Have you ever pondered how nice it would be to earn some extra passive income from renting out your house? If you think being a landlord means easy money, then you’re in for quite a surprise! Owning a rental property certainly comes with many challenges, some of which you probably won’t want to handle! We’ll cover those difficulties in the rest of this article and give you a great way of unloading a disappointing Indianapolis rental property!
Owning Property With the Purpose of Renting
Does owning property with the intention of renting it out sound enticing to you? Being a landlord can certainly be financially rewarding, but most people don’t know what it actually entails. If you think being a landlord is as simple as: purchasing a property, finding a tenant, renting it out for higher than it costs you, and raking in the profits, then you have a lot to learn!
Transitioning into a rental property owner begins with understanding the local market of your house. The first question you need to ask yourself is if there is actually a demand for rentals in your neighborhood. Not only will this help ensure you find someone to fill your vacancy, but it also lets you be pickier about who your tenant is. Then you’ll actually need to find your tenants by conducting interviews, running background checks, and looking at credit reports.
If you manage to actually find a suitable tenant, you’ll then need to decide if you intend on being an active or passive landlord. If you want to be hands off, you’ll need a property manager to handle any concerns, maintenance requests, and collection of payments.
Even with a property manager, don’t forget you’re legally responsible for fulfilling all of these duties. This is why it is important you find a trustworthy one, or better yet, manage the property yourself!
How is this Profitable?
If you already own your own home, then it is quite easy to see how renting is profitable. But what about when you have a mortgage to pay? Having a mortgage doesn’t necessarily mean you can’t be a property owner, it just means you’ll have a higher minimum rent that you need to charge.
The basis behind making a profit on rental property is fairly simple. You calculate all expenses needed to own and operate the home on a yearly basis. This includes any property taxes, utility fees, homeowner dues, mortgage payments, and anything else you’re required to pay because the property is there.
You’ll allocate this across all 12 months of the year to determine the minimum monthly payment a renter would have to make to break even. From there, you increase the price to whatever you think is fair/someone is willing to pay.
On paper this seems easy, but there are two things this calculation fails to, and simply cannot, easily account for. First, there isn’t a crystal clear way to determine how much the cost of any maintenance or repairs will be. Appliances and furnishings can break at anytime, even without your tenant being neglectful.
Speaking of tenants, they’re the other variable to consider. If you’re lucky, you’ll have a reliable tenant that pays on time every month and never causes any issues or damage to the apartment, but that isn’t always the case.
Being a Landlord Comes With Endless Stress
The harsh reality of being a landlord is that there is a decent chance you won’t have perfect tenants. Whether a tenant has poor intentions or not, when they create issues for you, it makes things uncomfortable. Not only that, but it can get expensive if they cause damage to your home. Not every tenant will be awful, but here are some things to watch out for as a landlord:
- Late Rent (or not at all) – One of the worst things you can deal with is a tenant who consistently pays rent late, or worse, they don’t pay you at all. Not only does this violate the terms of your lease, but it also shows a lack of respect for your boundaries. This is also a quick way to lose any profitability.
- Pets – Whether you allow pets or not is up to you, but you can’t always be sure your tenant will respect that rule. Many people have pets they love and have no problem omitting the fact that they have any. Pets are extremely harmful to any home, as they create a strong smell and often damage furnishings.
- Illegal Activity – When a tenant rents a property, they view it as their home. This often gives them the impression they can do whatever they want. This includes illegal activities, if they so choose. It’s one thing if they cause damage with this behavior, but it’s another altogether if they get caught by authorities and drag you into the mix.
- Smoking – Something you may never be able to fix if it happens is a tenant smoking in your home. Not only does smoke leave an incredibly pungent odor, but it also discolors your walls. Even with new paint and extreme fumigation, your home will never feel the same again.
Unload Your Indianapolis Rental Property Fast!
Transforming your home into a rental property is something many homeowners consider, but there are some good reasons to give it a second thought. There must be a demand for rentals in your area so you can have a healthy pool of tenants to choose from. You’ll also need to find someone with the ability to pay rent that more than covers any costs you have, but this can’t account for any unexpected maintenance and bad tenants.
When you do have tenants, you run the risk of them not paying rent, having pets when you don’t allow it, engaging in illegal activity, and smoking inside your home. Not all tenants will cause you a headache, but you’re always taking a big risk when you let a stranger live in your home!
Owning a rental property certainly can be prosperous, but it comes at the expense of stress and frustration. If you own a rental property in Indianapolis and want an easy way of dumping it, reach out to Ben Buys Indy Homes.
Whether the property is trashed from a previous resident, isn’t as successful as you hoped, or you’re just tired of being a landlord, we can take the rental off your hands! We’ll give you an excellent cash offer to help you recoup your initial investment. Reclaim peace of mind and give us a call today!