If you’ve never purchased rental property, you may think that being a landlord sounds like an easy way to make a bit of somewhat passive extra income.
While it can be an appealing career option and offers many benefits that traditional jobs do not, it also comes with a unique set of challenges.
So, if you’re considering starting a rental property business, check out this list of the pros and cons of being a landlord that our Prince George’s County property management experts have put together. By the time you’re done reading it, you should have the information you need to decide whether or not pursuing a career as a landlord is right for you.
Pros of Being a Landlord
Added Income Streams
Many people work 9-to-5 jobs in addition to running a rental property business. By doing so, you can give yourself peace of mind knowing that you will still have a reliable source of income if you get laid off or need to quit your day job.
But that’s not the only benefit of having added income streams – often, landlords choose to use their rental property income to save for an early retirement, pay off debts, or spend money on luxuries (like vacations). As long as you’re choosing profitable properties and good tenants, you should be able to reach your financial goals from the added income!
If you’re a successful landlord for long enough, you may find yourself able to quit your 9-to-5 job and fully commit to running your rental property business.
Self-employment as a landlord offers many benefits, including:
- Setting your own work schedule – While you’ll sometimes need to address tenants’ needs at crazy hours, you mostly have the freedom to work whenever you choose.
- Taking time off as needed – Feeling sick? Need to attend a family get-together? Want to take a vacation? Go ahead – you don’t have to worry about being penalized for taking too many days off, as long as you plan properly.
- Being your own boss – Choose the tenants you want, manage your own income, and work from wherever you choose.
Of course, you might feel like your tenants are your boss since they may demand your attention at times, but ultimately you are in control of your career as a self-employed landlord.
Like many self-employed people, landlords can take advantage of certain tax deductions related to their rental property business, including:
- Repairs – Need to pay for painting, plumbing, or some other repair that is your responsibility as a landlord? Chances are, you can write it off!
- Business-related travel – If you’re traveling to fulfill responsibilities for your landlord business, you can deduct your travel expenses. Even if you’re only traveling within Maryland (from Laurel to Takoma Park, for example), those small savings could really add up by the year’s end!
- Home office needs – If you need to buy a desk, computer, or other office necessities, you can likely write those items off. Just make sure you keep your receipts any time you purchase a business-related office item.
Of course, you’ll want to consult with your accountant to learn more about what is tax deductible, figure out what records you must keep to take advantage of tax deductions, and make sure you’re writing off everything you can.
Tip: Check out this blog post to learn about the top 15 tax deductions for landlords so you can make sure you’re saving as much money as possible.
Cons of Being a Landlord
Many legal issues can be avoided by choosing good tenants and learning all of the local, state, and federal laws that apply to you.
However, even the most knowledgeable landlord could be caught off guard by a lawsuit.
Not only is a lawsuit a hassle to deal with – it can cost you a lot of money. That’s why it’s so important to prepare for the worst as a landlord. You should always try to anticipate potential legal issues and actively work to avoid them.
Tip: Legal issues aren’t the only risks you face as a landlord – you also risk losing money if you make bad decisions in relation to your business. If you want to learn how to manage risk as a landlord, check out this blog post.
Maintenance Fees, Insurance and Other Required Expenses
Being a landlord isn’t as simple as paying for a rental property and watching the money roll in. You have to pay for landlord insurance, repairs, legal fees, taxes, and more.
While many costs associated with your rental property business are tax-deductible, some are not. That’s why it’s critical for you to calculate all of the costs you’ll need to cover before you decide to purchase rental property. Otherwise, you could find yourself in financial trouble.
Being a landlord isn’t like a typical 9-to-5 job – you have to be available to address problems with your property and handle tenant requests at any time. For someone who is used to clocking out at a certain time every day and forgetting about work in the evening, this can be quite stressful.
Plus, you gain lots of responsibilities, like learning the laws that apply to landlords, screening tenants, maintaining properties, handling tenant complaints, collecting rent, and more. If you don’t have the time to handle those responsibilities or dread doing so, you may find that starting a rental property business is more trouble than you originally expected.
Hopefully, this blog post hasn’t made you want to give up on your dreams of building a profitable rental property business.
While being a landlord can be challenging, it’s still a great way to make some serious income and take control of your career.
If you want to avoid some of the cons of being a Maryland landlord, like stress and unwanted responsibilities, consider hiring a Prince George’s County property management team like Bay Management Group.
We can help your rental property business prosper by handling your unwanted tasks while making sure you get the biggest returns on all of your investments. If you’d like to learn more, contact us today.