When it comes to investment, it’s a well-known fact that property is not only one of the safest, but most profitable places to put your money. This is why so many people consider becoming landlords by investing in rental properties and acquiring tenants. The freedom that comes with being a landlord is indisputable. You get the opportunity to be your own boss, earn a second income, and occasionally people even make lifelong careers out of expanding their property portfolio. However, many people ten to skim over the responsibilities and sacrifices that come with investing in rentals and becoming landlords. Lets take a truthful look into the pros and cons of investing in a rental property and becoming a landlord.
Pro: It’s a Steady Source of Income
It makes sense to start on a positive note, and our first pro is that it’s a relatively steady source of income. It’s difficult to get started, but if you’re looking for impartial advice, there’s plenty of it readily available on the internet.
Whereas investing in, say stocks and shares, comes with a risk of not making anything at all, investing in rental property is a fairly safe shout. People are always looking for a place to live, and in a lot of places the demand outweighs the supply. This means you’ll be offering something that’s in high demand, and so long as the property itself is in good condition and for a reasonable price per month, you’ll have no issue filling it with tenants.
Likewise, you’ll also save, perhaps even entirely on the mortgage repayments through the rent you’re paid, and are likely to even make a profit too.
Con: Emergencies Happen when You Least Expect it
One of the negatives of investing in a rental property, is that household emergencies can happen when you’re least prepared for them – and as a landlord, solving them is entirely your responsibility.
These emergencies can be anything – from something as minimal as a cupboard door that needs screwing back on, to a burst pipe. The main issue is, regardless of what they are, they become entirely your problem. If you can’t fix them yourself, you’ll have to fork out and hire someone to do it for you.
Therefore it’s always advisable to take out a certain amount of insurance on household appliances and items, however, that costs you extra. It’s just something to be mindful of, because it could always result you in you being out of pocket – and nobody wants that.
Pro: It’s the Ultimate Form of Independence
We’ve all done it, haven’t we? Sat at work, and dreamed of the day where we don’t have to answer to our awkward. Where we are alternatively our own boss, and work is a breeze that doesn’t feel so much like work at all. Well, with a rental property investment, this dream could become a reality.
Being a landlord means working for yourself, with pretty much nobody to answer to. So long as you can organize all of your outgoings incomings and tax successfully, you have no reason to employ anyone else. Plus, it’s a way of making money where, unless there’s an emergency, you don’t have to do very much.
Con: You Will be Taxed
One of the worst things about investing in rental properties and becoming a landlord is the tax that comes with it.
Basically, as with any other form of self-employment, as soon as you make a profit as a landlord, you’re likely to have to submit a tax return – and if you own more than one property, then the tax rates go up yet again. Although you can claim back on certain expenses, it’s definitely something to think about before taking the plunge.
Pro: It’s a Secure Investment
It makes sense to finish on a positive, right? And what’s more positive than the fact your new buy to let property is a secure investment.
Sure, the property market is fluid, and although it fluctuates, it will never collapse entirely. This reliable source of income is so secure, because it has the longevity that many other investments wouldn’t. If you have a family and want to invest in their security, then property is undoubtedly the way to do it.