Is Becoming a Landlord More Headache Than It’s Worth?

Is becoming a landlord more headache than it’s worth? Some argue that investing in residential real estate is the best way to grow wealth. At first glance this seems true, but in practice, it can be more trouble than it’s worth. While real estate is certainly a great wealth creator, the challenges are many, and almost always require both time and money.

The following list of common difficulties for new landlords should be considered before joining the residential real estate investment market.

Challenge 1: Finding the Right Property

Finding a decent residential rental property is so crucial that entire books have been written about it. You won’t make much money if you pay too high a price, however, attempting to score a deal can also be challenging. You must have the knowledge, the time, the resources, and the money to carry out the required repairs and improvements in order to purchase a fixer-upper.

If you’re not in a rush, this could be a way to save money on your purchase. Every minute spent fixing the rental is a minute you are not spending on a more profitable or fun activity especially if you already have a family, a full-time job, and other commitments. Today, though, management firms may take care of a lot of this grunt work for you, from finding a property, to renovating it, of course for a charge.

Challenge 2: Preparing the Property

Fresh flooring and paint are typically required to transform almost any piece of real estate into a rental property, and both tasks take time and money. Other regular requirements include cleaning windows and maintaining lawns and decks. These matters must also be reviewed after the vacate of each tenant.

Challenge 3: Securing Tenants

Securing the services of a good real estate agency is your first port of call here. We have the know how and channels to market your property to the widest possible audience, to gain the best selection of potential tenants. The more tenant applications you have, the better your chances of securing a great long term tenant. As a part of the process your agency should also be able to screen the applicants and do the appropriate checks to ensure your selected tenant is the right fit for you and your property. The right tenant for the right property in terms of affordability, size, location and upkeep is critical for a smooth run in the real estate investing game.

Challenge 4: Inconveniences

Even excellent tenants and ideal rental properties come with a variety of inconveniences. A few of the difficulties include clogged drains, damaged garage door springs, dogs, and roommates. All tenants will expect your full and rapid attention when toilet is backing up or if there is no hot water.

An even bigger problem is having difficult tenants. The inconveniences might be made worse by daily calls and late or unpaid rent. Another difficult period is the day of moving out, as the damage to the home’s walls, floors, carpets, and other components can lead to conflicts and expensive repairs.

Challenge 5: Maintenance

The cost of maintaining important features and amenities is high. A new appliance can cost several hundred to thousands of dollars. A new driveway or roof can run into tens of thousands of dollars. If a new roof costs $30,000 and the rent is $2,500 per month, you could quickly run out of money, and your property can be even in the red for years. Even lower cost items such as new carpet or flooring, fresh paint, or a new cooktop can take a long time to recoup renovation costs, especially if you are repeatedly having short-term tenants and vacancy during tenant changeover.

Challenge 6: Interest Rates

What are interest rates even related to? Plenty. When rates decline, it’s frequently less expensive to buy a home than to rent, which could cause demand for your property to decline. Rent reductions to stay competitive can seriously hinder your potential to generate income.

In Conclusion

Is it worth the effort to become a landlord? You’re the only one who can make the choice. Just remember to look before you leap and approach your new endeavor with solid goals and a well-thought-out plan. Or if you want, you can also choose to hire a property manager to make managing your rental property easier on yourself.

Hopefully after reading the above you will be more prepared for what you may encounter, and more likely to enjoy your experience as a landlord by being aware of what you’re getting into before you do it.