Reasons to Become a Landlord…and Reasons Not to
Being a landlord can mean many things. It can be a way of covering a mortgage on your own home, or it can be a full-time profession. Some people fall into becoming landlords through circumstances, while others set out to build their own property empire. However you get into it, being a landlord can be both frustrating and rewarding. How do you know if it’s for you? Read on for reasons why you should, and why you shouldn’t, become a landlord.
Why you should
– Rents are on the rise, and show no signs of stopping. With so many people priced out of the property market and an undersupply of rental property, demand is pushing up rents across the country. If you make an investment now, you are likely to see good returns for the foreseeable future.
– Being a landlord could give you security for little effort. For most, being a landlord shouldn’t take up too much time, but can provide a regular income. Most landlords in the UK are not full-time professionals, but rent out one or two investment properties as well as having a day job. Using a letting agent means that you can be a landlord without making a huge time commitment.
– The risks are relatively low. As long as you buy sensibly and don’t overstretch yourself financially, your property investment is likely to be a sound one. Unlike investment in stocks and shares, you have a tangible asset with an intrinsic value of its own. If you buy with a sizeable deposit, then you should be able to ride out dips in the housing market comfortably.
Why you shouldn’t
– Being a landlord is a big responsibility. If something goes wrong in the property, you will need to deal with it. Even if you have a letting agent managing the property, you will need to make sure that you are contactable at all times – including when you’re on holiday. This is fine for some – but it doesn’t fit every lifestyle.
– There are hidden costs. You must be able to charge enough rent to cover much more than your mortgage. Add up the costs of maintenance, landlord insurance, possible void periods and tenant arrears. Can you still make a profit once you take these costs into account?
Being a landlord is not just an investment decision, but a lifestyle choice. It can be a great way to make money and can sometimes be good fun too. But before taking the plunge and getting that buy to let mortgage, make sure you’re not making a decision you might regret.