The Benefits and Risks of Being A Landlord
Reality Check √
Landlord and Tenant Law
Unit 1 – Written Assignment
February 7, 2012
What Are The Rewards of Becoming A Landlord?
Owning rental property offers many financial and lifestyle benefits. The number one reward and benefit of being a landlord and having rental property is you own the property. As long as you are not breaking the law in the process, it is yours to live in, enjoy, freely and rent to whomever you chose as long as you follow the law and do it legally.
Many have amassed a fortune in property rental. Even in this economy, if you hold onto your property long enough, it will almost always appreciate in value. It can be a guaranteed way to increase your net worth, through increased property value.
Well managed investment/rental property can be a great source of income, with tenants who pay on time. If the monthly expenses are less than the rent, it can bring the landlord a reliable source of income to enjoy many pleasures in life.
With today’s economy and work place uncertainty, if you're laid off from your job or if your health is unstable or failing, your rental property can become your salary or your primary source of income. Being a landlord and owning an investment/rental property can give you income making option that can serve as a buffer or cushion in the event you lose your job or have to stop working because of an illness or your health.
Unlike most investments, real estate/rental property is considered to be a relatively low risk investment. A landlord can almost always expect to see a return on their investment. The stock market can deteriorate, disappear or crash leaving you penny-less. However the land and property are typically permanent or forever and won't disappear and consequently, will always have some form of value.
Owning a small piece of property and maintaining a good credit rating will allow a landlord/property owner to trade up or purchase a larger piece and more profitable piece of income property enabling the landlord to increase their earning potential. Unlike other investments. You can use a portion of the value of your existing property to make a down payment on another piece of property.
If you decide to become a property owner, be it a rental or single family property, the tax breaks available, short and long term, in most instances, are excellent. A landlord can deduct almost all of the expenses related to owning and maintaining the property on their annual income tax in addition to mortgage interest, insurance, repairs, and property upkeep. They can also include other business expenses, such as phone calls, office supplies, and accountant and lawyer fees
The IRS is very kind. Even if your property quadruples in value, the IRS won't expect the landlord to pay taxes on the value of the property until the landlord decides to sell. If that is the case, if you have a good tax accountant (s)he can maybe help to decrease any tax liability you might have.
In a good case scenario, being a landlord can be a part-time commitment. Usually if you own just one piece of property, you can probably handle the commitment in your spare time, while still working a regular job. You may be able to do some of the smaller maintenance jobs yourself on your days off and leave the more complex and time consuming jobs to certified contractors and experts. In some instances, if the income is there or if the landlord desire to take on the expense, the landlord may opt to hire a property manager freeing up substantial time, though it may take away from the landlord’s overall profits.
What Are The Risks Of Becoming A Landlord?
There are numerous risks and disadvantages in being a landlord. All of which can be the evaluated according to your circumstances which may be limited to a few or many.
One inconvenience and...