Are You the Right Person for being a Landlord?
Becoming a landlord is a great financial move for those that can take on the added responsibility that comes along with owning rental property. There are some great advantages and then there are some disadvantages of being a landlord in today’s society. In this article we will take a look at some of these disadvantages and give you some insight from what we have learnt over the years. Before we go any farther, just remember that if you have what it takes to be in business as a landlord you can diffidently make some serious income.
Being a landlord just might be the calling for you. This type of entrepreneurship is not for everyone though. Succeeding in this business does need a person to have a certain set of people skills and you must be able to handle issues that can arise expectantly. Sometimes there are some big challenges and headaches that a landlord has to deal with. So let’s jump into this article and take a look at what I call the 5 major challenges of being a landlord
Challenge number one: Locating the right property to purchase.
Purchasing property to use as a rental can open doors to many problems, some of these issues can be a huge burden on many that we will dedicated a whole article just on this subject in an up-coming post. Some important items that you will want to consider when purchasing property is:
- School system
- Property taxes
- Neighborhood crime
- Un-employment rate
- Number of other rentals that are vacant
- Going rental price
- Insurance cost for the area
- Public services
- Utility cost
Having a real estate agent may be beneficial for completing the purchase of the home but it is not always worth the hassle when searching for an investment property. A real estate agent works on commission and they may put undue pressure on you to purchase a piece of property that does not suit your needs or desires. If you are in no hurry to purchase then you sit in the driver seat to land a bargain when it falls on the market.
Challenge number two: Financing the property.
Again this is a huge question that we will cover more in-depth in an up-coming article. One of the biggest road blocks for purchasing rental properties is funding the cash needed to purchase the property. For investment properties you will need to come up with 20 percent down payment and closing cost. If the home needs repair before you are ready to rent it out then you will also need cash to do the repairs and prep the home for new tenants. One place that you could find this needed cash is through refinancing your personal home with either a line of credit, a HELOC loan or a cash out refinance loan. Do your research before making any financial decisions and get some good financial advice before signing on any dotted line.
Challenge number three: Are you the type of person that can do things your-self?
If you are a handy type person that can do simple plumbing repairs, electrical wiring, yard work and maybe some light construction then you could be a great candidate for being a landlord. Depending on the type of property you buy usually some of the basic things that you will need to do is apply a fresh coat of paint, either clean the carpets or replace them, fix or replace window screens and maybe some lawn maintenance. Remember the more you can do the more money stays in your pocket.
Challenge number four: Finding the right people to rent too.
What you are looking for are responsible adults that will be long-term tenants that will take good care of the property. Many times this is hard to find. With today’s social media sites one can screen their tenants with hardly any cost to the landlord. When I take an application I will tell the prospective tenet that I will have an answer for them within a week. I will take the application and jump on Facebook, twitter, and Google search their name to find out what type of people they really are. Example, I had one tenant that put on a good show at the time of visiting the house and had a good-looking application. When I Google and Facebook the applicant I found that they were huge party people who had many calls on them by the police department. This information I used to not rent the property to them. Properly screening your tenants by running credit checks and background check will take a bite out of your profit but is well worth the time and money to make sure that you get the tenant that will be responsible and not a burden to you.
Challenge number five: The hassles of tenants.
You could have the perfect property, the perfect tenant but even these come with their issues. Just like any home you are going to experience items that break from time to time. Broken water pipes, a garage door that won’t close, a window the kids broke, a drain that won’t drain, these are just a few of the challenges that arise from time to time.
Having bad tenants are even a larger issue that you will need to deal with. From daily complaints to unpaid or late rent payments are just a few challenges that come with bad tenants. Damage to walls, floors, and other parts of the home can lead to costly repairs and possibly having to hire an attorney to get the people evicted.
Don’t believe everything you see on television about becoming a millionaire overnight in the real estate game. Real estate especially through rental properties can be very profitable and build you a very nice lucrative passive income. While many people can bring in some extra side money having a sole piece of rental property, earning a true living as a landlord will require you to have multiple properties. The work is not for everyone. Those who are willing to pay the price of hard work and pay the price of creating a successful business will be nicely rewarded.