When looking for a side job or profitable investment, many people consider being a landlord for a rental property. The investment of a rental property is a fantastic way to generate side income while saving and investing for your future.
However, being a landlord is not for everyone. There’s a lot that goes into the process, and it’s a commitment you don’t want to take lightly. If you’re considering this position, here are some questions to prepare you.
- Can I be a landlord with a family?
Of course you can! But it will take a little work. Consider how your kids and spouse factor into the situation so that the job doesn’t take too much time away from your family.
“The best rule of thumb is to wake up an hour before your kids do,” says an article from one of the top property management companies in Houston, Green Residential. “You’ll get more done during this hour of solitude than you will in three or four hours with your kids. And even if it isn’t highly productive in a work sense, it’ll allow you to frame your mind for the day. Try it for a month and see how it works. You’ll like the results.”
The article also suggests explaining the job to them, unplugging during the evenings, involving kids in age-appropriate tasks, and preparing them for a potential future in real estate investing.
- Are you naturally handy with repairs?
Landlords have the option of calling a certified repairman every time something breaks, but the costs will cut into your profits. Most landlords prefer to handle some repairs in-house to save money.
However, this will be a challenge if you don’t have the right skillset. A natural handyman can do basics like landscaping, leaky pipes, and stuck drawers. If that seems beyond your control, however, landlording might not be for you.
That being said, don’t try to fix everything yourself. Some repairs must be left to a certified professional.
“While there are home repairs that can certainly be tackled by enthusiastic amateurs, taking on complicated tasks you’re not qualified to do can have costly consequences,” says an article from Discover Card. “Not only could faulty work lead to spending more money on repairs than you would have spent if you’d hired a pro from the start, they could result in your home not being up to code, serious injuries or even death.”
Consider this and the general costs of maintenance in owning a property before diving in.
- Do you have the time and capital to make this commitment successful?
Don’t underestimate the time and money it will take to be a successful landlord. The rewards could be great, but it will require some sacrifice and money on your part.
“People need to understand that this is a business, not a hobby,” a New York-based landlord told CBS News. “You need to take it seriously. The people who make it a hobby usually run into problems because it’s not their top priority.”
If you don’t have the time to dedicate to this position, you could hire a property management company to handle the bulk of the daily commitment for you. It’s an added expense, but it can make your property look better to potential tenants and will save you the time you need.
If you don’t think a property management company is a feasible investment, this may not be the side job for you.
- Are you a good judge of people?
When you look at a real estate investment, you probably see four walls and a lot of money. You might not think about the people that make it all possible. Being a landlord requires working with people, and if you don’t have a great tenant in place, you’ll deal with conflict.
Bad tenants can not only create conflict between you and your neighbors, but they can also damage your property. They might refuse to pay the rent, bring pets when they’re not allowed, and leave the place trashed when you leave. Are you cut out to manage the resulting conflict?
“This business is about managing people and managing conflict,” a property owner in Boise, Idaho told BusinessInsider. “Finding the right tenants, screening them, dealing with the different personalities and having to fight to get rent or deal with collections — most people just aren’t cut out for that.”
Here’s another area that makes hiring a property management company an investment worth considering. They’ll handle tenant screening for you so that you can get good tenants and avoid some of the issues. Otherwise, it’ll be up to you to handle the people problems.
Being a landlord can be a rewarding job, as long as you have the right tools on hand. Make sure you’re prepared for the rigors and pleasures of being a landlord, and you’ll be on track for success.