3 Facts to Know Before You Become a Landlord
Real-estate moguls make it sound like you can become rich by amassing property, and for many people, that is exactly what happens. However, owning and renting property isn’t always as glamorous as it seems, especially when you first start out. Being a landlord takes a lot of work and knowledge, so check out these three important facts before you decide to become one.
You Should Know What You’re Doing Before You Start
If you own your own home, you may think you have the skill and knowledge to be a landlord. However, when you rent a property, there are a whole new set of laws and regulations you need to know. Different states have different landlord-tenant laws, and you need to know them all, so you don’t end up getting sued or fined.
It’s also important to check with association rules. If you purchase a condo or a home that is part of an HOA, the HOA may have restrictions that prevent the property from being rented.
Managing a Property Takes a Lot of Time and Effort
Another misconception you may have is that managing a property is easy. However, that is far from the truth. When you live in your own home, you may ignore certain problems, such as a leaking faucet. However, your tenants probably won’t ignore this and demand you fix it and every other problem that arises. Managing property also involves making routine inspections, showing the house, collecting rent, and many other little routine tasks. You could hire someone else to do all this work for you, but that will eat into your profit, and you must find someone you can trust.
It’s Only Worth It if You Make a Profit
Because owning and renting another property is so much work, it’s only worth the hassle if you actually make a decent profit. Before you purchase a property, you need to determine all the financial expenses, such as mortgage, taxes, insurance, etc. Use this information to calculate if renting the property out is even worth it. If the amount of money you’ll spend is more than, or equal to, the amount you’ll be getting, it’s not worth your time.
If you know what you’re doing, buying property can be a great way to make money. However, being a landlord takes time and skill. You need to educate yourself before you get started, so you know exactly how to make money.
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