Becoming a landlord of a property that you own can be a great way to earn some extra income. Many people today make the decision to become a landlord, and while the right property can earn you enough to cover the mortgage and then some, there are also a number of challenges that come with being a landlord as well. Keep these six challenges in mind before you sign up to lease a property that you own so you can make sure that you are making the right decision regarding this type of real estate venture.
1. The Initial Investment
Unless you already own a home that you don’t want to live in for some reason, one of the biggest challenges of becoming a landlord lies in the initial investment. Before you start charging rent, you must be able to come up with the money needed to purchase a property. In addition to requiring a great deal of money up front, it can be more difficult to get a loan for a rental property than it can for a traditional home.
2. Costly Repairs
No matter how great the home may seem, all homes tend to have repair issues. Costly repairs are some of the most frustrating parts of being a landlord. When something goes wrong in the home, whether it is a broken refrigerator or a leaky faucet, you are responsible for paying for it, and of course, you can never prepare for when these repairs will sneak up on you.
3. Problem Tenants
As a landlord you need to have certain rules in place for your tenants to follow. However, that doesn’t mean that they will always abide by the rules you have set. Problem tenants can make things increasingly difficult for you, whether they don’t pay on time, constantly have lists of complaints or don’t follow your rules.
4. Tax Planning
Collecting rent means that as a property owner you have an extra source of income that you need to file in your income tax returns. This actually becomes far more complicated than many people assume and is something to be prepared for when April 15th rolls around. The right tax advisor can help get you on the right track.
5. Legal Rules to Follow
There are certain laws that you must abide by as a landlord and if you don’t, you can find yourself in serious touble. Laws regarding fire codes, security deposits and safety concerns all must be followed. There are also Fair Housing Laws that govern reasons to not choose a tenant and what counts as discrimination.
6. Finding an Emergency Contact
When you are a landlord, you always need to have an emergency contact standing by in order to help you out. You must always have someone available when you are traveling or out of town that can handle any issues at the property. This is an extra hassle when it comes to planning holidays and trips, but something that must be done in case there is an emergency with your tenants.
These are just a few of the many challenges that landlords today tend to face and obstacles that can make being a landlord difficult for any individual. Make sure you carefully weigh these disadvantages before you decide to lease a property.