Real Estate Investing – Should You Become a Landlord?
In investing there is an adage that says you can make either a fast nickel or a slow dime. Deciding to invest in long term rentals is the slow dime approach to real estate investing. Many investors are afraid of becoming a landlord because they have heard horror stories of calls at midnight from tenants to come and fix a leaky toilet. That is enough of a reason to convince people to not be a landlord. Here are some things you should consider before deciding if you want to be a landlord.
The first step is to make sure that you purchase your investment property at a decent price. A decent price is defined as a price that has a mortgage payment much less than what you can reasonably expect to receive in rent payments. If you monthly expenses are going to exceed your monthly income, you will not be a new landlord for long because you will be broke. You will also need to account for taxes and insurance each month when you calculate your expenses. If you are able to purchase a property at a decent price then you have a chance to be a successful landlord.
Getting a property at a decent price should be fairly easily for an investor who spends the time searching for properties. Once you have located a potential property, you need to ask yourself if you think you are cut out to be a landlord. A landlord is expected to be in contact with their tenants when they have maintenance requests and when you need to collect rent each month. This requires you to have very strong people skills and the willingness to go after a tenant when they owe you money. If you do not have the temperament to deal with tenants then you should consider a different line of business instead of becoming a landlord.
If you get to this point then you have found a good property and you know that you have the necessary people skills to deal with tenants. The last step is to determine whether or not you have the technical ability to handle repairs. Some people are great at fixing anything that breaks but others do not have this ability. If you are unable to handle the necessary repairs then you will have to pay a professional to do them. This can be expensive and you have to account for this as part of your monthly expenses.
Renting a property can be a very profitable business. Before you decide to invest in real estate, make sure you are cut out to be a landlord.