Becoming a landlord as a means of having extra income is something many people are doing nowadays. If you flip the channel to HGTV, more than likely you will see a show about flipping houses. This is a practice that has become very popular. Many people are flipping houses and instead of selling them, they are turning them into a rental as a means of (extra) steady income. There are benefits and challenges to becoming the landlord of a rental property so here are the pros and cons of becoming a landlord.
As mentioned before, the most important and probably the most appealing benefit of becoming a landlord is the extra income. This applies to you if you’re the kind of landlord that has a regular job and having a rental property is just additional. If the property you’re renting is one that you’ve paid off then great! That means the rent that the tenant or tenants are paying can be extra cash you’re earning a month. This extra money you’re getting can be used towards repairs the house may need through out the renters lease. If it’s a house you still have a mortgage on, then obviously you wont be able to pocket all the rent money but you will be able to use it to make your mortgage and property tax payments and whatever other expenses the house may have. The additional income is one that appeals to most and its obvious why.
Having this additional home under your name means you can use it as collateral if let’s say you’re applying for a loan. Also, in the dire case that you fall into some financial troubles or you want to make a major purchase, you always have an extra property to sell so you can have cash to pay off any debt. If you find that being a landlord is your thing, having more than one rental property can just add to the amount of assets that you can liquidate incase of a financial emergency.
Having an additional home is always a good thing, right? Many people tend to rent homes to college students or younger families or even family members. People they can trust or that will have a co-signer incase of a hiccup. Lets say you own a property that happens to be a duplex. This can serve for two purposes. You can rent it out and have tenants that pay rent on one side of it and then maybe have your child who happens to be a college student live in the other half. Sure, they wouldn’t be paying rent but it’s someone you can trust and that can look after the house. Having an extra home is simply a good thing incase of an emergency in which someone close to you needs shelter for a bit.
Becoming a landlord requires time commitment so if you are not ready to handle two jobs, this is not the thing for you. If you don’t hire a property management company you will be go-to guy for any emergencies that happen in the house. To start off, if you want to have a good tenant experience, you will need to put in the time to screen all the candidates and once tenants move out, you will need to put in the time to market your home so it becomes occupied again.
Being The Bad Guy
Being a landlord means that at one time or another, you will be the bad guy. You will have complaints from tenants and confrontations about matters regarding the house. If you don’t like confrontation, then you might want to reconsider being a landlord. It doesn’t matter how thorough your process for electing a tenant is, you will encounter issues at some point. Things might get as bad as having to evict someone.
As you can see there is good and bad that comes with being a landlord. The extra income is what attracts most people into the idea of becoming a landlord but it’s about weighing the pros and cons and seeing if the stresses, time consumption and overall responsibilities of being a landlord are worth it.