4 Things You Need To Know Before Becoming A Landlord
In 2018, it makes sense to become a landlord. As recently discussed on this site, millennials are not buying homes, for a number of reasons, so the rental market is a fairly safe place to be for those looking to invest their money. But being a landlord isn’t all sunshine and roses. If you have money signs in front of your eyes, there are a few things you need to know first.
1. Being a landlord is a full-time job
Unless you hire the services of a property management company, you are going to be very busy looking after the property and tenants. Admittedly, some days will be easier than others (you may even get a day off), but there are a range of hats you will need to wear as a landlord. Supervisor, debt collector, handyman, salesperson… you will be fulfilling a number of roles, and unless you do get outside help, you will need to adapt to a range of situations. For a lot of the time, you will be kept very busy indeed.
2. You need to adhere to legal rules
There are unscrupulous landlords – those people who don’t adhere to any legal rules and regulations – but they will (we hope) eventually come a cropper because of their behaviour. As a landlord, you need to put your tenant’s welfare at the heart of what you do, ensuring you meet housing safety codes, fair housing laws (avoiding discrimination), and any number of health codes. It’s a minefield, but to avoid legal action, you need to learn your responsibilities. You can find out much of what you need to know with your local government, so check out this site, and go into your local council offices to find out more.
3. 2018 brings new changes
You need to keep abreast of all the changes that might affect your role as landlord. Taking 2018 as an example, there are several changes taking place. This includes changes in the tax relief you can claim on your mortgage, as well as higher mortgage rates. You will need to adhere to minimum energy efficiency standards to meet new regulations. And you will have to sign up to a compulsory arbitration scheme. Thought being a landlord was straightforward? Think again, but by factoring in these changes, you can better determine whether becoming a landlord is right for you.
4. There is a huge financial commitment
We have briefly touched upon some of your financial commitments. Ensuring your property meets energy efficiency standards, for example, and the increased mortgage rates. Then there are the other things to consider. For starters, you may suffer reduced income when the property you buy stands empty for any length of time, so you may need to have financial backup elsewhere. Then there are the costs of insurance to consider, landlord licensing fees, and general maintenance costs to preserve the upkeep of the property. While it is possible to become a property millionaire, it will take years of financial commitment on your part beforehand.
Still want to become a landlord? There are rewards – both for yourself and the people who rent housing from you – but you shouldn’t commit without understanding some of the challenges ahead. We wish you every success, whatever you decide to do.