The Cons of Being a Landlord

Money and work. For most people, these are top of mind when it comes to being a landlord. To earn the money, you’ve got to do the work…or pay someone else to do it for you. Learn the downsides of being a landlord to decide if the pros outweigh the cons or vice versa.

Taxes

The tax implications of becoming a landlord can overwhelm anyone. Particularly in a rural area where the property tax base may be high. Since there are fewer corporations to pick up their share of the tax burden, property taxes can represent a major expense. There are also school taxes to consider. It can be hard to stomach paying for sky-high school taxes in our own neighborhood, for your own child. It can be more gut-wrenching when you’re paying those same taxes on another property.

Check current property tax rates, then consider mortgage rates. Once you know how much you need to make to cover these expenses, you can look at the going market rate in your area. This will help determine if it’s financially worthwhile to become a landlord.

Insurance & Liability

This is one of those areas where people often don’t think about the costs. You may be able to get a multi policy discount if you have other insurance policies with a single carrier. Get several quotes, then see how this affects your bottom line.

Concentration of Assets

If you’ve inherited rental property, you don’t need to worry about this. If you’re thinking of purchasing a second home to rent out, then you’ll need to worry about concentrating your assets in one sector (real estate). All markets rise and fall. If the neighborhood declines, or if you can’t keep up with home maintenance, then the value of your asset goes down. There is risk in concentrating so many assets in one sector, and only you can decide if the pros outweigh the cons.

Talk to a licensed HomeGo agent today.

Tenant Risk​

Finding good tenants takes a lot of up-front time. You’ll need to advertise the rental, screen tenants, and manage any problems that arise. Bad tenants can happen to almost any landlord over the long haul. It can take more time and more money to clean up a mess, such as property damage caused by a negligent renter.

If you’re not willing to be the bad guy and proactively deal with problems, you’ll want to hire a property manager.

Maintenance

Cleaning out gutters

Lawn care

There’s no shortage of property maintenance

Again, you can either DIY this stuff or pay someone to handle it.

Schedule a no-obligation home tour, or talk to a HomeGo agent today.

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Check out more of our information on being a landlord.

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