Becoming a landlord may seem like a very good idea on paper. Particularly if you find yourself with a property in a desirable area, the idea of renting it out and using the income to fund another property is enticing.
However, before you make the decision to become a landlord, you should be aware of the pros and cons associated with the process. According to Million Acres, the positives of being a landlord include extra income, tax deductions and appreciation. The negatives include the time commitment, and dealing with maintenance and repairs.
The positives of being a landlord
Extra income is usually the biggest plum associated with renting property. Particularly if the rental income associated with the property is greater than all of the holding expenses and financing costs, you will be able to pay the mortgage on the property easily and have a little extra on the side.
There are also multiple tax benefits associated with being a landlord. These can include business deductions, depreciation, mortgage interest and the overall cost of the property. Finally, it is likely that a property will appreciate in value over time. A landlord will get to enjoy these benefits without directly paying the mortgage.
The negatives of being a landlord
Being a landlord takes a great deal of time. You will be responsible for advertising the property, screening tenants, collecting deposits, communicating with the tenant over time, coordinating all repairs, collecting rent and potentially evicting tenants if necessary.
Dealing with maintenance and repairs can also be a great investment of time and money. Even if you have responsible tenants, the property will experience general wear and tear. As the landlord, you are responsible for managing all of this.