Being a landlord is a great way to become your own boss or make income on the side. However, it also comes with its own set of challenges and problems that you’ll be responsible for, especially when it comes to taking good care of your tenants and their needs. So, if you’re wondering whether becoming a landlord is right for you, you’ve come to the right place. Here are the benefits of being a landlord.
- Additional Income
If you already have a job, becoming a landlord is a great way to earn an extra income because it doesn’t take too much out of your day. Depending on how many rentals and tenants you have, you may not have to spend time every day managing your side business. Once you get reliable tenants, you can count on a steady cash flow to cover the property’s mortgage until you start making money off it.
You can also earn additional income by house hacking, in which you live in the rental property with your tenant. This isn’t ideal for everyone depending on their unique circumstances, but it is a great way to pay off your mortgage and earn a little extra money on the side until you’re able to afford a home on your own.
- Tax Deductions
Landlords can deduct landlord business expenses from their income to reduce their annual tax liability. You can deduct anything from maintenance costs to renovations and mortgage interest. In addition, virtually any cost associated with doing business can be deducted, helping you save on taxes. This can be especially beneficial if you have a full-time job as an employee and want to earn a larger refund.
Since you can deduct anything as the cost of doing business, you should invest in professional tax software that can help you track your income and expenses, do your taxes every quarter and year, and teach you about your financial health to ensure your properties are making you money.
- Low Time Commitment
Many landlords choose to focus on a few properties to hang onto their full-time jobs. However, the amount of time you must commit to being a landlord depends on many factors, including how many tenants you have, how many properties you manage, and what your responsibilities are during business hours. For example, you will have to be available to tenants from the hours of nine to five to answer phone calls about repairs or emergencies.
- Long-Term Investments
When you purchase a property and rent it out, ultimately becoming a landlord, you own real estate and can receive a long-term profit from rent payments. Since real estate appreciates in value over time, you can keep the house for as long as you want to rent it out for a monthly profit or sell it for a higher ROI many years down the line.
Rental properties make money, even though they require a large upfront investment. However, you can charge rent that covers the cost of the mortgage, and eventually, that rent will provide you with regular income until you decide to sell the property.
As a landlord, you can choose how many properties you want to manage and how you’ll manage them. If you don’t want to be involved in management, you can even hire a property management company to take care of everything from rental payments to repairs. Of course, you also get to choose the right tenants to ensure your property is taken good care of.
- Fallback Property
Being a landlord means you own property in case anything happens to your primary residence. While you can’t always plan for the future, having a backup property can help ensure you have somewhere to go in case of an emergency or accident like a fire or you need to sell one property for financial reasons. Of course, you can’t simply move into your occupied rental property, but you can choose not to renew a lease for the following year to allow you to move into the property when you need to. Of course, if you are going to ask tenants to leave at the end of their lease, you should inform them as soon as possible to give them time to find a place.
- Agencies Can Do It For You
As a landlord, you have the option to hire whoever you want to do whatever tasks you need. You can hire a property management company for any and all of your responsibilities, including taking payments and scheduling maintenance. Of course, property management companies will reduce your profits, but they will be well worth it if you want to sit back and let someone else do all the hard work.
Is Being a Landlord Worth It?
Being a landlord has many benefits, but there are also disadvantages, so it’s not a job for everyone. While you can earn a passive income, especially if you hire a management agency to take care of all the hard work, you’ll still have to deal with other aspects of the business. For example, you may need to work with lawyers to ensure you’re running a legal business and draft leases and monitor the management agency to ensure they’re taking proper care of your tenants.
However, being a landlord can be well worth it for individuals who own property and want to rent it out to earn more money. Of course, if you’ve never been a landlord before, you might want to start small with one rental property and use the money you earn to fund another mortgage loan once you’re comfortable with being a landlord.
Since there is a learning curve, you must prepare yourself for hard work, potentially giving tenants your cell phone number for after-hours emergencies or leaving your office to handle a landlord-related disaster like a broken pipe. That being said, if you’re someone who likes the idea of having a flexible work schedule and being their own boss, you might choose to leave your nine to five altogether to become a landlord and manage multiple properties for an income.
Ashley Nielsen earned a B.S. degree in Business Administration Marketing at Point Loma Nazarene University. She is a freelance writer where she shares knowledge about general business, marketing, lifestyle, wellness or financial tips. During her free time she enjoys being outside, staying active, reading a book, or diving deep into her favorite music.