tenants who will care for the place as if it were their own property.
Maintenance and Repairs
Since property owners maintain total control of the apartment, they are also responsible for dealing with repairs, i.e. leaks, plumbing issues, heating, etc. These repairs will come out of your own pocket, which results to reduced income. Prior to putting the property up for lease, be sure to have it inspected by a professional in order to ascertain its structural integrity as well as the state of the permanent furnishings, i.e. built in oven, fireplace, etc. This is to reduce the need for repairs once the apartment is rented and occupied by tenants.
When deciding whether or not to convert your apartment to a rental property, be sure to take a closer look at all the facts and be prepared for possible adjustments
