It’s all but guaranteed that most homeowners, at one point or another, have thought about or seriously considered becoming landlords. After all, they know how to maintain their home, pay their mortgage on time, and who to call when repairs are necessary.
Plus, that income. That glorious passive income! The mortgage, in place for six or seven years, even when combined with homeowner association dues, insurance, and property taxes, is hundreds of dollars below market rate for a rental comparable to their residence.
But wait – isn’t there a saying, “If it were so easy, then everybody would do it.”?
Maybe, just maybe, there are reasons why more homeowners do not become landlords. And while the internet provides a blank slate to list and discuss those reasons, we will touch on the most widely cited items that homeowners wish they knew before becoming landlords.
Vacancies Will Happen
Homeowners that become landlords tend to think very highly of the properties they own and the parts of town where those properties are situated. “Oh, it’s near the university. There will always be grad students or new professors who need a place to live,” or, “Downtown is booming. There’s no way my place will ever go unrented.”
Well, bank on this. There will be vacancies. And guess what happens during vacancies? That’s right, the homeowners-turned-landlords find themselves covering the operating costs, utilities, etc., until a new tenant comes along. Time to say goodbye to that highly coveted passive income. That is unless you considered vacancies when setting your budget for your rental property. Responsible landlords usually anticipate one vacant month per calendar year and budget accordingly. Those with more properties likely need to stash away a little extra as their portfolio turnovers can vary year to year.
Expect the Unexpected
“Expect the unexpected” is something most homeowners will likely say to themselves at some point, especially once they take on the added role of landlord.
No matter how great your screening process may be, a tenant probably isn’t going to care for the property the exact way a property owner would. They can create messes, flush items that are better suited for the trashcan, and cause damage to walls, floors, and fixtures.
Then, of course, there are matters entirely out of your or your tenants’ control, like increases in property taxes and utilities. And let’s not forget that properties can be vulnerable to adverse weather, too.
Nearly all these unexpected issues cannot be controlled, but landlords can combat them ahead of time by being prepared. Budgeting for potential damage caused by tenants or nature and smartly anticipating regular hikes in operating costs will go a long way toward these matters having a less negative impact on your bottom line and stress levels.
Budget More than Your Money
Being a landlord is a job in and of itself. Sure, there will be busier times than others, like when you are between tenants and the property is undergoing a few facelift items before you begin showing the home to prospective renters. And there will be slower times like after a new tenant moves in, and some time passes without so much as a word from them.
But you have to budget your time if you are going to be a landlord. No matter how substantially tech-heavy the world has become, most people still can’t be in two places at one time. Allowing yourself flexibility in your regular schedule will help if and when any emergencies arise, and setting aside a few hours each month will give you a chance to do property inspections, handle bills, or update insurance coverage.
An even better alternative than setting aside your precious time is to work with a property management company. Doing so frees up hours in your week and takes the stress out of finding tenants, worrying about repairs, and dealing with other difficulties that being a landlord can create.
As the leading property management firm in the Cape Fear region, Sweyer Property Management recommends that property owners strongly consider working with a trusted and experienced property management company. Additionally, we want to ensure property owners and investors understand the relationship they are entering into when choosing to work with a property management firm.
If you have investment properties and do not use a professional management company, we hope you consider doing so.
The experts at Sweyer Property Management will be happy to provide you with a free rental analysis or, if you prefer, give us a call at 910-239-1338.
Sweyer Property Management is a full-service professional property management company specializing in all aspects of rental management. If you’re an investor or property owner looking to learn more about our services and what a professional property manager can do for you, reach out to us today at 910.256.3031 or via our website. Sweyer Property Management has exhibited continuous growth throughout the Wilmington, Leland, and Hampstead areas while maintaining an excellent Google+ rating for customer service.
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