Have you ever thought about owning a rental property? For many having one (or several) apartments or homes for rent has proven to be an excellent source of ongoing income. Being the owner of a rental property can be a very worthwhile investment and an excellent part of an overall investment portfolio. But (and you knew there was going to be a ‘but’ in there somewhere) there are a few considerations worth having before becoming someone’s landlord. Let’s take a look at a few of them here:
The money required: Unless you have a new property to rent, the apartment, townhome, condominium or detached home you will be renting will be older. To make a property rentable may require work, especially with an older home. All of which will cost money. Cleaning and painting, the upgrading of locks and doors, wheelchair accessibility if desired and many other updates might be required before tenants can enter. All of these improvements will be costly.
City regulations: City Hall will also have some requirements that must be met, such as those related to safety and fire related issues. Always check with the city first before advertising that you have a place to rent to prevent any future problems.
Being on call: When you’re the landlord you are responsible for your property and your tenants. This extends from the initial screening of potential tenants, to collecting the rent, dealing with neighbors if the tenants cause problems as well as any and all ongoing repairs and maintenance issues with the property. Murphy’s Law invariably states that if a hot water tank were to burst or a toilet to back up, it’s always going to be at the most inopportune time. Unless you have a handyman on speed dial (another of the expenses of owning a rental property) then you will be the one taking the 3:00 AM toilet calls.
Problem tenants: While most renters are great, there invariably will be some that are frankly less than great. Problem tenants are the ones slow to pay rents, damage the property, have the stereo cranked at all hours and generate a host of other potential issues. If a property is the scene of too many complaint calls to the police it can be declared a nuisance property, which is a very damaging designation for a property owner to have assigned to his investment. Having to personally deal with tenants, the good and the bad, is part of a landlord’s job description. It is also another factor to consider if seriously thinking about operating rental properties.
Tenant evictions: If a problem tenant becomes too great a burden they have to be asked to vacate the premises. But what happens if they are belligerent, or simply refuse to move? There are various legal methods to have a problem tenant removed from a unit, with the ultimate move having a Sheriff come to the door to physically dislodge them. Regardless of the method or emotions involved, any eviction is traumatic for everyone involved.
So, what is the bottom line? Is the owning of a rental property a good investment? By all accounts owning one or more rental properties is an excellent addition to any investment portfolio. Is being a landlord the right decision for you? That is something only you can truthfully answer. If you’re prepared to handle of the issues listed above, and more, without flinching or losing sleep, then go for it!
If on the other hand the one on one aspect of the business seems too intimidating, then the answer is to hire the services of a property management company, such as that provided by Realty Executives Mid Island Realty. Property managers look after the day to day issues, leaving you free to enjoy the fiscal benefits without the stress. Interested? Then give us a call today.