Are you thinking about being a landlord? Being a landlord and owning rental property can be a great way to diversify your investments and generate a great source of income. However, as with any business, being a landlord has many costs associated with it that you should be aware of. Here are some things you need to consider when becoming a landlord.
The basics of being a landlord include the costs of your property and insurance. Just like any property, you will most likely have a mortgage and insurance that you will need to pay for each month. You will also need to make sure you plan for property taxes, and possibly special taxes related to being a landlord (depending on your location). Also, you could have to pay for utilities for the property, such as water and sewer, depending on how the meters are setup on the property.
Being a landlord also involves other ongoing expenses depending on the property and your landlord skills. The first one is landscaping and yard maintenance. Most landlords hire someone to maintain the yard, but others do ask their tenants to maintain the property. However, having tenants maintain it could be risky as the landscaping may die or become overgrown.
There also could be maintenance required for the property. For a lot of basic maintenance, you may be able to take care of it as a landlord, but other maintenance or repairs could require a professional. Start building a network of reliable contractors early on so that you know you can get fair pricing quickly if needed.
Finally, there may be other potential landlord costs to take into consideration depending on your personal situation. First, you may want to run a background check and credit check on potential renters. This will cost you about $10 per renter.
You may also want to join an association for landlords, such as the Apartment Owners Association. With these associations, you can get credit checks and legal documents, such as leases, for free. However, you will have to pay annual dues and other fees as well.
You may also want to consult with an attorney if you want to have custom legal documents drawn up (such as leases), or if you run into problems with a tenant and need to evict. This can be very expensive depending on the type of services you need.
I know becoming a landlord is something (I hope) that I have in my future, but knowing what you’re getting into prior and educating yourself is extremely important. Do you currently own any rental property? How has your experience as a landlord been?
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