Have you ever thought about becoming a landlord? Maybe you want to purchase a single-family home or an entire apartment complex, or perhaps you want to access discounted rent rates by taking on a management position at an apartment complex someone else owns. Becoming a landlord may sound like a dream job, but there are a lot of factors you need to consider before you actually take the plunge.
Prepare to work your butt off
If you’re looking for a standard 9 to 5, 40-hour a week job (or are even hoping to work less), steer clear of this venture. As a landlord, you’ll have a very hard time structuring your days and weeks to look a certain way. Yes, there will definitely be periods where you probably will not have all that much to do, but there will also be times when you have to work for two days straight, from sunrise to well after sunset. Think about it: as a landlord, you are the point of contact. If anything goes wrong in the unit, the renter will call you and depending on the deal between you and the owner, you might have to coordinate repairs or even do them yourself. If you happen to be the owner, it is all on you—which is why you may want to hire someone else to manage your property.
Prepare to be a jack of all trades
Being a landlord is a whole lot more than merely collecting rent once a month. You will also be acting as a realtor and salesperson (how else do you think those empty units are going to get rented?), a negotiator (tenants sometimes come with a lot of red tape), a guard (if you live on site, you have to keep an eye on everything that goes down) and a debt collector (if someone fails to pay the rent, it is your job to go after them). And that list doesn’t even mention all of the strange therapy sessions you will have to wade through when tenants start having conflicts.
Prepare for lots of rules and regulations
If you plan on buying a property to rent out, there are a ton of rules that you have to adhere to. It isn’t as easy as buy, rent, make money. For starters, there is the not-so-simple task of buying the right property. Let’s say you are looking to buy in an area like Southern California, since you expect to pull in steeper rent prices. This fiercely competitive market can make breaking into real estate a bit more difficult. It can be difficult to come up with financing for these expensive property areas, and you may need to pursue funding from hard money lenders in Los Angeles or San Diego to cover the upfront purchase costs.
You also have need to know how to handle perspective tenants. There are certain things you can and cannot ask them while conducting interviews, there are laws regarding what is considered housing discrimination, and there is a certain procedure for security deposits. There are also a ton of rules surround the property itself, like certain qualifications the property has to meet in order to be rented out.
Prepare to be rewarded
There might be a serious learning curve, but being a landlord is pretty rewarding once you get the hang of it. Just think of it as being your bright, beautiful future at the end of a very bumpy road full of sinkholes and road blocks. While there is obviously money to be made, you will also get the personal satisfaction of not only being your own boss (assuming you own, of course), but of also creating a life for your tenants. It can be what you make of it. You can be aloof and distant with your tenants, or you can be friendly and personal. You can make real lasting relationships and be part of your tenants’ lives through the ups and downs, and that alone is pretty rewarding.