If you have some money burning your hole in your pocket, you know that the worst place to leave it is your bank account. If you’ve scored a big bonus, inherited some money from a dearly departed relative or simply saved up a sizable nest egg in your savings account it behoves you to find somewhere responsible to put it. Leave it in your bank account and it’ll all fritter away before you know it. But what to do with your money? Other than investing it in pretty things, of course? Stocks and shares can be a huge headache. And can we just steer clear of cryptocurrency altogether? They say that property is still the safest place to put your money, and they’re (broadly speaking) right.
However, while the idea of being a landlady has a certain romantic ring to it, there are certainly pitfalls when it comes to growing your money through property investment. For example…
A good deal starts with the right homeowner loan
Unless you someday develop a sizable property portfolio, your investment property won’t give you enough to live off. It’s simply a side hustle to guarantee you a little extra income every month. And how much you get depends on a number of factors. It depends on what you charge for rent, of course, but it also depends on how much your mortgage payments are. Which is why you need to be aware of all the deals out there to save money on an investment home loan. This will help ensure healthy profit margins from day one.
Do you know what your responsibilities are?
Many new landlords quickly realise that there’s really no such thing as passive income. A landlord has responsibilities to their tenants which you are legally obliged to meet. While these vary by country and state, you are responsible for maintaining the home and keeping it safe and habitable. And you’re liable for all costs incurred in doing so. Make sure you know your responsibilities and can realistically commit to them. Which brings us to…
How much will you be able to do yourself?
If you’re the kind of lady that comes alive when she gets to open her toolbox, roll up her sleeves and get stuck in, you’ll likely be able to handle most of the routine repairs and maintenance that come with running an investment property. But what about more complicated matters like electrical and plumbing mishaps? Do you have a good relationship with a contractor who can carry out these kinds of repairs and upgrades?
A letting agent can help shoulder a lot of this burden and handle the day to day management of the property from showing prospective tenants around to drawing up a legally enforceable contract to carrying out background checks on tenants and engaging contractors to carry out repairs and maintenance work. However, be advised that they’ll expect a portion of your monthly rental income for their services.
Being a landlady can be a great way to grow your wealth while giving you more free time to do the things you’re passionate about. Just make sure you know what you’re getting yourself into.