Is being a landlord right for you? What to consider when buying a rental property

These days, homebuying is changing.

While a single-family home may have once been the goal, rising housing prices have caused more people to consider multi-family options. By living in one unit of a duplex or triplex and renting out the rest, you have the unique opportunity to offset some of the costs of homeownership.

Plus, if you play your cards right, it’s a chance to create a passive income stream that will last long after you move into your forever home.

That said, though, being a landlord is not for everyone.

Like any side hustle, renting out a multi-family home has its own unique set of benefits and risks. We’ve laid a few of them out for you below. Read them over to see whether or not you’re cut out for this growing trend.

Landlords must multi-task

Being a landlord is, unfortunately, about so much more than collecting a rent check every month. Your unit(s) must be brought up to match city and municipal codes, tenant applications must be screened, leases will need to be drawn up, repairs need to be taken care of quickly, and your accounts should be balanced monthly.

As a landlord, you’ll be responsible for shouldering the bulk of these tasks, even if something comes up on the weekend or over the holiday.

Are you prepared to take care of these problems? Do you have the knowledge and skills necessary to handle them properly? If not, are you prepared to pay an expert to handle these issues?

If you’re willing to spend the money, there is a viable alternative to taking on these added responsibilities.

Some landlords hire a property manager to do the bulk of their dirty work. If you decide to go this route, you’ll work with them individually to determine how the above tasks will be handled, but be aware that you’ll be charged a fee for the convenience.

Be sure to research rents and property management rates in your area to determine if this arrangement makes sense for you financially.

Landlords are subject to specific laws

When done right, the landlord-tenant relationship is not an-under-the-table deal.

Far from it, most aspects are regulated by state and local laws to ensure fairness on your part and the part of the tenant.

Though the specific regulations will vary depending on where you live, you could be subject to laws regarding the processes for screening potential tenants, bringing units up to code, collecting overdue rents, or fair eviction practices.

In situations like these, it’s always best to go in informed. If you think you’d like to become a landlord, be sure to look into any laws that apply to your state and local municipality.

That way, you’ll know what will be expected of you and you’ll have a better idea of what steps to take in the event that problems arise with future tenants.

Alternatively, there is no shame in finding that these regulations are too extensive and you’re more comfortable searching for a single-family home after all.

Location matters

While location will undoubtedly play a role in your house hunt regardless of whether or not you decide to rent out part of your property, your priorities will differ depending on which path you choose.

In a single-family home, the location can be tailored around your individual needs like a commute to work, the proximity to family, or your preferred scenery.

However, when you’re looking to score top rental values, sometimes your personal preferences need to take a back seat in order to appeal to the widest variety of potential tenants.

Location-wise, tenants tend to prefer popular, walkable areas with access to a variety of conveniences like shops and restaurants. Close proximity to public transportation and/or major access roads is also a plus.

Location isn’t necessarily a deal breaker when it comes to finding tenants, but it can definitely play a part in expanding or limiting your pool of potential candidates.

Ask yourself which is more important to you: choosing a neighborhood that has good rental potential, or whether you’d rather have your personal preferences come first.

Be prepared to compromise

If there’s one big detail that those considering buying a multi-family home need to consider, it’s that they will be living with other people, which requires a certain amount of compromise.

As the landlord, you’ll have the power to dictate when you’ll be paid and how much, plus a few small details such as whether or not your tenants will be allowed to keep pets or smoke in your unit. But, beyond that, you won’t be able to control how your tenants live.

While quiet and considerate neighbors are obviously ideal, that may not always be the case. Unless there are specific provisions in your lease, your tenants will have the freedom to come and go as they please, hosts guests, and generally make noise.

You may find yourself having to compromise on some of these inconveniences.

Before you decide whether or not to become a landlord, it’s crucial to be honest with yourself about whether or not you’re prepared to live so close to your neighbors.

Can you brush off the occasional party or late-night ruckus in favor of your monthly rent check? Or, at the end of the day, is some peace and quiet worth the added expense?

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