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So you think you might like to own some rental property. You imagine cash and checks rolling in around the first of each month as your happy and responsible tenants pay their rent on time. In your mind’s eye, you can actually see your bank account growing. Life is good and your financial future looks secure!
Well, hold on just a minute, OK?
Some Questions To Consider Upfront
If you are considering becoming a DIY landlord, you must be realistic about the time and expense involved. While there is certainly money to be made by owning rental property, there is also the potential for financial disaster.
Ask yourself whether you have the ability to go totally DIY. Do you possess the necessary skills, tools and time to manage and maintain rental property? If not, will the rent received cover all the usual expenses (taxes, insurance, utilities/trash, and heaven forbid, mortgage payment) plus inevitable repairs and maintenance AND hiring a professional?
Also, what would happen if your property was vacant for a month or two? What about several months? What if it was uninhabitable until expensive repairs could be made? How would you absorb the costs associated with your rental property if you had no rent coming in?
Think long and hard about all this. Have you called a plumber to troubleshoot a problem lately? How about an appliance repairman? Do you even know what a service call costs in your area? The planning stage is the time to figure all this out – not at 2am when you get a call from a tenant with several inches of water in their bathroom.
So Why Should You Listen To Me?
What do I know, anyway? Well, we bought rental cottages about 12 years ago as part of our retirement master plan. From the beginning, we devoted every extra cent toward paying down the principal. We now own the property outright and also saved a fortune on interest.
At this point, we put most of the profit back into the property (improvements/upgrades). Eventually, we’ll be done with that and the rent payments (after expenses such as taxes and insurance) will provide a nice monthly income. Ultimately, when we’re old enough that we need to live in town, we’ll have free housing. But the only way this has worked out for us is because we do all the management and maintenance, and most of the repairs, ourselves.
So, what do you think now? Still want to be a DIY landlord?