Acquiring and leasing out rental income property can be quite lucrative. However, as soon as you decide to become a landlord, there are many things about which you should be aware:
- Income: A major reason for becoming a landlord is to receive a check every month. Hopefully that check covers the mortgage, pays the expenses to maintain the property and also provides a positive cash flow, all while your equity continues to increase.
- Tax deductions: You can get income tax deductions for: repainting, replacing damaged furniture, property maintenance, building and contents insurance, accounting expenses, cleaning and gardening, professional services, and depreciation in the form of ordinary wear and tear.
- Long-term security: While renting out a property, you are most likely not only going to receive an ongoing income, but hopefully an appreciating equity value.
- Flexibility: Being a landlord is like owning your own business. You thus have flexibility in the amount of time that you need to devote to it. You are able to make your own decisions on costs, contracts and the like.
- Taxes: While you will receive some tax breaks, you may still end up having to pay tax on the rental income.
- Your money is locked up: Rental property is typically intended to be a long term investment. You are going to have to pay for any repairs on the home, which may be money out of pocket, if rental income is inadequate.
- Unexpected expenses: Some of the expenses that you may incur are: tax on rental income, gas safety certificate, energy efficiency certificate, repairs and maintenance, landlord insurance, furniture and decoration, etc.
- Emergencies: There are also always going to be certain unexpected things that are going to happen, for which you may have to come out of pocket. Some examples are household emergencies, such as burst pipes, lost keys, or broken hot water tanks.
- Small maintenance issues: While you may think you can fix them yourself, you may still have to deal with tenants who may stress out Over such matters.
- Legal issues may arise. It is important that you keep up to date as to property laws. You may wish to consult with an attorney as to such matters.
- Time constraint: There are going to be times when you have to respond to tenants needs, even if it is not that convenient. You will have to field calls from them, and make sure that you are taking care of any issues as quickly as possible.
- If you have ever lived in the home which you are now renting to others, you will need to let go of any connection you may have to the home, and accept the fact that your tenants are likely going to change it.
Deciding to rent out a home makes you a landlord. There are going to be both advantages and disadvantages of assuming such role. Before you decide to rent out your property, it would be a good idea to seek the counsel of an attorney who will be able to explain to you what is involved in doing so. At Simon Law, your Las Vegas real estate attorneys, we can help with all of your real estate needs. Call us today at (702) 451-7077.