Perhaps you’ve just decided to rent out your property, or maybe you’re in the midst of discussions about how you can best transition from homeowner to landlord. Either way, here’s a complete guide on how to make the most of your time.
Why Become a Landlord?
Landlord is just a blanket term for someone who rents out property to other people. You can become a landlord simply by renting out a room or floor in your home, and you also count as a landlord if you decide to rent out a property space for commercial use. If you have an extra room or floor in your house that doesn’t see use, or even if you own a property that you don’t live in regularly, you can make some extra income by renting that property out to prospective tenants.
There are people who are in the business of renting properties and take being a landlord as a profession. They purchase properties and houses for the sake of renting it out and making long-term profits. However, not everyone is in this boat. A lot of people just want to have a bit of extra cash by renting out a room or having a roommate to live with. It’s a great way to cover rent costs or to pay off a mortgage.
Don’t Expect to Get Rich Soon
Landlords can expect to secure a comfortable amount of money, but not enough to get rich unless you own several properties. The cost of buying a home can get ridiculous depending on where you live, and you can expect to rent a property out for several decades before you start making profit. However, if you do plan to have children or you have younger family members, you can pass on the duty to them when they come of age and they’ll continue to collect profits from the properties that you worked hard for.
It’s Hard Work
It’s not as difficult or intensive as some jobs in the world, but being a landlord can put a lot of stress on your body and mind. You’re in charge of a property and tenants will look to you for assistance or help when repairs are needed or disputes with neighbours need to be settled. Expect to get phone calls in the middle of the night complaining about a leaky pipe or lack of hot water. You’ll have to hire repairmen and most likely pay for all the charges. You need to keep an eye on your tenants and make sure that they aren’t ruining your property or misusing it.
Many people refer to being a landlord as “passive” income, but that’s far from the truth. You play a major role in keeping the property maintained and your tenants happy. You need to deal with potential renters, and you also need to keep track of your finances.
There Are Hidden Costs
Not only do you have to buy and manage your property, but you also need to keep it furnished to attract clients, you need to spend money on listing your property at different locations, and you also need to search for prospective tenants. Insurance also adds to the list of fees involved in being a landlord, and you’ll need to look into landlord insurance for your property. You might need to insure not only the home but also any furniture that you’ve bought for the property.
There are smaller expenses too, such as key fob duplication so that your tenants have a way to get into the property, or cleaning costs once a tenant has vacated your property. You’re also in charge of all the safety checks because you are still the owner of the property, so make sure to consider the cost of hiring professionals to carry out maintenance, and also the cost of safety equipment such as fire extinguishers smoke alarms.
Remember, it’s a Long-Term Investment
Becoming a landlord is a long and gruelling investment. There are dozens of points to consider before you should contact an agency or website to list your property. Be prepared to make almost nothing, or even lose money when you invest into becoming a landlord.
Much like a business, you should expect to be in the negative during the first couple of months or even year that you begin your journey as a landlord. Make sure to keep in touch with any agency you contact to list your property or consider renting it out on your own without external help. It saves you money, but you’ll need to research how to properly advertise and manage all the legal complications that could arise with renting out a property.
Always make sure there are potential clients lined up when your current tenant is close to ending their contract. You need to have a steady stream of income to make renting your property a worthwhile investment. It’s no different to a traditional business—you need tenants to make money, and a business needs customers to make money.
Dealing with Uncooperative People
A lot of people in the world prefer to work desk jobs because there’s a lack of human interaction involved. Customer service call centres and storefronts are some of the most hostile environments because you have to interact with consumers on a daily basis. People can and will get nasty, and tenants are no different. No matter how positive or polite a tenant is, the slightest hint of negativity could trigger a full-blown argument and you’ll end up feeling horrible, offended, or in the worst case, even injured.
Once the contract is signed, expect the worst from your tenants. Ruined furniture and housing, constant complaints via phone calls, and perhaps even legal threats. In cases like this, consider calling security services or the police to respond to threats. Make sure you hire legal professionals to ensure that your actions aren’t illegal and that you aren’t responsible for whatever charges the tenants are accusing you of. Fight fire with fire, and make sure you put your foot down when it comes to uncooperative tenants.
Becoming a landlord isn’t easy. It’s not a get rich quick scheme, and it’s not the safest of investments. However, with a good track record, you’ll be able to make a comfortable living with the money you make, and it’s a great gift to pass on to a family member.