What Are the Pros of Being a Landlord? What Are the Pros of Being a Landlord?
There are plenty of time-consuming challenges related to being a landlord, from finding and screening and tenants to collecting rent and security deposits. However, there are also a range of benefits to turning your property into a rental unit including generating passive income, diversifying your investment portfolio, and certain tax advantages.
If you're weighing the pros and cons of becoming a landlord, look no further. We'll dive into all of the perks mentioned above and some of the other benefits of being a landlord below.
Rent is a Source of Passive Income
One of the biggest benefits of being a landlord is having a passive income. This just means that you'll have a stable, recurring income stream (rent) that doesn't necessarily require a daily effort to maintain. Passive income is a great option as a second income stream for working professionals, or as financial security for retirees. For a rental property income to be truly passive, you'll want to ensure you have a regular maintenance plan and potentially a property manager or property management company to oversee the day-to-day tasks associated with running a rental unit. If you're relying on income from your property as a primary source of income, you'll also want to be sure you balance the costs associated with owning a rental unit against your potential income -- think of things like property taxes, potential repairs, how much it might cost you to hire a property manager, and the costs of tenant background checks.
Diversify Your Investment Portfolio
If you already have money invested in the stock market or elsewhere, owning rental properties is a way to diversify your holdings as a potential counter to financial risk resulting from fluctuating stock market conditions. Real estate investments are long-term investments and may continue to produce income for you for years, including after your mortgage is paid off. As the property owner, you'll even be able to leave your rental home as part of a trust so your next of kin can inherit the rental income from your property if you so choose.
Landlords Get to be Their Own Boss
One of the key advantages of being a landlord is being your own boss and having control over your investment. As a landlord, you'll have the ability to make nearly every decision related to your property including setting your rental rate, tenant screening, property maintenance, and renovations to increase your property value. If you're looking for a type of investment that you can play a more active role in, being a landlord could be a good avenue to explore.
Build Equity Through Rental Income
As your tenants pay rent each month, you'll have an extra stream of income to contribute toward paying down your mortgage and building equity in the property. Using the cash flow generated by rental income will help you increase your equity in your property faster and is one of the main pros of being a landlord. And as real estate prices increase over time while your equity is growing, you'll enjoy even more return on your investment.
Property Value Appreciation
Property appreciation can lead to substantial profits over time if and when a landlord decides to sell their property. And with control over their investment, landlords can directly impact the rate at which their property appreciates in value by making renovations and improvements. Updating fixtures, flooring, kitchens, and bathrooms can be a great way to both help your investment appreciate as well as increase your rent prices.
Flexibility
Are you handy with repairs? Consider yourself a people person and find fixing up your property a rewarding process? Maybe you prefer to be a more hands off landlord and leave the day-to-day work to the experts. Either way, being a landlord can be a rewarding profession because it gives you the flexibility to let your talents and preferences shine through. If you decide to enter the world of real estate investment, you can be as hands on or hands off as you like. For instance, if you rent out your property as a second stream of income and have a full-time job, you may prefer to hire a property manager to handle the day-to-day work of maintaining the property and handling tenant relations. However, if your income from your rental property is your primary source of income and you enjoy tackling home improvement project and like interacting with tenants, these might be things you decide to take on yourself instead of outsourcing. As a landlord, get to choose to contribute as much or as little effort as you'd like into managing your property.
How New Landlords Can Simplify the Security Deposit and Rent Collection Processes?
We know how hectic property management can get, especially for first-time landlords, that’s why we developed an innovative solution that automates, simplifies, and modernizes the security deposit management and rent collection processes. And the best part is they are totally free!
Simply open an account with our easy-to-use digital platforms ZDeposit and ZRent, invite your tenants to join, and sit back and relax!
