If you’re considering becoming a landlord, there are probably some questions you’d like answered. One of the big questions might be whether being a landlord is financially worth it. You most likely know that you will need to purchase a property to rent and pay for any maintenance that needs to be done when you have tenants, but what are the other costs? Here’s what you need to know about the finances of being a landlord.
What are the expenses?
The first thing you need to do to become a landlord is purchase property to rent. This might be something you already have, but most likely, you will need to purchase the apartment, building, or home you would like to rent out.
Getting a rental property mortgage can be a challenge. You want to make sure you have the funds to put down a large down payment, and your lender will require that you have enough money in the bank to make six months of mortgage payments. Online payday loans might be a great solution for you to ensure you have all the money you need.
After you’ve purchased your property, you need to make sure you have insurance for it. Unfortunately, insurance for rental properties has a premium of about 25 percent more than regular homeowners insurance, so you will need to factor in this added expense.
Then, of course, there is the maintenance of the building. Before you even find tenants to occupy your property, you need to make sure it looks presentable. You might end up spending $1,000 just on paint, carpeting, and landscaping in order to attract tenants. The look of your units is important, and your potential renters want to see a clean and good-looking space.
After you complete a tenant screening and find the right people, you will still be responsible for any maintenance that needs to be done. Your tenants will depend on you to replace light bulbs, fix railings, and keep everything in working order. This can also get expensive and if you have chosen to hire someone to do this work for you, you will also be paying that cost.
Is it possible to make money as a landlord?
The short answer is yes, it is possible to make money as a landlord. A good rule of thumb is to make sure that your property’s monthly rent is equal to or greater than one percent of the total purchase cost. Where you decide to purchase a rental property can make all the difference. If you’ve looked at other properties in your area and determined that no one will pay rent over $1,000, then you need to purchase a home for a total cost of $100,000 or less. Also, the more properties you own, the more equity you have, and the more money you are able to make.
You can also maximize your money making by living in the property yourself. This will also make it more convenient for your renters since you will be there whenever they need assistance. Landlords who are serious about making money are full-time. They purchase multiple properties and spend their time doing any maintenance themselves, which additionally saves money. If you are determined to make being a landlord your career, it is possible to make money and live well.
It can be intimidating to think about becoming a landlord, but as long as you know how to make money and what you need to do to build equity, you will be able to succeed. Focus your efforts are finding renters for your property and making sure everything is in working order. If you are able to grow your equity, you’ll find yourself very happy with the work you are doing and the money you are making.