For those who are wondering how to invest in real estate, one option is to find a rental property. If you do decide to go with a rental property, you end up becoming a landlord. Therefore, you will need to think about whether this role is right for you. There are numerous responsibilities that come with being a landlord. Some of these include handling property taxes, homeowners’ insurance, the mortgage, finding tenants, and dealing with any repairs that might arise regarding the property. One challenging decision you might have to make is whether to hire a property manager.
Hiring a Property Manager
Being a landlord is a hands-on job; however, one way to shift the details to someone else is to hire a property manager. The property manager would help you handle the various issues that were discussed above; however, there is a downside to hiring a property manager as well. You have to pay them. This is money that comes out of your monthly income. While this would free up your time to find other investment properties or work a W2 job, you would also have narrowed margins unless you are able to charge more rent.
Determining How Much Rent You Charge
This is another challenge that comes with being a landlord. While this is your main income stream (aside from capital appreciation), you might not know how much rent to charge. The value of your rent depends on where your property is located. If you charge too much, you could end up chasing tenants away from your property. In contrast, if you charge too little, you end up leaving money on the table. It becomes easier for you to charge rent once the mortgage is paid off; however, this could take years. This is one of the biggest challenges of being a landlord.