Pros and Cons of the Landlord Life
Real estate investment is a rewarding business and becoming a landlord has its perks. Many people with full time jobs rent out property for extra income on the side. Being a landlord is similar to becoming a business owner, i.e. you are your own boss and you can reap huge profits. Despite all the benefits, the landlord life can be challenging when you consider dealing with tenants, real estate planning, and property maintenance costs. If you are planning to get into the rental property business, you must familiarize yourself with the pros and cons:
Passive Income
If you purchase and rent out multiple properties, you can quit your regular 9 to 5 and relax. The real estate business generates substantial revenue, and you don’t have to do much once you have secured a building and rented it out. The surplus income can be used to fulfill all your dreams; you can use it to pay off debts, put together a college fund, go on a luxurious vacation, or save up for retirement.
Equity and Appreciation
Bear in mind that the landlord business is a long term investment. If you rent out mortgaged property, the monthly payments from your tenants should be enough to pay the mortgage, and then some. Taxes and maintenance costs may take up a portion of your income, but you won’t see yourself at a loss. You can quickly build up equity without paying out of your own pocket, and real estate usually appreciates over time. If you buy property in developing neighborhoods, their value is likely to soar in a couple of years.
Financial Security
Compared to other kinds of investments, real estate is perhaps the safest option. You may not acquire massive returns immediately, but the money you spend is secured. No matter what, you always retain your piece of land, and insurance covers most extensive damages. Your rental property safeguards you from inflation and recession; amount for rent increases when the price of everything is hiked, and economic decline does not affect the demand for accommodation. You can always sell a house in case of emergency or use it yourself.
Tax Deductions
All rental income is taxable, but you can take advantage of several tax deductions. As the stature of a landlord is the same as a business owner, the money you spend to sustain the venture is compensable via tax. Property insurance, repair, renovation, and maintenance costs are deductible. In addition, you also get reimbursed for property depreciation, mortgage interest, and travel expenses related to property management.
Initial Capital and Struggle
In order to revel in the benefits of the landlord life, you first need a handsome amount of money to invest, i.e. you have to be rich to get richer. Getting the hang of the real estate business takes time, thus patience is compulsory. Keeping up with real estate laws, preserving functionality of the property, and finding tenants is a hectic process in the beginning.
Problematic Tenants
Renting out your property to people who pay their dues on time, take care of the place, do not disturb the neighbors, and avoid making futile complaints are a dream. Unfortunately, many renters can be a pain in the neck, by causing property destruction, paying up late, or not paying rent at all, whilst refusing to vacate the residence. Make sure to review the Landlord-Tenant law of your state to prevent any form of litigation.
Repairs and Maintenance
Ongoing costs of maintaining rental property cannot be ignored. If you rent out defective or uninhabitable space, this could lead to legal issues and penalties. Old or aged real estate may require extensive renovation, which can be rather expensive. Newly built accommodations are pricier, but they do not require extra work.
Author Bio
John Adams is a paralegal who writes about widespread legal and social issues. He helps readers overcome challenges and solve many personal problems the smart way, rather than the hard way. He aims to reach out to individuals who are unaware of their legal rights, and make the world a better place.