Hi everyone! I probably sound like a broken record with how much I go on and on about real estate this and real estate that. Blah blah blah. Well, it’s for a dang good reason – passive income!!! I’m happy to share a guest post today by Angela Pearse from Zumper.com. Check out this quick and insightful read, and let me know in the comments if being a landlord is something you’re willing to try. If not, I won’t be offended, just don’t be mean, k?? Take it away, Angela!
Why Being a Landlord is a Good Investment
With over a third of Americans currently renting rather than owning a home, being a landlord either as a new career (or a side gig) could have big payoffs. It can also give you a whole new set of interpersonal skills that you would never learn at college, or in the workplace.
Whether you’ve dabbled in self-managing a rental property before or are thinking of investing in property for the first time, consider the following reasons why becoming a landlord is a good investment, both financially and personally.
It Creates Positive Cashflow
Buying and holding onto real estate for a number of years to increase equity is a sustainable investment as many homeowners will tell you. But not only does a property have the potential for capital gain, having a credit-worthy tenant to help pay your mortgage creates positive cash flow and generates passive income. Another benefit of being a landlord is that many rental expenses are also tax-deductible allowing you to maximize your rental income.
It Teaches Invaluable People Skills
Landlords that choose to self-manage a rental property not only avoid paying a property manager’s fee, they also learn how to pick the right tenant to keep getting those monthly rent checks. Choosing the right tenant is essential, and this is a people skill that you’ll definitely learn being a landlord.
You want someone who will look after your property, won’t cause trouble with the neighbors and who will pay their rent consistently, and on time. To protect yourself further from non-payment, property damage and vacant periods, spending a small amount per week on landlord insurance can give you peace of mind.
You Have The Technology To Self-Manage
Technology is making self-managing a rental investment easier than ever before. There’s lots of information online from people who have been there and done that so you can get landlord advice firsthand, and even handy tenant screening tools that can help you easily perform credit and criminal checks to choose the right tenant.
How you go about advertising for that perfect tenant needn’t be a time-consuming and tedious process either. With a Smartphone or tablet you can post rental adverts, accept online rental applications and schedule viewings on-the-go, it also makes you easily contactable if your tenant needs to go hold of you urgently.
You’ll Have Contractors on Speed Dial
A self-managing landlord has to be prompt at responding to their tenant’s calls if something is amiss at the property. This could be a simple fix-it job, such as a tap that’s sprung a leak or a light fixture that needs replacing, but having a local plumber or electrician you can rely on and who won’t charge the earth for a simple job, will be your new best friend on speed dial.
You Can Raise Your Rents
A steady, long-term tenant is ideal for generating rental income but once a lease is up, they may decide not to renew. However, this gives you an opportunity to raise your rents in accordance with the market. If you’ve chosen your location and target renter wisely then you can expect rents to increase along with housing prices. This not only gives you capital gain but an increase in positive cashflow.
Be aware you may have to spend some cash on getting your property ready for a new tenant before they sign a lease agreement. This could require anything from painting, to checking / replacing appliances, to cleaning and changing the locks.
You Can Build Retirement Income (Cubert says, “Right on!!”)
Renting has become the norm after the Financial Crisis, and there is no shortage of people who are looking to rentals as a long-term housing solution. This continuing trend means that becoming a landlord is a viable way to build long-term wealth and security.
Yes, buying rental property is a risk, but then so is anything worth doing. Solely relying on social security and 401k income to provide for you in your old age could be actually more risky. Buying a house and having a renter pay off your mortgage is a viable short-term path to long-term wealth, and a good way to diversify your income.
So as you can see being a landlord is not only financially rewarding it can also be personally rewarding as it gives you the opportunity to learn new skills and meet all kinds of people.
Angela Pearse is a blogger for Zumper who frequently combines travel with freelance writing. She’s passionate about Art Deco hotels, historical novels, Netflix, hiking and healthy living.
Cubert’s notes: This is just about everything I’ve been preaching since this blog’s inception, nicely distilled in under 900 words. Thanks, Angela! The one note I’d add is that being a good landlord is an asset to the community. With each new rental, we’ve spent money to improve the property, making it more appealing to neighbors, and increasing property values. Sometimes it’s as easy as planting trees, other times you might need to replace a roof. Being a good landlord is profitable, and a great way to support your community too!