If you have found your way to Mashvisor, you are already thinking about becoming a landlord. Here at Mashvisor, you are among friends. We are in the same business you are, and we all wondered if it is worth becoming a landlord at some point. It is. And we will tell you why from our own experiences.
That is not to say there are not both pros and cons of becoming a landlord. All reward requires work. One thing we should make clear at the outset is that being a landlord in 2020 is not an informal business. There are many rules and laws with which you will need to comply. But you are not alone. Mashvisor has many of the tools you will need, and your network of real estate peers and professionals will help you stay on track and guide you on your way.
Related: How to Build and Maintain a Real Estate Network
Benefits of Being a Landlord
Let’s start with a focus on the rewards of becoming a landlord. Like any endeavor, you should stop and ask yourself if becoming a landlord is worth it. Only you can answer that, but we can tell you the benefits of becoming a landlord we have enjoyed. Many of your fellow real estate investors can also share their experiences and act as mentors. If you are not reaching out to those in your field already, start now.
Related: 5 Best Ways to Find a Real Estate Mentor
Investing in rental properties allows you to earn a living as your own boss while becoming a landlord. You will create a business from nothing. Sure, there is satisfaction from making money by becoming a landlord, and we will explore that in more detail, but any landlord will tell you that owning a real estate business and operating a rental property business will bring you satisfaction.
Unlike working for a company where you are an employee who follows the company’s plan, you start the business with your own money, and at your own risk. The rewards are yours alone, though you will soon learn that many folks in your network will play a big role in your success. Still, those folks are in your network, which you also create. Very few businesses are as personal as becoming a landlord. At the end of the day, it is your hard work, your wits, and your brains that make you succeed with your first real estate investment.
Continuing the non-monetary theme, by becoming a landlord and investing in rental properties, you will see distressed properties as an opportunity. Properties that are short-sales, in pre-foreclosure, or in foreclosure can be great investments. These investment properties offer instant equity and the opportunity to build even more equity with repairs and upgrades. But think of the community benefits. Many of these properties have back-taxes due, and the bank or seller will only pay them at closing.
Furthermore, if the properties reside in a condo community or one with a homeowners’ association, the fees may also be pending. These will be paid in full by the seller or bank at closing (by law in most states). Also, many of these properties are sitting un-maintained and empty. By investing in them, and accepting the responsibilities of becoming a landlord, you serve the community. Rehabilitating a distressed property removes a drag on local property values. You will even offer a new renter a home that would otherwise be off the market.
Making Money as a Landlord
Altruism is not the primary motivator for becoming a landlord in all cases. Let’s be honest. It is profits. Becoming a landlord can be lucrative for a wide range of investors. Those with capital to invest may find that real estate rentals offer a good return on investment with a low number of hours spent working on the business.
Those landlords who purchase a multi-family unit as their first investment property can take advantage of low-interest mortgage rates. There are also many tax benefits of becoming a landlord. Depreciation is one tax deduction that many real estate investors count on to offset taxes on profits. Also, any repair or improvement that you do is not only adding equity, but also providing you with a deductible expense. The tax code in effect assists landlords in paying for equity-building work.
Steps to Becoming a Landlord
How to become a landlord is easy to envision. The first step is buying rental properties. The next is owning rental properties. The final step is making money from rental properties. The trick is making all of these three steps come to fruition. However, no single article can provide you everything you will need to be a good landlord. Be prepared to do some background research before you start in the business.
Step one is to buy your first rental property. Before you do, be sure to educate yourself on how to finance that first purchase. There are some ways to do that without needing a lot of capital (cash) for the down payment, but you must plan ahead. You will then need to learn how to find listings of rental properties in your area. Next, you learn to evaluate various rental properties in your area. Mashvisor has the tools you need to both find rental properties and to evaluate which properties are right for you.
Related: Buying Rental Properties: What Tools Do You Absolutely Need?
Being a Landlord
Once these steps are completed, you will be a landlord by definition. However, to actually walk the walk you will need to continue to work, learn, and put what you know to practical use as a landlord. Mashvisor not only has the basic real estate tools you need, but we also update these tools regularly to ensure you’re getting the most valuable insights.
Becoming a landlord has many benefits. Included in these are financial gain and the satisfaction of helping a community. If you are ready to get started, you’ve come to the right place.