So, you want to be a Landlord? It looks pretty easy…doesn’t it?

Back in 2010 and 2011, it was a slam dunk buying investment properties to lease out for future passive income. To make money in Real Estate, you have to buy the property right and the prices were RIGHT back then. My wife and I bought 5 homes in a 14 month period back then. At today’s prices, finding a good buy is tough to do! I’m not buying right now and the ones I find that might be worth considering end up with 10 bids on them which runs the price up way over where I believe it needs to be to make money. You are in this to make money, right?

People tell me all the time they are making $150/month while someone else pays their mortgage via rent. Something tells me they aren’t very good at math or they just don’t have the experience a savvy real estate investor should have. First, $150/month is only $1,800/year in cash flow which is NOT MUCH! I can almost guarantee you it will cost you out of pocket money unless you’re the luckiest person in the world.

I suppose if you never had any repairs, you might turn out OK. If you think the Roof, HVAC , Water Heater and Kitchen Appliances are all going to last the entire 30 years it takes you to pay off that mortgage, I’ve got some bad news for you!

You’ll also need to keep it leased 100% of the time! That’s not likely to happen either. Speaking of vacancies, every time a tenant leaves, you’ll most likely lose a months rent while you SPEND MONEY cleaning up the property for the next tenant. Sure, I’ve had a time or two where one tenant was moving out while another was moving in but that’s a rarity.

And what about the tenant that stops paying? You may have picked a great tenant but life just happens to folks sometimes. Do you have what it takes to evict a pregnant woman whose husband just left her? I know that may be an extreme example but I’m sure some landlord somewhere has had to make that tough decision! If that’s not bad enough, have you ever gone through filing an eviction proceeding? It costs money, it takes time and the tenant doesn’t usually pay during that period of time.

These are only a few of the pitfalls that face an inexperienced Real Estate Investor. If you want to be a landlord, you had better be prepared financially and emotionally and run this like the business that it is! If you can’t do that, you should put your money somewhere else.

If you decide you still want to be a Landlord one day, start studying now so you’ll be prepared when the right time comes along. I never thought I would have the opportunity to participate in a Real Estate Market like we saw in the 1980’s but I swore that if it ever happened again, I would be ready this time and I was lucky enough to have that presented to me after the mortgage meltdown of 2008. And I was ready this time!

I’m always up for a cup of coffee to discuss what I believe it takes for a Real Estate Investment to be successful if you ever want to have a casual chat about it.

#RealEstateRoss #RealEstateAdvisor #Realtor #Sugarland #Houston