So You Want To Be A Landlord?
It's not as passive as you think.
“I want to be a landlord. I’ll collect rent from my tenant to cover all of my carrying costs, and then some. It will be a super easy way to earn extra income.” Perhaps you’ve heard someone say something like this. Or, maybe you’ve thought about becoming a landlord yourself.
But, before you do this, you might want to think again. Although everyone loves the idea of passive income, becoming a landlord is not as passive as you might think. Think about it this way: When you own and maintain a property, you are opening and running a business. And, just like any other type of business, becoming a landlord has its share of challenges.
Consider the following:
For starters, you should be aware that there are federal and state mandated laws on how you can advertise your home, select a tenant, and handle the security deposit. There are even standards you must adhere to when it comes to the physical condition of the property you are renting out. Massachusetts tenant and landlord laws lean heavily in favor of the tenant. This means that if you are the landlord and do not follow proper protocol, you open yourself up to liability and financial penalties. For example, if you improperly handle the security deposit, you put yourself at risk of potentially owing triple damages and attorney's fees. Here’s another common issue faced by landlords: If your tenant stops paying rent and refuses to leave, you may have to go through the court system to evict him. This typically takes a minimum of three months. And, you could be collecting rent from another paying tenant during this time!
Common questions about being a landlord
When evaluating whether you want to rent out your property, consider these common questions and answers:
I don’t want kids under six living here because my property is not de-leaded. Can I say no to an applicant because he has children?
Can I require an interview with any potential tenants, and reject an applicant because I have a bad feeling about them?
If my tenant stops paying rent, can I keep his security deposit?
The short answer to all of these questions is no.
I know the challenges and want in! How do I get started?
Now that I’ve laid out the challenges with renting out property, it’s important that you understand that - if done right - renting a home or apartment can be a great source of extra income. And, with the right approach, you can be a successful landlord.
To learn more, it’s recommended that you talk to a real estate expert who can help you find an investment property and/or navigate the do’s and don’ts of how to rent your current property.
Do you think you want to be a landlord? Let’s go!