Becoming a landlord is serious business and not for everyone. It also has serious upside
potential—if you know what you’re doing.
Smart investments can pay off in a steady stream of passive income, and provide a nice chunk
of change when you go to sell. But that doesn’t mean you should run and buy a property
without learning a thing or two first. Buy wrong or go in unprepared, and you could make a
financial mess of things.
Ask yourself these questions (and answer honestly!) to determine if you’re ready to be a
landlord.
Do you have the time?
Being a landlord is a job. A part-time job, hopefully, but a job nonetheless. If you’re already
overscheduled, it can be hard to keep up with all the must-do’s.
Do you have the money?
If you’ve made a good investment in your chosen property, the amount of rent you’re collecting
each month will exceed your financial obligation. But what if you have a hard time renting a few
of the apartments in the building you bought or one of your tenants skips out? Remember that,
no matter what’s happening with the property, you’re still responsible for making your
payment to the bank.
Hiring a property management company to do some of the ongoing work for you will also cost
money—count on about 10 percent of the rent each month, and you’ll also have to pay them a
finder’s fee for securing new tenants. But many landlords find it’s well worth the money to be
able to offset some of the more painful or time-consuming duties involved.
Do you know what the smartest investments are?
Not every property is a winner when it comes to investment potential, and you need to think
like an investor to become one. Make sure you research before you buy, calculate your
finances, and keep your emotions out of it.