Being a landlord has many benefits. Whenever you rent or lease your home to a tenant, you are taking on the role of a landlord. Someone else paying your mortgage while you still hold the deed. A risk is that you have to be willing to lose money or have some negative cash flow for before you start seeing a return on your investment.
Many times, the rent in your area may not be high enough to cover your mortgage payment so this will incur a monthly negative cash flow. For instance, if your monthly mortgage (PITI) is $1500 and the maximum rent you can charge is $1200, then you’ll have to pitch in $300 a month to keep your mortgage current.
You’ll also have to anticipate the following:
Tenants missing or not making their payments
Tenants who trash the house
General home maintenance & repairs
Vacancies while one tenant moves out and another moves in
General home cleaning, carpet cleaning and interior painting between tenants
If you have equity in your home, you may be able to cover the mortgage and all these costs. However, if you have little to no equity, you need to evaluate your budget and determine if you can cover these costs. Most homeowners don’t like the cost or hassle of being a landlord.
Leasing is another option, especially if you want to hold the property long term and can afford any negative cash-flow.