Becoming a landlord is certainly an attractive opportunity, but it isn’t necessarily as easy or simple as it might appear and it’s important to be prepared. Luckily we’ve created this list to help you ensure you’ve considered the realities of becoming a landlord.
- Do you have your budget worked out?
There is much more to being a landlord than simply buying a property and renting it out. You also need to budget for initial repairs and decorating, and then also consider a yearly or quarterly budget for regular repairs and maintenance. This will not be a one off cost, and so it is important to make sure you are ready to absorb the financial impact of renting a property.
- Do you know the local area?
Though a cheap property may look tempting, have you looked into why it might be cheap? It may be because it’s in an unpleasant, dangerous, or run down area of town then it will be very difficult to rent out and you will have wasted your investment. Getting to know the local area where you plan to rent is absolutely vital, and will enable you to make an informed decision about any properties which you are considering investing in. It may be better to buy a more expensive property in a better area, or even buy a property that needs doing up if you have less seed money, because it’s rental value will increase with renovation.
- Have you researched insurance?
Just like homeowners insurance, renter’s insurance, car insurance or pet insurance, there is CIA Landlord insurance, and it’s important that you know what you are looking for from an insurance policy and what all the financial ramifications will mean for you if you go ahead with becoming a landlord. It’s always important to be protected from liability and other problems that might arise from renting a property to others and is definitely something that should be sorted out before the fact, not after.
- Are you prepared to find tenants?
Finding tenants isn’t always easy. If you live in a college town for example, there will certainly be times of year where it’s easier (like the beginning of the school year or term), but other than that it can be unpredictable. Add onto that fact that it’s important to find tenants who you are comfortable renting to and who will get on with any existing tenants in a house share, and it becomes easy to recognise that this isn’t necessarily the easiest thing. If you’re looking into becoming a landlord, it’s important that you have a system in place for this.
- Do you have the time?
Many people seem to go into becoming a landlord without properly considering how much time it will take up. While when things are running smoothly you may effectively be able to enjoy receiving passive income, things won’t always be this way. As with any home, rental properties run into problems and require maintenance; you will have to spend time either solving these problems or booking someone to do so yourself. So, make sure you don’t underestimate the time you will have to dedicate to being a landlord.
Becoming a landlord can be a great addition to your income and can even be fun – but don’t go into it unprepared. Hopefully this list will have helped you consider all the relevant preparations!
