So you a wanna be Landlord?
We get many calls from home buyers who want to buy a rental property because they think they will get rich. I have been a landlord for 35 years and I am still waiting to get rich…ha!
It is just not that simple.
Think that you qualify to be a landlord?
Stage 1: Buy a rental property.
Stage 2: Be a landlord for 3 years.
Stage 3: Sell the property as an don’t wanna be a landlord...
The reality is that most home buyers that want to be a landlord will not make it through stage two. Stage one is buying the home…easy. Stage two is renting the home for a few years…not so easy. Stage 3 is selling the rental property to another wanna be landlord…relief.
Being a landlord takes time, effort and extra money
Finding and buying a rental property is the easiest part. You figure out what your monthly mortgage payment will be and hopefully you buy a property where the rental income will cover the mortgage. Now I did not say covers the monthly expenses, I only said mortgage, as the expenses is a separate issue.
Keep in mind that regardless of the monthly being covered by the rental income, your expenses will probably eat up any profit that you thought would go into your pocket. Other expenses includes the upkeep of the property, painting, mowing, roof, electrical, A/C, appliances and more.
That does not include your taxes, home owners insurance, or vacancies.
Here is a true story that may make you change your mind about becoming a landlord.
I have tenants renting a home for 5 years now. That is an ideal tenant because every time someone moves out, you have to re furbish the property, and during this vacancy, so you loose money. Having a long term tenant (that pays the rent on time) is what every landlord dreams of.
I have not raised their rent in 5 years and am breaking even. I can live with that, as the rent is covering the mortgage…barely.
I got a call last week from this tenant that the sewer was backing up. We had a plumber out that same day to pump out the system, who said the drainfield was the problem. The septic company says we need a new drainfield to the tune of $5,000-6,000 depending if the city will require us to raise the drainfield. We are waiting on the details. In addition, we learned that the dishwasher has not been working for months and the refrigerator is leaking water. Yes the refrigerator needed replacing.
The pump-out was $150, the dishwasher got fixed for $85 and a new refrigerator was $1,200. So now my bill is over $6000 which will take me years to recoup on the rental income so I can at least appear to be breaking even again.
Sure, I could raise the rent and probably should raise the rent, but what if they move out? How long will it take to find a quiet tenant, that does not complain and wants to stay forever? A good tenant is like finding a diamond in the haystack. I think I will keep them for now. How about you? Is being a landlord loosing its shine?
To buy an investment property, retirement property, vacation home or a permanent residence call Buyers Broker of Florida for expert help. 407-539-1053