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Becoming a Landlord: The Pros and Cons

If you are considering getting into the real estate investment as a landlord, you are not alone. There are many investors that buy a property and rent it out as a way of making money. In actual fact, many people have turned this real estate investing method into a full-time profession and many of them have made millions by doing this. They have concluded that investing in real estate, especially as a landlord, brings much more returns than in stocks or other investment options.

There are many advantages of becoming a landlord as listed below:

1. Set up a constant income stream
You will receive your income month after month like clock work as long as someone is renting your properties. Furthermore, many investors start out with only one or two properties, and then quickly improve their portfolio. Eventually, they have several properties that are all working for them simultaneously. In short, they will have an income stream set up based on each property.

2. Freedom of time and work
Being a landlord is not like working in an office, you do not have a lot of work except some administrative work each month when it comes to collecting money. Even though you will be responsible for up keep on the rental units, but you can always hire others to complete the maintenance work for you. This will never add up to a full-time job.

3. Tax Advantage
Becoming a landlord can brings some considerable tax advantages. Actually, favorable IRS rules are one big reason why so many fortunes have been made in real estate. There are generous tax breaks offered to landlord who rent out their properties. As a landlord, you can deduct mortgage interest and real estate taxes on rental properties. If you pay mortgage points, you must amortize them over the term of the loan (unlike points on a mortgage to purchase a principal residence, which can be deducted immediately). Moreover, you can also write off all other operating expenses such as repairs and maintenance, utilities, yard care, homeowner association fees, insurance and so forth. The best part is that you can depreciate the cost of residential buildings over 27.5 years, even while they are increasing in value. A great way to keep up with these advantages is with good budget calculator.

As expected, there are a number of drawbacks of becoming a landlord too. Even though there are a range of reasons to not become a landlord, you must keep in mind that there are many myths that you hear are blatant exaggerations. Here are some drawbacks of becoming a landlord:

1. Responsible for the upkeep of the rental units
As a landlord, you will be responsible for the upkeep on all of the units that you are renting out. This could be a major problem especially if you are renting out an old property that barely passing the housing code. Even though it is impossible to avoid every issue that may arise, you can cut back on them by investing and renting out a new property that has quality facilities that do not require constant fixing.

2. Not getting paid on time
Many landlord depend on incoming rent checks to pay the mortgage or to get by each month. If they are not getting paid on time or worst at all, they are put in a bad cash flow position. This means that anytime somebody is late with their rent that you need to hunt them down and try to get the money that is owed. In other words, becoming a landlord also means that you also have to turn into a debt collector. Sometimes, this is as easy to do as making a phone call. In other cases, it may take you weeks or even months to collect your rent.

3. Responsible for the safety of the tenants
When becoming a landlord you will be responsible if something happens to them due to your negligence. It is, therefore, important to know what you need to do as a landlord and follow the rules exactly who they are outlined.

There are drawbacks to becoming a landlord that has never been debated. This is due in part to many myths that surround this industry. Even though there are some inherent drawbacks, they do not cancel out all of benefits that go along with becoming a landlord.

To sum up, the best thing to do if you want to become a landlord is to know what you are getting yourself into. This is best done by researching the industry and talking to others landlords. 



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