11 Terrific Reasons for Becoming a Landlord
If you like helping people and would enjoy a career where you can make a difference and get paid well, then becoming a landlord could be in your future.
Landlord jobs are popular choices for business-savvy professionals looking to earn a good paycheck and grow their money. In the United States, approximately 10.6 million people earn money from around 17.7 million rental properties. Also, in the U.S., landlords earn a yearly income that is 44.8% higher than the average household income.
Whether you want to change careers or make extra money alongside your current gig, becoming a landlord is a fantastic choice for anyone looking to earn cash and invest. Here are eleven terrific reasons that becoming a landlord is a wonderful decision for you.
1. Landlords Make Money
First, the most obvious reason landlord careers are great is that they make money. You will need a reliable tenant to accomplish this, but as long as you find a good tenant, you will have a reliable source of cash flow.
At the beginning of each month, you are aware of how much you will get. Typically, you should not have that much work to do if the tenants are properly maintaining the property. The renter should let you know if the property needs repairs right away.
If there are no repairs or other issues, you can collect a paycheck every month, which makes planning finances fairly simple.
2. Build Equity
Other than collecting the rent money, you are building equity. Your monthly rental paycheck can go to pay for the rental property, and someday, you can sell the property to collect on the equity. When that day comes, consider how you can take the money you built and invest it.
3. Growth Potential
When you have one rental property, it’s simple to get more. Let’s say you have a building with three units, and one unit’s rent takes care of the mortgage. The second unit can pay property services, property taxes, and any potential repair costs.
The third unit in this example can be profit. If you save this money, you can build up enough to buy a second property. Your income will double.
If you follow the same formula here with two properties, you have cut the time in half to save enough for a third property, and so on and so forth. This way, you can keep building your wealth base in real estate!
4. Save for Retirement
Since you are building equity, you don’t have to spend your profits when you sell the property. You can save this equity as money to live from when you decide to retire and take it easy.
5. Protect Yourself from Inflation
As inflation may occur, you could raise your monthly rental price. This protects you from a slow wage increase you could succumb as a victim to when working for another company. You can protect your wealth and rise as the tide does.
6. You’re a Boss
When you are a landlord, you are your own boss. You have no one else to answer to. You don’t need to manage employees or set up a business to do it, either.
7. Tax Deductions
Rental properties are tax-deductible. You can deduct the mortgage interest and the all-repair costs you will need to pay. Insurance premiums are also a tax deduction.
8. Lower Cost to Begin Versus a Startup
You don’t need as much of a cash investment as you would need to begin a startup tech company when becoming a landlord. The amount you would need is the same as if you were moving into a new home.
The difference is that you are not living there. This is a second home specifically for a renter.
The renter is going to cover the monthly costs. Your renter will need to complete a rental application and qualify, but if they pass a background check, they can move in.
Plus, it is much easier to get financing in landlord jobs than it would be if you were starting a business.
9. Flexibility with Your Time
You have options for maintaining the property. You can keep up the maintenance yourself or hire a property manager to help you and save some time. Becoming a landlord can have a minimal time commitment that still allows you to maintain a full-time job.
10. Help People
When you become a landlord, you help people. You are providing a place where an individual or family can call home. This is something that people need, and you can take comfort in that you are making a big difference in their life.
11. Build Relationships
While there are some scary tenant stories out there, often, you can find a tenant that you can maintain a positive long-term relationship with. You want to keep your relationship professional, but you can still watch a family grow and learn about them. It’s an opportunity to meet a diverse group of people from many backgrounds.
How to Become a Landlord
If you are nodding your head with interest, you may be ready to consider the next steps. First, you must buy an investment property, but also make sure that you budget for unexpected costs. You will also want to conduct extra research to understand the landlord-tenant laws in your area.
Alongside purchasing your property, you’ll need landlord insurance. You will also need to get your property prepped for someone moving in.
You’ll need to determine a reasonable amount for the monthly rent. Do some research for similar rental properties in the area and, if you can, be in the same ballpark as the others.
Then, you are ready to market your property to prospective renters. Once you accept applications, carefully screen the potential tenants.
Once you select a tenant, they will need to sign a lease agreement. We recommend working with an attorney on a lease agreement so that you don’t get caught in a contract that could lead to issues later. Hire an expert to help you with this.
Once you have a tenant signed off and ready to go, then they can move in. You will need to stay organized and maintain the property. If you need help, look into hiring a property manager to help you.
Types of Landlords
There are a few different landlords. Most of what we have mentioned is helpful for beginners, which would make you the first type of landlord. This is what we call “Mom and Pops.”
A “Mom and Pop” has a small portfolio as a primary investment and traditionally won’t be as formal in their approach to renting. This type of landlord has a personal investment in their property. They will be happy with tenants who maintain the space and keep it nice.
Then, there is the “family investor.” They are still family owners; however, they own more than the “Mom and Pop.” They have a sizable portfolio of properties they built, but they are still personable.
Finally, there is a “management company” that works on behalf of the owner. They usually have a big portfolio and handle the day-to-day management of the property.
We wanted to leave you with a few quick landlord tips as some food for thought if you are looking to take the next steps.
Screen your tenants thoroughly, including checking credit history, background, and references. Do not rent to someone without screening them first, as this may lead to challenges like damaging the property and nonpayment issues. Evictions can be difficult.
We highly recommend that you report any arrears of rent that occur as you rent your property. By doing this, you can help future landlords identify late payers and non-payers.
Next, make sure that you get everything in writing and include all pertinent facts of the relationship in your rental agreement.
Handle a security deposit correctly and establish a fair system. When repairs are necessary, make them as they request and in a timely manner. Ensure that the property is secure to the best of your ability, including lights and landscaping.
Should you need to enter a rental unit, give the renter plenty of notice. Your renter has a right to privacy.
Follow these tips, and we know you’ll do great!
Becoming a Landlord
Landlord careers are exciting, and if you take our advice, you are well on your way to a successful endeavor. Continue to do your research and soak up as much information as you can.
Now that you know more about becoming a landlord, we hope you will stop by again for some more great articles on business, real estate, and financial freedom. Until next time, keep on investing wisely.