Some people might think that being a landlord is a great way enjoy a passive income stream, where once you’ve outlaid some capital to fund part or all of a property, you can just sit back and take the money.
In reality, unless you’re a property mogul with a string of properties under your belt and a team of people who do the dirty work for you (believe me, it can be very dirty), being a landlord can be a right royal pain in the backside. Not to mention a drain on your pocket.
My husband and are currently renting out our former home and have done so for the last few years. We relocated to be closer to my husband’s work and because at the time our house wasn’t worth much, we couldn’t sell it, hence the reason for renting it out. Now, it’s increased in value a little, but we’re still struggling to get the sale that we desperately want!
In this post, I’ll outline some of the reasons why we can’t wait to see the back of our time as landlords – and why, if you’re thinking about becoming a landlord, you should seriously consider whether it’s worth the hassle.
There are so many factors to consider, not least the type of tenant that you might get. I’m not tarring all tenants with the same brush either – there are great ones and I’m also a tenant! Take a look at these considerations below:
The phone calls
Everytime I see my tenant’s name flash up on my mobile phone screen, my stomach sinks and I answer the call with dread. Usually, when a tenant rings you, there’s a problem. Unless you know your tenant very well, they’re probably not going to be phoning you for a friendly chat.
The amount of times your phone will ring depends on two things. How many problems your property actually has and how “needy” your tenant is. My last tenants were of the particularly needy variety. I had phone calls about door handles coming loose, cupboard doors sticking, who they could use to trim the hedge and other little things that they could have sorted out themselves.
Yet, they didn’t phone me when they wanted to put up a photo gallery wall in the living room using 20 nails which meant that we had to fill holes and repaint the walls when they left. 🙁
It’s not the tenant’s property – and they know it
As much as you might get a happy tenant who loves your property, there is a chance that they aren’t going to treat it like their own. They’re not always going to take their shoes off when they enter the house and because the house isn’t their own home, they’re probably not going to spend too much money on it.
I can vouch for this from a tenant’s perspective because I haven’t spent much money at all on the house we’re living in. I do like the house but I’m not going to throw money away when I need to save up for a deposit to buy a house of my own. I imagine lots of tenants could feel the same way.
From the landlord’s view though, there’s nothing worse than going into a rental property and realising how much work needs to be done. Because rental time does equal wear and tear.
Over time, money will need to be spent on general maintenance jobs. This is the best case scenario. If you get a tenant that really doesn’t give a crap about your property, you could see your house trashed and a lot of financial consequences as well.
In addition, not everyone will have the same standards of cleanliness as you’d like. Our last tenants were “surface cleaners”. The house looked clean and tidy upon inspection, however after they’d left we noticed mould around the window seals, blinds filled with dust and marks on the paintwork.
Even if you don’t have a mortgage on your rental property, there are regular costs to take into account during the course of the year that will eat into your profit.
You’ll need to pay for landlord insurance to protect yourself in case your property is ruined through fire, water or vandalism. If you’re renting out a property through an agent, there will be management fees to pay which could add up to around 10% of your monthly rental income.
Then there are annual gas and electrical inspections to pay for each year. If you do have a mortgage on the rental property then you may also have to pay an annual fee just for the pleasure of renting it out.
There’s also the dreaded tax bill. Depending on your earnings, you may have to pay tax on your profits, less any expenses.
As well as general maintainance costs and regular expenses, there will be times when something awful happens like if the heating breaks down or there’s a water leak. Those times usually mean big bills.
We’ve been lucky so far, we’ve only had one really bad problem which no-one could have foreseen. A pigeon got stuck down the chimney and the gas fire had to be disconnected and removed in order to get it out. Otherwise the poor bird would have no doubt died and rotted in there!
The law sides with the tenant
I’m referring to my experience in the UK here – basically the landlord doesn’t really have many rights when it comes to evicting tenants. There is a court process that needs to be followed and that can take up to two months and of course, it will cost money.
For example, if a tenant doesn’t pay rent and they are in breach of contract but they won’t leave, the landlord can apply for a possession order and then to bailiffs to remove them from the property. But all this takes time and if no rent is being paid during this period along with court fees on top, this situation could turn into a financial disaster for a landlord.
Imagine if such tenants decided to trash the place before leaving too? Doesn’t bear thinking about does it? Sadly, this does happen and all too often.
Research the facts around landlord law and rental agreements
If you’re thinking about becoming a landlord, you should make sure you know the law around tenancies before going ahead with any agreement. We didn’t really think about this until after we’d rented our house out and so far we’ve been lucky that we haven’t had to evict a tenant.
In hindsight, it’s much better to learn about your obligations for becoming a landlord well in advance of actually doing so. In the UK for example, there are certain rules that you must abide by when renting out a property. These include making sure your tenant’s deposit is protected in a government-backed tenant deposit protection scheme and you must give your tenant plenty of notice if you intend to access the property.
Becoming a landlord isn’t a decision that you should make lightly in our opinion. But I’d love to know what you think about this topic? Tell me your thoughts in the comments below…