Landlording


Whenever you rent or lease your home to a tenant, you are taking on the role of a landlord. Landlording certainly has its pros and cons, the biggest pro is that you have someone else paying your mortgage while you still hold the deed. The biggest con is that you have to be willing to lose money or have some negative cash flow for a number of years 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 happen to have a lot of equity in your home, you may be able to cover the mortgage and all these costs too. However, if you have little to no equity, you may want to evaluate your budget and determine if you have the means to cover all of these extra costs. Most homeowners don’t like the cost or hassle of being a landlord so this isn’t usually one of the top options people like to consider.

Depending on your particular situation, leasing could be an option for you, especially if you want to hold the property long term and can afford any negative cash-flow short term.