Becoming a landlord can be a very profitable real estate investment as it allows the owner to not only purchase a property that will appreciate over time, but also to generate good income from rents and lease agreements. But before you go out and buy a rental property, you should know that becoming a landlord is not for everyone.
Many investors are turning to real estate rental properties to diversify their investment portfolio. Becoming a landlord can be a very profitable real estate investment as it allows the owner to not only purchase a property that will appreciate over time, but also to generate good income from rents and lease agreements. When you add the tax incentives associated with the repair and upkeep of the property, it is no surprise that more and more people are seeking investment properties.
Before you go out and buy a rental property, you should know that becoming a landlord is not for everyone. The role of landlord can be time consuming and may require your attention for several hours per month. You could be called at any time of the day because one of your tenants has an emergency such as a leaking toilet. If you end up with a bad payer, you will need to take on the role of bill collector and sometimes you will have to take legal action to have tenants evicted from your property. The regular upkeep and maintenance of the property can also be time consuming such as mowing the lawn, painting, doing minor repairs, etc. If you have a lot of free and enjoy this type of activity, then you are set. Otherwise, you may want to consider hiring a property management company who will handle all of these things on your behalf.
When you hire a property management company, the company will take over the day to day responsibilities of the property. The management company will handle such tasks as property maintenance and repairs, collect rent, respond to tenants complaints, insurance coverage, landscaping, vacancy advertisement and tenants selection, etc. In fact, the property management company can do as much or as little as you wish. Their fee is usually based on a percentage of the total gross rental income. In many cases, this percentage is around 10%.
Another option is to select a tenant to take on the role of superintendent for the property. For a reduced rent, this super could handle the minor repairs and maintenance of the property, do the landscaping, put out the garbage, etc. If you can find a reliable tenant to act as a superintendent for your building, this can save you time and money, particularly when it comes to the day to day maintenance of the property.
Being a landlord of a rental property can be a profitable business but it can also be an overwhelming responsibility. Consider all that is involved in being a landlord. You can then determine which of the responsibilities you want to handle yourself and which ones you wish to delegate to someone else, be it a superintendent or a property management company. As long as you factor in the cost of hiring a super or a management company into your operating costs, you can be a hands off landlord and still turn a healthy profit. Just remember, being a landlord is not just about collecting rent.
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