Most will assure you that property is a sound investment, but you usually have to wait years before you see a return on buying a house. If you want to have an instant and more regular income from property, your best bet is to become a landlord. But is this as simple as you think it might be? Make sure you weigh all the pros and cons before you decide that this is the right option for you.
Income from renters
Reliable renters will have to pay their rent every month, so that’s a guaranteed source of income. The rental income will cover the mortgage and operating expenses while allowing you build equity and turn a monthly profit. If the property is occupied for a whole year, and the rent is $1,000 per month, then you’re looking at an additional $12,000 at the end of the year. However, the more likely scenario is that your tenants might move out and you’ll have an empty property for two or three months. Even so, that’s not a bad income.
Property value growth
When you look into finding property to rent, you could either buy a fixer-upper or a new property. Both have their own pros and cons, but either way you stand to gain from an increase in the property value over time due to changing demands in the area, even if you don’t do any renovations. However, you should always repaint the house, update the carpets, and keep everything in good condition between renters. While this will attract more interested lodger, this will increase the value of the property itself, and allow you to charge more rent. Alternatively, if you decide you don’t want to be a landlord for much longer, you can try to sell the property; some investors can be found with a real estate agent, but you could probably find more from Flagship Digital if you want to have as many options as possible. Ultimately, becoming a landlord presents you with a lot of income options, so it can be an attractive way of making money on the side.
It’s a lot of work finding someone interested in your property, even with the help of an estate agent. The best case problem tenant is one that doesn’t pay their rent on time, and you may have to get a collection agency or lawyers involved in order to recover your lost income. You have to be ready, willing and able to deal with these situations when they pop up. Some landlords have horror stories of nightmare renters who have been actively destructive, and left them to deal with the cleanup.
As the owner of the property, you are responsible for any bad plumbing, roof leaks, or safety code violations that come to light after the purchase has been made. These problems have the potential to eat up your rental income, as tenants have a right to withhold rent until repairs are made.