Things to Consider Before You Add "Landlord" by Your Name

(Investment Properties: Part 2 of 5)

Owning investment property has been a proven means of gaining wealth. However, it is not as passive as some information marketers would have you to believe. Here are some items to think about before jumping in to the world of landlords.

Handling Repairs

All homes need maintenance and repairs. It does not really matter how old the home is, whether it is brick or wood or even a modular home. To protect tenants most states have adopted laws that favor the renter when repairs are not made in a timely manner. If you are handy with tools and have a knack for being able to fix anything that breaks then this may not be a major issue.

However, if you have a full time job, a family and you are not comfortable with most repairs then you will need to decide how to handle the roof leaks, toilet overflows and broken appliances that come from owning a home. You can choose to use a property management company that will handle all the repairs for you and simply bill you. Or you can contract with your own handyman service.

Managing Tenants

The majority of tenants will pay the monthly rent and treat the place as if they actually owned it. However, a small percentage of people can cause a large number of problems. Lack of maintenance can lead to mold and mildew throughout the property. However, major problems like parties that attract police, illegal activities that end up on the news and major damage to floors, ceilings and walls can cause a nightmare for even the most patient person. Some people have the personality to handle this kind of stress while others want no part of the problems.

Collecting Money

It is highly likely that at some point you will have to call on your tenants, either on the phone or in person, and get them to pay for their past due rent. This is just a fact of being a landlord. With these situations comes a need for good judgment. Some people really do run in to bad luck and simply need a few more days to pay the rent. Others are either poor money managers or simply lazy and refuse to pay their obligations on time.

Evictions

It may seem on the surface that evictions favor the landlord. Once the renter has stopped making payments then the landlord simply makes a plea to the local court to have the person(s) removed.

However, things are not that simple. First, you will lose a month’s rent waiting on the tenant to pay. If the court system is backed up then you may have to wait another month to get a hearing date. In the meantime the renter can leave a major mess behind that requires extensive cleanup and possibly new paint and carpet. Once again, as stated before, the majority of tenants will pay on time and not cause problems. But an eviction can be problematic and expensive and you need to be prepared for it.

Investment/Rental Properties (5 Part Series)

• Preparing to Purchase that First Rental Home (Part 1 of 5)
• Adding the Title of Landlord Behind your Name (Part 2 0f 5)
• Rental Property is Still a Safe Investment (Part 3 of 5)
• How to Pick Profitable Rental Properties (Part 4 of 5)
• Success Plan for Investing in Rental Property (Part 5 of 5)

50% of Homes with Mortgages now Underwater


I came across the video below and was shocked to hear that nearly 50% (half) of the nations homeowners are effectively underwater. In times like these, it's important to know that there is help available. If you are a home owner that is struggling to make mortgage payments, I would first suggest that you talk with your bank. They may be able to offer you a few different options. They can sometimes lower your interest rate, offer you a forbearance, or even roll your past due amounts into the mortgage principal.

In the event that you need to sell your home due to your financial situation, I would be happy to discuss if a short sale might work for you. This is a process in which we work with your bank to sell your home for less than you owe on the mortgage. Does your home qualify for a short sale? Fill out our Short Sale Home Evaluation Form to find out.