You might have heard on the news that rents are rising sharply in some areas. It’s a good idea to invest in real estate right now and become a landlord.
However, you only profit from being a landlord if you’re excellent at managing tenants. Otherwise, the costs of the rental property may outweigh the positive money flow you have from rents.
Let’s look at the pros and cons of becoming a landlord.
Pros: A Job for a People-Person
As a landlord, it can be very exciting to engage with tenants and build a community. With proper maintenance and care, landlords can ensure tenants have a safe and comfortable living experience.
While the mindset of a “people-person” is essential to manage multiple tenants and provide good customer service, it also requires the application of legal and financial skills. Additionally, landlords must strive to continually stay informed and educated on best practices and new laws affecting rental properties.
Pros: Nearly Passive Income
Being a landlord can be a great way to make nearly passive income. You have the freedom to set your own rates, and can even make an income from properties you already own with the use of rental homes or apartments.
Not only do landlords get to earn money from monthly rents, but they also benefit from potential appreciation in the value of their properties. As the market or economy grows, so does the value of a property. Being a landlord also provides tax advantages, as you may be able to deduct some or all of your rental expenses.
Cons: Time-Consuming Investment
Being a landlord carries many responsibilities, but it can also be very time consuming. When it comes to this type of investment property, it’s important to be mindful of how much time you’ll be devoting to it.
You’ll need to be sure to stay on top of paperwork necessary for rental agreements, maintain insurance, and take care of any and all repairs needed. Even more time consuming would be finding the right tenants and dealing with tenant disputes. Unfortunately this all requires ongoing effort.
Cons: Annual Upkeep and Long-Term Maintenance
Becoming a landlord requires more than just collecting rent: annual upkeep and long-term property maintenance. Property upkeep requires the landlord to be prepared to cover costly repairs and replacements.
From cracked windows to broken boilers and leaky pipes, there is no limit to the tasks that need to be completed in order to keep a rental property running. Additionally, the costs of routine maintenance can add up, such as replacing batteries in smoke alarms and fixing minor issues. Repairs and replacements can become expensive, leading to unexpected costs.
Explore Everything About Becoming a Landlord
Becoming a landlord can be a great way to increase income, but it isn’t for everyone. Make sure you weigh the pros and cons carefully to decide if it’s the right decision for you.
Researching tenant rights, rental laws, and best property owner practices can help you become a successful landlord. If you still have questions, don’t hesitate to contact a real estate professional to help guide you through the process.
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