There are a lot of ways to make investments and property is one of the ways that you can put your money into a pile of bricks. But, if you have enough money to invest in several houses, what do you do? A lot of people decide to become landlords, but is this the best course of action? Here are some things you should know before taking on this role.
Finances Are Complex
Being a landlord is so much more than just collecting your money every month. As nice as it would be to just pop that rent in your bank account, you will need landlords accountants to manage the money and make sure that the bills get paid. Depending on where the property is and where you live, there can be a range of different bills and taxes to pay. You will need to save a lot of the money that you get from your rent payments to funnel back into your properties so don’t book that spending spree just yet.
Tenants Are Difficult
There will be times that you get wonderful tenants who stay for years, never give you any trouble, and it is a shame to see them go. Then there are others who give you so much trouble, you question why you became a landlord in the first place. Property damage can be a big issue. You will never know which type of tenant you will get until they move in. You can vet your potential renters to ensure that you get the best tenants but sometimes even the bad ones slip through. Just be mindful of the people you are letting into your property.
When it comes to being a landlord, there are a lot of legal issues to take into consideration. You have the tenancy, which needs to be updated every time a new renter moves in. You also might have the eviction process to deal with if they won’t leave. There can be a lot of legal loopholes to jump through to make sure that the property can be rented out and keep money coming in every month. It is also worth remembering that the rules can change. Laws around properties are always changing so you need to keep on top of any potential changes that can affect your property portfolio.
You Don’t Always Make Money
Making money as a landlord can be tough, especially if you have a mortgage on your rental properties. If you have a tenant move out, you will be responsible for the mortgage payments yourself until you can get a new tenant. If the property lies empty for a few months, this adds up to several thousand dollars in missing income. This is why we mentioned keeping savings in point one as it is not as stable as you would think. Of course, it is possible to make a lot of money but the changing laws around rental properties and a landlord have made the profit margins a lot smaller than they used to be.