What It's Like Being a Landlord
If you’re thinking of becoming a landlord there's much more to consider than how much rent you can charge. Let’s look at some of the pluses to owning and managing rental property.
Great Things About Being a Landlord
Owning rental property offers these financial and lifestyle benefits:
• Appreciation and wealth building. If you hold onto your property long enough, it will almost certainly go up in value.
• Income. A well-managed investment property, with tenants who pay the rent on time and monthly expenses that are less than the rent, can bring you a steady stream of income.
• Diversification of income. If you’re laid off from your job, or your health takes a turn for the worse, your primary source of income -- presumably your salary -- could be jeopardized. Owning an investment property diversifies your income stream, and can give you a cushion.
• Low-risk investment. Unlike more volatile investments, the returns on real estate are fairly steady.
• Investment diversification. Owning property also diversifies your investment portfolio, a cardinal rule of investing. As you approach retirement, it’s good to start shifting into lower-risk investments.
• Leverage. Unlike other investments, a little bit of cash will buy a lot of real estate: A down payment of 20% of the value of the property is usually enough to get you started.
• Short-term tax advantages. While the rental income from your property is taxable, you can also deduct most of the expenses related to owning and maintaining the property. Among these are mortgage interest, insurance, repairs, and upkeep.
• Long-term tax advantages. Even if your property skyrockets in value on paper, the Tax Department won’t expect you to pay taxes on that increase until you sell.
• Part-time commitment. If you own just one property, and it’s not too far from where you live, you can probably handle its management in your spare time, while still working a full-time job. A little job flexibility will help, of course, to deal with tasks like getting the place painted while dealing with the departure of the old tenant and interviewing prospective new tenants. Your time commitment will be even less if you hire a property management company -- though your profits will decrease as well.
• Professional development. Being a landlord and owning property can give you a sense of accomplishment (and some stories to tell at parties). It shows that you’ve broken out of the mold of the average working stiff, and are willing to take risks and accept major responsibilities. You’re learning new skills involving finances, dealing with people, and maybe even home repair, which may help you in other areas of life.
Please contact me if have any questions about managing your Mandurah property
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