Do You Have What It Takes To Be A Landlord
When you hear the word “Landlord”, what adjectives come to mind to describe this person?
Any and all of these adjectives can be used to describe almost every landlord at some point.
[ctt template=”5″ link=”0w8j5″ via=”no” ]Do you have what it takes to be a landlord?[/ctt]
A landlord who has systems and follows them:
- Can be considered lucky
- Will have tenants that pay the rent
- Will have tenants that take care of his home
- Will be making money
- Can pay off his houses while someone lives in them
- Could end up wealthy
A landlord that doesn’t have systems that he follows will:
- Be considered unlucky
- Think he was crazy to get involved in renting homes
- End up with bad tenants
- Have tenants that don’t pay rent
- Be broke he has bad tenants that destroy his houses
- Have a harder life because he has vacant, torn up houses
The key is to be the first landlord, not the second landlord.
Being a landlord is certainly a great way to make more money in the real estate market if it is done correctly.
There is a market for rental homes in every area of the country that someone has to meet and there is no reason it can’t be you.
Purchasing homes, fixing them up and then renting them out can allow you to develop very profitable streams of passive income.
There will always be people out there who can’t or don’t want to buy a home and are looking for what you have to offer.
Advantages Of Being A landlord
The biggest advantage to owning rental homes is that you can generate extra monthly income. This will allow you to have financial freedom.
But the biggest value of having rental homes is the equity you build in these homes.
If you concentrate on buying homes in decent areas, the value of these homes will go up over time and you will build equity.
This equity will allow you to sell these properties down the road and either cash out or pay off other houses.
Having homes that are paid off will only increase your monthly income.
Some areas also provide tax incentives for landlords, which allows you to take things like repairs, as tax deductions as business expenses.
[ctt template=”11″ link=”Ub9W3″ via=”no” ]But the biggest value of having rental homes is the equity you build in these homes.[/ctt]
Run your business correctly and you will have more freedom. Freedom to spend time with your family, take time off and do FUN things.
Downsides To Owning Rental Homes
Do you have the time to be a good landlord?
You need to do an honest assessment of your time before you ever go down this path.
One or two houses are easier to manage, but if one or both becomes vacant, you will have to take the time to either hire someone to do repairs or do them yourself so you can get the house rented again.
The more houses you get, the more time consuming it will be.
The hours are not your typical Monday – Friday from 9 am to 5pm. You will be the one getting the calls after 5 pm and all weekend long unless you can afford to hire someone to take them for you.
Some are just maintenance jobs that can wait until normal business hours but sometimes there are emergencies.
Emergencies do happen and your tenants need to be able to call you – or your representative – at any hour of the day, even on holidays and weekends, to get help. Are you prepared to deal with these problems?
What happens when your tenant cannot pay the rent? Can you make the payment or will this cripple you financially?
In addition to no money coming in for rent, you will have court costs if you have to evict the tenant.
There can be a 3 – 4 month delay between initially filing to get them out and actually being able to set this tenant out.
Then you will have to pay to clean out the house and make necessary repairs.
Planning For Non Payment
If you have a house payment on the home, be sure there is enough spread between the amount you pay each month to the bank and the amount of rent you are getting.
Put that extra money into a fund each and every single month so that you don’t end up in financial hardship.
Tenants Not Taking Care Of Your House
Be prepared to deal with the tenant that decides he can’t or won’t cut the grass, clean out the gutters or pick up the trash in the yard.
I called a tenant once after being cited for tall grass and asked her why she wasn’t cutting the grass.
She unleashed on me with a profanity filled rant detailing how it was my fault her lawn mower was stolen out of her front yard several weeks prior and she couldn’t afford to buy a new one.
I calmly explained that it was in the lease and it was her responsibility to cut the grass but that if she couldn’t make arrangements, we would cut it for her and charge her.
She cussed some more and hung up.
She did somehow get the grass cut, but I was prepared to pay someone to cut the grass for her.
It’s Your House
The bottom line is that it is your house and you are responsible for handling any and all problems, even if the lease states otherwise.
Metro Housing will fine you, not the tenant and they will place the lien on your house.
Be prepared to either do these types of routine chores like painting fences and cutting the grass yourself, or even better, hire someone who can do it for you.
Even if you have a great tenant, things will still break and you have to be prepared to fix them.
What starts out as a small maintenance issue can turn into a huge problem if not addressed in a timely manner. It doesn’t matter if you fix it yourself or you hire someone to take care of it, the repair needs to be done quickly.
It is your job to see that their maintenance requests are taken care of in a timely manner and that the problems are fixed right the first time.
You can hire a property management company which is usually more affordable if you only have a few properties.
But, once you end up with more properties, it may be cheaper and more convenient in the long run to hire someone that only works for you.
Tenants like knowing who is coming and going in their homes. Most of our tenants trust us and allow the maintenance men to come and go without them being home. It makes it much easier to get maintenance items completed more efficiently.
Becoming a landlord doesn’t have to be traumatic or ruin you financially, as many or your family and friends will no doubt warn you about.
A landlord with systems in place will do very well in this business.
If you don’t want to do the work, you can easily hire someone to do everything from pre-screen tenants to do all of your maintenance for you.