Should You Be a Landlord?
Owning a property is the first step to becoming a landlord. However,
is this career choice right for you? Although it might seem like a way to
generate passive income, being a landlord is more than just collecting profits
from your house
for rent in kuching every month.
Do you like doing it
yourself?
If you have a pair of hands that are handy, and you like doing your
own work around the house, you could try your hand at being a landlord. As a
landlord starting out, you might not have the budget to outsource some of the
work needed around your rental property. It could be light plumbing, or even
simple construction, landscaping work, etc. Outside contractors could be
charging a fortune for the work your property needs before it is ready to be
leased out. You need to be able to do some of the work yourself if you expect
to turn your rental income into profit. This is an easy way to save some hefty labor
costs.
Do you know the right
people?
If you are planning to expand your rental business and property
portfolio beyond one rental property, you’ll find yourself unable to handle
sheer amount of work all on your own. Sure, you can convincingly do all the
work yourself if it’s one property. But what if you are expanding to multiple
locations, and expanding quickly on top of that?
Then, you’ll need to have a network of contractors to call in to
handle the work. Relationships with these contractors take time to build. It
also takes a good deal of time to find the right people to hire for the work.
If you have already formed a relationship with these people, you’ll be able to
begin your adventure as a landlord in a much better starting position.
This same relationship trump card applies to real estate agents as
well. With established connections, you’ll be able to have better access to a
potential pool of tenants. This reduces your advertising costs and also helps
remove some obstacles before you even get started.
Can you handle the
responsibilities?
If you look at your rental business as passive income and not a
career, or if you have a principal job that you are busy with, you will find
yourself with competing priorities due to the responsibilities of being a
landlord. Depending on your tenancy agreement and the fussiness of your
tenants, you might be working around the clock 24/7 just dealing with your
tenants concerns and issues.
If you have the budget for it, consider hiring a property management
company to manage your rental properties for you. This operating expense might
cut into your profit, so do your financial planning ahead of time to see if you
can really afford it. Otherwise, be prepared to be taking calls, which might
even be in the middle of the night, to placate your tenants’ household
problems.
Do you like dealing with
people?
Being a landlord takes a lot of time, patience, and most importantly
people
skills. Regardless of whether your tenants are easy or difficult to deal
with, as a landlord your tenancy agreement obliges you to address their
concerns. If you have a pool of tenants to pick and choose from, you can screen
them carefully to see if they are the right fit for you. However, screenings
are rarely a good judge of character, and even the nicest people can some times
end up surprising you in a landlord-tenant relationship. Your tenants may or
may not share the same ideals with you in terms of values as well as
personality. To be a successful landlord, you will need to be able to deal with
any type of character life throws at you.
However, certain times you will be pressed to fill a vacancy as
quickly as possible to prevent losing money. You may have to accept a tenant
that you may not like if there are no other tenants interested in the property.
This threat of negative cash flow could force your hand in the matter.
Even if you have chosen well, dealing with strangers may not be your
strong suit. The problem is that even the nicest tenant will not care for your
property as well as you would if you were to live there. Thus, you will still
have to deal with them to address their issues and concerns.
Do you have the financing
available?
One of the greatest financing
tips is to buy a house with cash. This eliminates the expense of loan repayments,
which will definitely incur interest. When you buy a property with cash, every
cent of rental income you receive, after maintenance costs are deducted, is
your profit.
Of course, leveraging your property purchase by using other people’s
money can also be a smart approach that can turn out to be profitable. Financing
your rental property purchase with debt opens up the possibility of becoming a
landlord to more people.
Thus, having the cash on hand to buy the property outright is not a
must when it comes to real estate investing. However, it will be much easier to
generate a positive cash flow if you do.
Can your rental income
cover your expenses?
The amount you can charge for rental prices is determined by the law
of supply and demand. In certain locations, the overflow of empty rental
properties can cause competition to be intense and subsequently drive prices
down. What’s more, if you are competing with investors that own their
properties outright, while you have to content with loan repayments and
expenses, this puts you in a disadvantaged position as you will end up having
less room to maneuver and be flexible in your rental prices.
Thus, the rent you charge needs to be high enough to cover your
expenses and also allow you to take home a bit of a profit. You may also look
to increase your profits by volume. The more properties you own and rent, the
more you profit per property due to economy of scale.
2 comments
Good info!
BalasPadamgood info.. tengah mengumpulkan ilmu bab property ... hehehe
BalasPadam