Being a landlord comes with many challenges that many property investors don’t realise until they encounter them. If you assume that becoming a landlord will mean just sitting back and waiting for the cash to flow in, you will be in for a rude shock. When you start out as a landlord, you’ll quickly realise that you have to plan months or years in advance and you’ll have to put in a lot of effort and practice quite a bit of patience.
The Upside of being a landlord
Becoming a property owner is a great way of building wealth. As long as you can afford the initial deposit, once you get some tenants in, the mortgage will be getting paid off by money coming from someone else’s pocket. You’ll still need money for repairs and maintenance but this should still be manageable. The best part is that once you’ve paid off your mortgage you’ll be able to have a regular job while enjoying a second income stream. You can go for months at a time without worrying about your rental properties.
The Downside of being a landlord
As good as being a landlord is, it’s not without a few challenges. One of the most common challenges is finding the right tenant. Many tenants will lie about their credit rating, employment status etc. Each time you have a vacant property, you’ll have to put up ads and this takes money. Even after you’ve found the type of tenant you were looking for, there are still other issues that can come up. Some tenants will be consistently late in paying their rent and this can be a huge inconvenience. Even when there’s a fee for paying the rent late, sometimes you’ll feel like enforcing this rule will only further complicate the matter.
The Ugly side of being a landlord
As bad as being a landlord is, there are times when it can be exceptionally terrible. One homeowner’s experience had a tenant leaving her with a $7000 bill for repairs due to the extensive damage that had been done to the house. The tenant was unable to pay the full cost of the repairs and they had to settle for $3200 and covered the rest on their own. The huge bill wasn’t the only issue because the homeowner still had to spend a lot of time working on the repairs to the home so it could be ready for the next tenant. This is one example of just how bad things can get for you as a landlord.
Is it worth it?
Being a landlord comes with many challenges and quite often, the experience will be the best teacher in learning how to handle these challenges. You’ll learn that a bad credit rating doesn’t always equal a bad tenant especially when they don’t hide this fact. You’ll also learn that when you keep your house well maintained, your tenants are likely to feel compelled to keep it good shape. You’ll also learn that having a large cash cushion can be a lifesaver. At the end of the day, you’ll be fine as long as you learn from your experiences as you go along.