Becoming a Landlord: The good and bad.
Becoming a landlord has its perks, but for some, it’s not all it’s cracked up to be. Compare the pros and cons of being a landlord so you can determine whether owning rental real estate is the right move for you.
The Good: Financial Returns
Rental properties provide you with an income right away, just as soon as you get a tenant. There is no waiting to see a return on your investment.
Another benefit of rental properties is long-term appreciation, especially if you invest in an area that’s up-and-coming or an in-demand area that’s seen property levels increase over the years.
As your property appreciates and as you pay the mortgage down, you’ll be building equity.
Finally, owning rental property also opens the door to a number of valuable tax benefits. A number of your expenses associated with owning a rental are tax-deductible including mortgage insurance, repairs and maintenance, travel costs to and from the rental, property taxes, and depreciation.
The Bad: Unexpected Problems
One of the risks that come with buying a rental property is vacancies. If you have a mortgage on the property, then the payment as well as the rest of the bills and expenses will be due every month, regardless of if you have a tenant.
Unexpected Expenses and Repairs
Being a landlord also involves paying repairs and upkeep. If something stops working at the property like the HVAC unit, it is your responsibility as a landlord to get it fixed. Make sure while owning rental properties you have plenty of money set aside for unexpected repairs, maintenance, and vacancies.
As a landlord, you are the one who will get the calls about repairs that are needed. Let’s say an AC unit stops working in the middle of the summer on a Friday night, you will be the one getting the call and scrambling to dispatch someone to make the repair. Make sure you get a few good contractors lined up like: a good plumber, electrician, HV/AC technician, and general contractor.
If you end up having to take a tenant to court for eviction or if you need to collect on any damages. Always document your screening process, policies, and rental agreements. It’ll make it much easier to prove your case if you end up in court. Finally, make sure you charge a security deposit as that can be applied to damages caused by your tenants.
Unfortunately one downfall to renters is the property is not theirs and they do not always treat it right. THis can be costly damages to not paying rent and dragging out the eviction process. Months without rent can be a big hit to a lot of landlords, not to mention once you do finally get them removed, odds are they did not leave the property in the same condition that they acquired it.
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3 min read
June 1, 2022
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