Being a landlord can be a great way to create passive wealth and financial freedom. But like all businesses and investments, it’s not for everyone. Over the years, many people have dipped their toes into renting property, only to regret it later.
There are many reasons you wouldn’t want to own and manage real estate. This article will walk you through many of the pitfalls, so you can make an educated choice. But, what do you do if you find yourself with rental property, but realize only too late this isn’t for you?
On the other hand, maybe you’ve enjoyed your time as a landlord and the benefits it brought, but it’s become too much work and you’re ready to divest. We will go through several steps you can take to get rid of your property quickly, while still making a nice profit.
Maybe one of the attractions of entering the world of rental property and being a landlord was the cash flow. You may be handy with construction skills and enjoy the labor of fixing up properties.
Then you realize you have to deal with people. Being a landlord means you will have to brush up on your people skills. A person with every personality type you can imagine will become your tenant.
There’s a good chance you will be lied to at some point. At times, you will even feel like a babysitter. Dealing with people is probably the biggest reason people decide to leave their rental property behind.
Maybe you have the perfect tenant that never damages property, but you soon realize that even with the best tenant there are accidents. Most tenants will want the damage fixed immediately.
Then, on the other hand, you may discover a nightmare-worth of damage when a tenant moves out. Not only do you have to do the cleanup, but you will also have to try to recoup some of those losses from the tenant. And that’s just part and parcel of landlording.
As a landlord, you are always on the clock. Tenants don’t mind calling you at all hours of the day. As a rule, the biggest emergencies will happen when you are on vacation. This isn’t a 9 to 5 job that you can forget about when you come home. With property management, you’re always on call.
Unless you are a master at carpentry, plumbing, electrical work, landscaping, etc., you will have to deal with contractors from time to time to get work done. This can be harder than managing tenants. Finding reliable contractors to help keep your property maintained is a constant source of frustration for most landlords.
Being a landlord entails managing a lot of documents. You have closing documents, mortgages, insurance, tenant files, leases, applications, taxes, etc. Be prepared to be very organized and have a system in place or this quickly gets overwhelming.
The more properties you have the bigger your insurance issues will be. You will find that you will be constantly shopping, amending, and canceling policies as you manage your insurance coverage.
Then, if you have a claim, you will soon learn what your policy really covers. Most people don’t think through the time required to manage insurance policies when they enter the world of real estate.
We could lump this one under contractors or emergencies or people management. But it is the biggest property hazard you will find so it deserves to be separated from the pack.
You will need to be diligent with your inspections. Water can be a silent killer to property and many tenants won’t recognize the signs or even tell you if there is a problem. Being a landlord means you have to do your best to forestall problems.
You are probably a really nice person. The last thing you want is to be the grumpy, mean landlord demanding rents or repairs. Unfortunately, you will have to be firm from time to time and address issues with tenants that can be uncomfortable.
If you are simply unable to have unpleasant conversations, landlording is probably not for you. At some point, you will unknowingly get tenants who will try to take advantage of your kindness and ultimately damage your property, and if you don’t deal with it, you’re in for a world of financial hurt.
No matter how much financial analysis you do on a property, there are some properties that seem to drain money. The best antidote to this is to keep plenty of cash in reserve for these money-hungry properties. They will happen, and it could be a good reason to sell your property before a major financial situation arises.
Properties that continually generate rental income are golden, but you will have vacancies. These can be difficult, especially if they go on longer than you expected. Then, long vacancies can lead to poor decision-making in finding tenants, which causes a new host of issues.
Hopefully, this won’t happen, but if you are in it for the long haul, you will have legal issues with tenants and possibly municipalities. You will probably have to process an eviction or two while being a landlord. Be prepared and realize this comes with the territory.
Ok, we know this is a depressing list of pitfalls. If you are thinking of getting into real estate, don’t let this discourage you. It’s just a warning that you should be prepared. On the other hand, you may identify with many of these pitfalls and are just tired and ready to divest and get out.
If you identify with these problems and you’ve found yourself saying "I hate being a landlord,” SleeveUp Homes can help. We can purchase the properties from you with a better offer than you will get from other Southern Californian buyers. Don’t worry about the condition either, we can fix it.
SleeveUp Homes has been in the rental property business for years, and we purchase properties from distressed homeowners and landlords. If you don’t want to go through the process of selling your home and you want to avoid the real estate wholesalers, SleeveUp Homes can help.
We buy and rehab homes directly from homeowners, and we perform any repairs required to get a home into sale condition. We cut out the realtors and wholesalers to pay top dollar for your house regardless of condition. If you’re ready to sell your home for a fair price without the hassle, contact us today to get an offer.