There’s no denying that becoming a landlord sounds like a great idea. At first glance, it looks as if you can make money by simply having a tenant inside a home.
However, what many people don’t realize is that it also requires a big commitment. Before you get started, you need to assess if it’s the right choice for you.
Below we are going to talk about some of the pros and cons of becoming a landlord.
Want to learn more? Then keep on reading.
Pro: Great extra income
Obviously, one of the best parts of owning a house to rent is that it provides an excellent second income. You can use it to pay off another mortgage and build up a significant retirement fund.
Another plus is that with so many homes for sale, there is something to suit everyone. You can get started with a small house and work your way up to larger properties.
Con: Requires time and effort
One myth that many believe is that being a landlord doesn’t require a lot of work. Believe it or not, it’s up to you to make sure that the property is in good condition at all times.
Alongside providing regular maintenance, you also have to be responsible for selecting a responsible tenant if you don’t choose to go through an agency. Not to mention that it can be challenging to deal with complaints.
Pro: Fewer risks
Compared to other investment types, real estate and renting out a property actually has few risks. This is because you’re always going to be able to make some amount of money back, even if you have to resell in the future.
However, you should know that it isn’t 100% risk-free. You may end up having vacant periods and could end up in legal battles if you don’t follow the proper precautions.
Con: There are hidden costs
Even if you completely own a house and no longer have a mortgage, there are always hidden costs. These can add up to be quite expensive and can cut out quite a big chunk of your profit.
For instance, you’ll need to be responsible for:
– Landlord insurance
– Repairs and maintenance
– Advertising for a tenant
– Fire and safety certification
– Agency fees
Finally, another advantage of becoming a landlord is that it has flexibility. You’re always going to have control and will be able to make changes depending on your situation.
Alongside picking and choosing a tenant and making upgrades, you may even be able to live in the property if it is free. This is far different from some other investment types where you don’t have any input at all.
As you can see from the above, there are many different pros and cons. What you decide will depend on your time, dedication, and financial health. However, at the end of the day, it can be a great way to secure your future.