One of the ways that many people decide to invest in real estate, or create a passive income stream, is to purchase a rental property with the intention of becoming a landlord.
Owning property that you can rent out to others can be one way of creating income, and also of waiting for a property to increase in value.
However, being a landlord isn’t for everyone.
You should consider whether or not you are truly cut out to be a landlord.
Renting Out Property Comes with Hassles
I know I’m not cut out to be a landlord.
Just the thought of the hassles that come with renting out property have me steering clear. If I had to move, I would rather sell my home at a loss than rent it out while waiting for the housing market to recover.
But that’s just me.
Here are some of the issues that I would have with being a landlord:
- Trying to collect rent: I wouldn’t want to try to collect rent, especially if I lived in a different town. It becomes especially difficult if you have a tenant that gives you trouble about paying.
- Maintenance and repairs: Being responsible for general maintenance and repairs also doesn’t appeal to me. While some people enjoy doing the work, I don’t. And, on top of that, I don’t want to deal with the hassle of hiring someone else to do the work. Then I’d have to pay them out of the rental income.
- Cleaning it up after tenants leave: Another issue is cleaning up after tenants leave. What if they break something, or had pets? Once again, you can hire someone to take care of those things, but it comes out of your rental income.
In the end, I have seen too many instances of people I know trying their hands at being landlords — and running into no end of trouble.
Before you jump in and become a landlord, make sure you think through the hassles that might be a part of your duties of being a landlord.
Protecting Yourself as a Landlord
There are some things you can do, though, to protect yourself as a landlord.
One of the most important things you can do is to check into the backgrounds of potential tenants. Look at credit scores to determine whether or not you might have trouble collecting payment. Ask for previous landlord information so that you can call to find out what types of problems, if any, you might run into by working with specific tenants.
You can also hire managers to oversee your rental property.
While it will cut into your profits, a competent manager can take care of items in your absence — especially if you live in a different state from your rental property.
If you don’t like the hassle of dealing with tenants, but you feel you can make a good income with real estate, hiring a manager might the way to go. You can still build an income stream, and avoid some of the hassle.
Just make sure you are careful about who you hire.
For some people, rentals are a great way to build a revenue stream. However, for others, being a landlord isn’t the right path.
Make sure you consider the pros and cons of being a landlord before making the decision.