Consider investing in a rental property if you have some extra income to put into real estate. At first glance, it seems to be a secure investment. While rental houses are generally a safe investment, there are other fees associated with being a landlord that may cause you to reconsider purchasing a new property. Consider the less glamorous aspects of being a landlord before investing a large sum of money in a rental.
The role of the Landlord is a unique opportunity for investment and business that brings several advantages and disadvantages. The DIY landlord is a dream career for some if you are an expert at planning and budgeting for house upkeep. Perhaps you find satisfaction in making repairs and meeting the requirements of your tenants. However, it's critical to acknowledge early on whether being a landlord is or isn’t the life for you. You can still invest, but hiring a property management company may be better. Let's have a look at some of the uncomfortable truths of being a landlord.
Advantages of Being a DIY Landlord
Making money is (without a doubt) the primary motivation for becoming a landlord.
Tenants will pay a fixed payment each month, and if you have a buy-to-let property, it will help you pay it off. If you own the property outright, the returns on your investment will be significantly higher.
It is easier to manage rental properties if you schedule and budget for maintenance. TenantClouds' automation tools, trackers, and calculators allow landlords to automate and make the whole process easier.
2. Investing in Your Future
Securing a property will provide a steady income that can be put aside for a retirement plan (subject to certain conditions, such as your tax status and contribution allowances). Furthermore, if your living circumstances change, you may reside on the property (provided you don't violate any lease agreements).
Rental real estate offers greater tax advantages than almost any other investment. Aside from the possibility for consistent income and capital development, real estate investments include tax deductions that can help save you money on taxes.
Remember that you can no longer claim tax relief on mortgage interest.
Here is the list of some costs that are tax deductible, such as:
- Replacement of broken furniture
- Building maintenance
- Insurance for buildings and contents
- Procedures for accounting
- Gardening and cleaning
- Professional assistance
- Wear and tear is a kind of depreciation (usually around 10 percent of the gross rental income)
4. Property Worth and Equity
The longer you own a property, the more equity you have in it. It will boost your net worth and strengthen your financial situation. When you become a landlord, the real estate grows in cost over time, which, along with equity, provides another type of profit.
Disadvantages of Being a DIY Landlord
1. Real Estate Investments Are Notoriously Problematic to Sell.
While a rental property is a relatively secure investment, it pays off slowly and steadily. If you're searching for a quick way to make money, this isn't the place to invest your funds. It's also a risky investment that's near impossible to walk away from when it's convenient for you. The process of selling your house might take several months. Consider an alternative investment if you require immediate access to your money.
2. Handyman Skills Will Be a Must
There will always be some work to be done as a DIY landlord.
Landlords need to make decisions, organize, solve problems, and capitalize on opportunities. Even if your property is in the hands of respectable tenants who look after it, routine upkeep will fall on you.
While some DIY projects are simple, others may require specialized equipment or professional touch. If you're not sure that you can manage a repair on your own, publish a bid request to find a service professional in your vicinity.
3. Taking Care of Tenants Day and Night.
When it comes to tenants - everything needs to run smoothly. You should have a strategy to deal with everything from the lease agreement, maintenance, and payment methods.
Thankfully, some of these technologies have already been implemented, so you won't have to start from scratch.
For example, TenantCloud offers templates for leasing agreements, so you don't need to waste your time searching for the right one.
Rent payment is another task you need to automate. Accepting paper checks and rent payments in cash may be a pain for both the landlord and the tenant. Property management software provides tools that allow scheduling payments, charges fees for late payments, etc.
Related: Why Do Landlords Lose Their Money?
Best Property Management Software for DIY Landlords
Many people find being a landlord highly fulfilling since it allows them to put their knowledge to good use while also putting money in their pockets.
Finding more innovative methods to provide better service to investment property owners is how technology should be employed in property management.
Landlords that start using TenantCloud benefit from the following:
- Streamlined communication channels
- Better records, having all paperwork and documents in one place.
- 24/7 access to your property through the online property management platform or dashboard.
- Cut costs.
- Utilizing data and analytics.
- Technology and software which benefits tenants.
From communication to annual reports and property upkeep, TenantCloud allows you to maintain everything about your property in one place.