Is Your Rental House an Asset? The answer may surprise you.
So, is your rental house an asset? Maybe you’re thinking, well that’s dumb, of course a house is an asset. But is it really? Yes, it’s an asset, on paper a rental house is definitely an asset, but it’s not an asset if the house is mismanaged, and it’s not the big asset in real estate.
I’ll explain what I mean. Tell me, how much do you like your rental house when it’s vacant? Not much. You’re constantly shelling out money for utilities, taxes, insurance, maintenance, and mortgage payments maybe. It’s all one never ending expense after another with no income coming in. How is that an asset? Maybe to an accountant it is.
And you may be thinking, well, at least houses go up in value. Well, not so fast. Houses really do not go up in value. It’s the land that the house sits on that goes up in value. Houses are like cars. They deteriorate and lose value a little each day. Again, it’s the land that goes up in value.
So where am I going with this? Well, here it is.
A well-managed house certainly is an asset, but it’s the tenant that’s the real asset.
Houses do not go to work and pay you rent. It’s the tenant that pays rent and provides the property owner with income.
So a good tenant is the big asset in rental property and should be an important person in your life if you have a rental house.
So, if a good tenant is the asset, take care of your asset. Give the tenant a nice home to live in. Keep the house well maintained and respond quickly to maintenance issues when they arise.
So, if you agree with me and realize a nice house is what attracts the asset, appreciate your good tenants, they’re the real asset.
My name is Michael Bielon. If you ever need property management, please reach out to me.
