You Will Have to Do a Lot of Things by Yourself
Being a landlord sounds very easy – You come at the end of each month, collect the rent, and your work is done, right? Not even remotely. Bringing a property in shape requires a lot of hard work, and keeping it such requires even more. Contractors and repair services may lend you a hand, but if you own more than one property, you will have to do a lot of heavy lifting by yourself. So be prepared to deal with painting, unclogging and repairing on a daily basis.
Property Taxes May Blow Up in Your Face
Property taxes are a very volatile thing. Something that was a great investment can overnight become a huge tax burden. So, be smart and don’t put all your eggs in one basket. The more diversified your investment portfolio is, the less likely you are to trip over and fall. Also, do your best to not make collecting the rent your sole source of income. You may find that you have the least control over the money you earn.
The Mortgage Can Bury You
Don’t get us wrong – once you make the initial investment, maintaining a property tends to be quite inexpensive. If the circumstances are favorable, you can easily repay the mortgage relying solely on the rental income. However, the key word is “if.” In reality, maintaining mortgage repayment over the long term is a very risky move. If you can’t pay upfront, at least try to cut the mortgage repayment period to a reasonable time, or find a payment that won’t bite too deep into your monthly incomes.
The Repairs Are as Expensive as They Are Unexpected
Even the smallest failures can burn huge amounts of money. One leaky pipe and you will have to tear down the wall, pay for the plumbing services and repaint the room afterwards. And what about furnace, air conditioners, refrigerators and other appliances? Be prepared and always keep some money on the side for such occasions.
Don’t Try to Flip a Property
Or buy a flipped property, for that matter. While flipping can bring a lot of money to the table, it is also known to be quite risky and not something the first-time investors should do. Play it safe, at least until you learn to feel the pulse of the market. Moreover, if you have problems finding first-time property, some consulting companiescan lend you a hand and make this job much easier.
You Will Need a Good Property Manager
When people say that real estate market plays by its own rules, they mean that in literally the most possible sense. Navigating complicated property law, understanding your rights and responsibilities and all that while managing maintenance issues, can be overwhelming, especially for a newcomer. Hiring a property manager to guide you through these turbulent waters, at least until you get a handle on everything, can be a really smart move.
You Will Have to Be Proactive
Finding the right tenants is much easier if you do anything but sit and wait for the renters to come knocking at your doors. If you want to have any luck in the real estate business you will have to take a more proactive stance, hire a real estate agent, constantly check forum and renting websites, and do your best to make your property as appealing as possible. This will helps you to avoid making beginner mistakes.
Good Tenants are Worth Waiting For
Don’t rush to find tenants at all costs. Renters can do more damage than you realize, and if you are not careful you can end up with an empty, ruined apartment in the middle of dead season. Good tenants, on the other hand, represent not only a stable, long-term source of income, but also a guarantee that your property will be orderly maintained.
All above images courtesy of Creative Commons
A guest article by Diana Smith, a full-time mom and freelance writer.
Site last updated: 26. January 2021