Have you thought about buying a rental property and becoming a landlord? Although it does have its perks, there are also a few drawbacks that you may want to consider. Here are some important pros and cons to think about when becoming a landlord.
Pros of Being a Landlord
1. Extra Income Every Month
Owning a rental property is a great way to earn extra income. If the monthly rent exceeds all expenses, then you as a landlord will be able to have a consistent source of income. As long as a renter is living there and pays on time, this is definitely a smart way to earn some side cash.
2. You Get to Choose the Tenants
The nice thing about being a landlord is that you can be as picky as you want when it comes to choosing your tenants. You also get to set the rules that they have to follow. For example, if you prefer someone with no pets, you can put that in the contract. There is a lot of flexibility here when you’re the one in charge.
3. Tax Benefits
A huge benefit of owning a rental is that there are great tax benefits. Here are some tax deductions that are available for people with rental properties:
- Mortgage interest
- Travel costs (when checking in on tenants)
- Legal fees (if forced to evict tenants)
As long as you can provide documentation to support these deductions, you can substantially reduce your tax bill as a landlord.
4. Flexibility to Sell at the Right Time
Oftentimes, people opt to rent out their properties instead of selling right away to allow time for the market to improve. This gives them a lot more flexibility to wait and sell their home when they want and for a good price. If you aren’t in any hurry to sell, this is a great perk and something to definitely consider doing.
Cons of Being a Landlord
1. Maintenance Costs
As a landlord, it’s your responsibility to take care of all maintenance projects and costs in a timely manner. To be courteous and for the sake of safety, you need to be prepared and available whenever your tenant calls. If you know that you’ll be out of service, let your tenant know ahead of time who they should contact in case of an emergency. The last thing that you want is to have to spend thousands of dollars on repairs that could have been avoided altogether.
2. Issues with Tenants
Sometimes it’s hard to predict what a tenant will be like. In an ideal situation, you’d find a renter who takes care of the yard, is super clean, doesn’t have pets who will tear up the place, and who pays their rent early or on time every month.
Although they’re out there, sometimes these people are hard to come by. You may find that it’s extremely hard to have good renters who don’t cause you any problems. If they do, however, you need to make sure that you have a strict policy in place so that they don’t take advantage of you and your property.
3. Legal Issues
Make sure that you are informed about the latest property laws and legislation regarding rental properties. Also make sure that you know where you stand when it comes to late rent payments and evictions. If you end up having problem tenants, you may spend a lot of time and money sorting things out.
4. Takes Time
Being a landlord takes time. First, you have to take the time to get your property ready for renters. This may include making repairs and updating the space so that people will want to move in. Next, you have to create a rental contract, which takes time to draft. You also have to find reliable renters who will ideally take care of your place. Once you have found the right people, you may have to spend a lot of time doing maintenance work if something goes wrong while the tenants are living there.
Sell to Us
As you can see, there are many pros and cons to weigh before deciding whether or not to become a landlord. Although you have the potential to earn some really great income, it also comes with a price: time. If time is something that you don’t have, you may want to sell your home to a cash buyer instead. At Enlight Homebuyers, we will take the property off of your hands and you won’t have to worry about a thing!
If this is something you’re interested in, feel free to give us a call at 1-800-655-8322 or fill out the form below. We’d love to chat with you and see if we’re a good fit. We look forward to hearing from you!