Becoming a landlord is one of the greatest ways to earn some extra money. Moreover, besides handling other jobs or businesses, one can also be a landlord. This comes along with its’ own challenges. The challenges can be starting from problematic tenants to maintenance costs. However, there are many pros and cons to this job. Listed below are few points.
Pros of being a landlord
Adds to income:
Once you have reliable tenants and the ones who pays the rent on time, your job is on point. The rent that you charge, should be able to suffice your mortgage amount.
Alongside, the amount should suffice the need to run your business. Once these are right, you will benefit. This ensures a steady income of money, each month.
Little engagement of time:
Most of the landlords have other sources of income. Thus, looking after the property given out, or taking care of the tenants becomes a hectic job. Thus, few landlords keep property managers to look after their property and also the tenants.
On the other hand, the landlords themselves take care. Taking care also involves the ensuring of the good state of the property as well as the tenants.
Deduction on tax:
Though subjected to few deductions, the rental amount stays taxable. The taxable amount is subjected to the reduction, to a great extent.
Though, tax has to be paid. Few of those instances are accounting, buildings and contents insurance, cleaning, depreciation during wear and tear, gardening, mortgage interest, replacing water pipes and disposal duct, replacing damaged furniture, repainting.
Profit for the long term:
One of the investment for the long run owning a real estate. One can appreciate its’ value over a period of time. One can also put the amount collected, towards their retirement.
For the higher education of one’s child, it can also be used. In case of emergencies, this amount puts itself to use. Moreover, it can also be used after one retires, as a pension.
Once your lifestyle changes, for personal use or for leasing out, the property can be used. This helps one, in the time of a financial downturn. Though, the contracts signed by the tenants has to agree.
Flexibility is a key factor:
Being a landlord, one is the owner of their own business. This, in turn, allows the individual to be free. This enables one to set their own terms and conditions. One has the liberty to make their own rules and decide the cost of rent.
Till the rules and terms and conditions are within the law, one has the freedom to rule. Being ones’ own boss by keeping the laws in the contract, is a rewarding job.
Security is available for a long term:
In the process of renting a property, there is a security for a natural flow of money. For later use, this amount can be saved up. As a pension or for your child’s education, this can be used. For any ‘rainy day’, as it is called, this can also be used.
During periods of emergency, these can be put to use. However, the prime factor remains that the terms and conditions should be maintained.
There is full liberty:
By being a landlord, it is almost similar to managing ones’ own business. This process, however, can be rewarding, in lots of ways. One has the liberty to take decisions and also, determine the cost of rent. Moreover, one has the freedom to make their own terms and conditions.
In addition, one can also take the decision of whether or not to sell their asset. The individual is the sole boss.
CONS of being a landlord
Costs of the startup is high:
The very first step to becoming a landlord is buying an estate. This, however, can lead to a lot of expense. In addition, cost is incurred, when renovations are being done.
However, taking the decision of how much an individual wants to invest, is a must. This, in turn, makes the decision of which estate to buy, much easier.
Incurrence of the cost of maintenance:
Alongside the costs that is incurring during renovations, one also has to invest in the process of repairs. Leaking of roofs, bad plumbing, fires, water damage, and safety code requirements are just a few of the are faced by the landlord.
One has to keep in mind all of these while owning a rental. These glitches leads to the loss of a bite from the rental check. Thus, in order to put it to use during emergencies, few amount of the money should be kept in the emergency fund.
Issues with the tenants:
The biggest headache incurred by a landlord is the handling of tenants. When tenants do not pay the rent at the fixed time, it results in the blockage of the monthly income.
The damage to the property, complaints regarding loud noise and use of drugs or other intoxicants inside the premises are few of the other risk factors that are incurred by the landlords.
Presence of legal problems:
A landlord should be up to date about the laws and legislation pertaining to them. Being alert on the changes that are made to the federal, state, and local housing laws is important. This is to be sure about not exposing oneself to lawsuits or fines.
Locking of the money:
When thought about controlling ones’ own business investment, it might be appealing. However, one probably should not think in short term profits. Short term profits is a no in case of the rental properties’ investment.
Bear in mind also that – if and when you choose to get out – it may take some time to sell the property and release your assets.
Outlay of Finance:
However, it is not enough to simply have a house that can be given on rent. Being a landlord can make one incur many extra expenses. Not all of these expenses are tax-deductible.
Some common costs include Tax on rental income, tenancy deposit scheme, gas safety certificate, energy efficiency certificate, repairs and maintenance, landlord insurance, furniture and decoration and letting agency fees, should you choose to use one.
Relevance of emergencies:
Expenses related to lost keys, burst pipes, and broken boilers, are the ones’ that needs to be incurred. Moreover, both, the landlord and the tenants can face the household emergencies.
There are many pros and cons related to being a landlord. But, irrespective to those, this job is a very rewarding job. It brings about a good relationship between the landlords and the tenants.