Have you thought about owning rental property, but you’re nervous about being a landlord? Sometimes lack of money and opportunity aren’t what keeps people from investing in buy and hold real estate. Sometimes people are just downright afraid to be a landlord. But fear shouldn’t stand in your way of doing anything in life, let alone being a landlord. Following are the most commonly cited fears about owning rental property, with solutions that will hopefully make you rethink your beliefs about what the landlord experience is really like.
Not Having the Right Personality
You may feel apprehensive about being a landlord if you think you don’t have the right personality for it. If you’re a natural worrier or tend to assume the worst in every situation, you may envision a future of sleepless nights and chronic stress.
You shouldn’t need to make massive changes to your personality in order to make money from real estate rental investing. But it does help to reflect on the underlying causes of your worrying. Studies have shown that people who worry about things that haven’t yet happened often do so because of fear of the unknown. Learning more about how real estate investing actually works—and specifically about the unique benefits of turnkey rentals—may help to alleviate your fears.
Perhaps the biggest fear that people have about being a landlord is being sued. You may be imagining all kinds of horrible scenarios ranging from paying out of pocket for someone else’s misfortune, or ending up penniless due to a huge lawsuit claim.
If you’re already a homeowner, you know that you could be held liable for injuries and accidents that occur on your property. That’s why you carry homeowner’s insurance. If you get a third party claim from someone who’s injured on your property, the liability coverage of your homeowner’s policy will usually kick in – if the injury was caused by negligence on your part. The same holds true for your rental property. You’ll be carrying property insurance as well as some other insurance specific to rental property ownership. This insurance coverage is designed to protect you and your assets in the event of a claim.
Lacking the Proper Skillset
When many people think of what it would be like to be a landlord, they picture themselves wearing a tool belt, hunched over a broken something or other, trying to look like they know what they’re doing.
While some landlords do try to “play handyman,” it’s safe to say that most landlords are very willing to let the experts be the fix-it men. This is especially the case when you buy and out-of-state rental property. When you buy a turnkey rental from MartelTurnkey, your out-of-state rental repairs and maintenance are taken care of by your property manager. So you can leave the tool belt at home and rest easy knowing that no handyman skills are necessary to be a landlord.
Another big fear that people have about owning rental property is losing money. What if the tenant stops paying rent or simply vacates the property in the middle of the night? What if you can’t pay your mortgage on the rental, or the whole real estate market comes crashing down?
As far as investments go, real estate is a very safe bet. Rental property in particular is considered a very low risk investment. Unlike stock, the value of real estate never goes to zero. Technically, even if your rental property burned down to the ground, you’d be reimbursed by your insurance company, plus you’d still own the land to rebuild. Now, things do happen with real estate just like anything else, but there are always ways to handle any situation that arises. If your tenant stops paying rent, your property manager can begin eviction proceedings. This ensures that you can get a new, paying tenant in as soon as possible. The same thing happens if the tenant vacates in the middle of a lease term. As far as not being able to cover the mortgage, you could buy what’s called “rent loss insurance” that’s designed to cover just such scenarios for landlords. You could also just make a practice of keeping the equivalent of at least one mortgage payment in reserve, to cover yourself in this event.
Messing Things Up Out of Ignorance
Personal ignorance also plays into people’s fear about owning a rental property. What if you buy a bad piece of property or you pay too much for it? What if you mismanage it and you lose your investment due to not knowing what you’re doing?
If you’re fairly uneducated about real estate, then by all means you should learn more before buying a rental property if you plan to do it all by yourself. Not understanding where to buy, how to choose a rental property or how to manage it can indeed lead to massive loss. However that’s why buying turnkey rentals from MartelTurnkey is a smart strategy; particularly for investors who don’t know or don’t have the time to learn all the nitty gritty about investing in real estate. When you buy from MartelTurnkey, you know that the property was bought in the right place at the right time, for the right price. Your rental property cash flows from day one, giving you the peace of mind of knowing you made a wise investment.
Lacking the Funds to Maintain It
Another common fear is lacking sufficient funds. Suppose you can’t maintain the rental property? You’re probably already aware that homeownership requires regular maintenance and upkeep. What if your rental needs something major and you can’t afford to repair or replace it?
There are definitely repairs and maintenance costs associated with owning any kind of real estate, including rental property. But again, buying turnkey rentals through MartelTurnkey offers advantages in this area, too. First of all, when we seek properties to buy, we give preference to homes with solid roofs and HVAC systems. This helps to ensure that we get good value when we do purchase, so we can ultimately pass on savings to our investors. Second, we do a full rehab on all the properties we buy. This includes taking care of the major repairs and replacements as well as the smaller details like trim and painting. So when you take possession of a MartelTurnkey rental property, it will be in the best possible condition. Over time, repairs and maintenance costs will come up. We recommend that you keep a few months of rental income on reserve, in an account that is easily liquidated, to take care of these expenses.
Has fear been keeping you from being a landlord? If so, you’ve been missing out on one of the most effective wealth-building strategies that exists today. Hopefully this article has addressed your biggest concerns about being a landlord and you feel more comfortable with the idea. If you have any other questions, or would like further information about the benefits of MartelTurnkey rental properties, please contact us today.