If you go on TikTok, YouTube, or even LinkedIn, you’re probably going to find some content creators bragging about how they’re buying property to become landlords so they can make some semi-passive income. Honestly, the idea of managing a property portfolio sounds pretty amazing, doesn’t it? Well, the thing is, it’s not a “walk in the park” like how these content creators make it, how the internet makes it.
Actually, if you talk to any landlord offline, they’re going to tell you that there is some work, sometimes even hard work, that goes into being a landlord. Seriously, it’s not as simple as buying a piece of property and a renter using their money to pay your mortgage. It really doesn’t work that way (well, not as much anymore, at least). So, before jumping into this, you need to be educated, but something else you need to do is ask yourself some questions.
But what questions exactly? Well, here’s exactly what you need to know!
Why Do I Want to Become a Landlord?
So, what exactly is motivating you to try this out? Understanding your motivations is pretty crucial, to say the least. Are you looking for a steady source of income? Is this an investment to diversify your portfolio? Or perhaps you’re planning to use property management as a step towards financial freedom? You have to educate yourself on the challenges because it really isn’t that easy being a good landlord.
Do I Really Understand the Property Market?
You can’t expect to read a couple of articles and then magically have a solid understanding of the property market; it really doesn’t work that way. Pretty much, having knowledge of the property market is key to being a successful landlord. This includes understanding local demand, the types of properties that are most sought after, and the typical rental yields you can expect. You just can’t expect guaranteed rent for landlords like yourself if you don’t understand the market and what people are demanding.
This is exactly where people get it wrong; they buy a property, maybe something that’s not in the best condition and still have the expectation that people will be desperate enough to rent it out. It just doesn’t work that way. What do the tenants in the area want? What area? What are the market trends? What’s there to offer in that area? Honestly, there are a lot of questions you’ll need to ask yourself, but this is a massive commitment, and you shouldn’t take it lightly in the slightest.
Can I Handle the Financial Commitment?
Really, it involves more than collecting rent. You’ll need to manage tenant relationships, ensure compliance with safety regulations, and handle any issues that arise, from emergency repairs to disputes. Are you prepared to be on-call? How will you handle difficult situations?
Even if you’re on vacation, you’ll still have to work on these problems. So, are you willing to deal with day-to-day management for these? If not, but you’re still set on the idea, then a property management company could be an option.