Pros and Cons of being a Landlord
Pros:

• This career does not require a real estate license. You can be a bona-fide landlord starting with just one rental property. You can hire a property management company to collect your rents and to maintain any repairs that are needed. A management company will usually charge up to 10% of the total rent collected.

I recommend hiring a management company if you have rental property out of state, or several rental properties. You may not have the time or patience to deal with tenants face-to-face. I advise, however, that first-time landlords manage their first rental property to know the difference between a good management company and a bad one. Some management companies charge exorbitant fees and are not very effective in maintaining properties and filling up vacancies swiftly. You can also create your own management company, through incorporating or forming an LLC. (We spoke about this in earlier chapters). Forming a company to mange your property will protect you from any liabilities and/or lawsuits.

• You will gain great monthly residual income. The more rental properties you own, the more money you put into your pocket. As long as you manage your properties effectively, you will turn a great profit from your properties monthly. Imagine ten rental units bringing in $1,120 per month each with a net income after expenses bringing you a total of $11,200 per month, $34,400 per year! With Section 8 income or high paying professional tenants you will be laughing all the way to the bank. And you can do this part time!


• As a landlord you’ll receive excellent tax write-offs. You get to deduct everything you put into your property such as repairs, taxes, insurance, etc. Even though you are making a residual income every month, you get to deduct your expenses and depreciation of the property against your personal income. Make sure you keep good records and receipts and consult with a reputable accountant at tax time. You will see a noticeable difference in your tax returns for the better by having rental properties to write off. Even if a tenant does not pay you rent, you can still win by writing that off for a huge loss.

You can also deduct the phone calls you make to the tenants. Even the wear and tear and gas you put into your car to collect the rents is tax-deductible. It is still wise to form a corporation or LLC and put your investment properties into that entity to shield you from liabilities.

Note: All of your rental properties are continually building you a fortune in equity. Real estate will always appreciate. In some areas properties appreciate 4% yearly and in some hot areas, 25% yearly. Whether you hold on to your rental property for one year, or 25 years, you will be able to sell for a profit in the future. Imagine owning 10 rental properties with $25,000 in equity in each one. If you sold them today you would
have $250,000 in cash. Not only are you making a monthly profit in residual income with rent payments, you are banking a fortune that is building-up in equity. A 25% yearly return in equity is something you cannot get in the stock market or mutual funds.



Cons:

• You must be capable of dealing with different types of personalities. Tenants can be a headache and a hassle, but that comes with the territory. Keep your relationships with your tenants professional and business like.

Your contractors and handyman can test your patience, as well. Set a payment schedule with your contractor and a timetable for completion. You do not want a simple repair job, such as a stopped-up toilet, for instance, inconvenience your tenant for a lengthy time period. Tenants get frustrated and will not want to pay the rent. Some tenants will even look for excuses to not pay the rent, and a delayed repair job can give them that excuse. When something needs repairing, have the work completed within 24 hours. If your contractor cannot accommodate you, look for another. Wasted time can cost you money.

• Just as risky as real estate investing, a real estate investor is speculating for a positive turnover in the marketplace in order to maximize their profits. A real estate investor looks for short term turnover and a landlord looks for long term dollars. Buy wisely and you won’t get stuck in the end with a bad investment.

Choose your property wisely and account for all expenses so that the property does not surpass its income. Have your exit strategy in place for whenever you choose to sell and cash-out.

Note: You have to spend money to make more money, so be prepared to invest in your rental properties. Shortcuts never makes it in this business.

This is an excerpt from the national best selling book Getting the Real out of Real Estate by Carl Agard available online
http://www.carlagard.com/
http://www.adelphipublishinggroup.com/
http://www.amazon.com/
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