Tired of Being a Landlord? Here’s What To Do Next
Being a landlord can be lucrative and rewarding. The financial gains, tax deductions, and asset appreciation of a rental property are all major perks. But being a landlord has some major downsides, as well. Here are six reasons being a landlord can be a headache and what to do about each.
1. Renovations add up
According to Business Wire, 61% of landlords say maintenance issues are the biggest pain point. As properties age, they need a little more upkeep and maintenance. On top of that, at some point every house needs a major overhaul and renovation. There could be plumbing issues or roof leaks that you have to take care of. Natural disasters hit and you may be on the hook after the property is faced with fire or water damage. There could be modifications you need to make to stay up to code. All of these take a toll on you and affect your bottom line. Suddenly your investment seems more like a sinking ship.
What to do about it: Take a hard look at your operational overhead. What was your total carrying cost for the past few years, including all maintenance and upkeep, and how much rental income did you take in? If expenses surpass revenues during this time, only a massive appreciation of the house’s value can offset your loss. Consider whether it might be worth it to sell the house and use your net proceeds in a more beneficial investment.
2. Tenant issues
Being a landlord means dealing with tenants. In an ideal world, you have good tenants who require minimal attention. But just one bad tenant can be a nightmare for even the most patient landlord. You know, the ones whose rent is always late (if you’re lucky enough to get a payment at all). Dealing with this type of tenant can lead to lawyers and collections in order to recover your income. Additionally, there could be tenant disputes, noise complaints, or other violations that make your job difficult.
What to do about it: Are the financial benefits you get as a landlord worth the stress of dealing with tenants? Today’s landlords can get around direct tenant contact more than in the past via online rent payment and tenant management software. But only to a point. Assess whether you can resolve tenant issues while remaining a landlord, or whether they are an inevitable constant of the job. If it’s the latter, you might want to consider selling the house and getting out of the property management business.
3. Staying informed
Before becoming a landlord you may have dreamed of sitting back and collecting rent checks. But you know that’s not how easy it is. You have to stay informed and up-to-date about all property legislation and laws pertaining to landlords. You want to be aware of any state or federal policies that could affect you, so you can limit your risk of lawsuits or unruly fines. All of this takes time and effort.
What to do about it: There is no easy way to get around this: if you want to be an effective landlord, you need to be informed. Thankfully, there are a lot of great online resources to help you stay in the know (including the Sundae blog). Above all, pay attention to the local market where the property lies. If the neighborhood goes downhill, no amount of information will help you avoid the negative impact on your business. Keep track of the national housing market, too, as it can signal rent changes coming your way.
4. Time commitment
Maybe you became a landlord because you thought it was a perfect way to spend your retirement. Easy money right? Think again. Being a landlord requires a time commitment, and it’s not always on your time. Tenant issues can arise at any time. If you don’t have a property manager, guess who’s getting the call at 3 a.m. when there’s an emergency? Yep, you.
On top of that, if you want to avoid issues with tenants you have to make the time to screen them properly and do your due diligence. If there is a vacancy, you need to make the time to market your property. All of these things can chip away at your free time and can require a huge investment of your time. Time is a finite resource — one that you cannot get back, so ask yourself how much time are you really spending on all of this and is it worth it?
What to do about it: Consider working with a property management company. A property management company can take on the role of intermediary between you and the tenant, while also dealing with the daily management of your property. Unfortunately, property management companies aren’t cheap. You will need to determine if the cost is worth the financial tradeoff.
5. Dealing with difficult situations
As a landlord, it’s not an ‘if’ you will have to deal with difficult situations, it’s when. No landlord is immune from troubles. There can be tenant disputes that you have to resolve. You might have to be the bad guy and tell a tenant something they don’t want to hear. Worse yet, you may have to evict someone, which is no fun. You must be able to withstand a lot of these difficulties to be a successful landlord. But at some point you may grow tired of always putting out fires.
What to do about it: As mentioned above, you could consider using a property management company to take these decisions out of your hands. But it will come at a cost to your bottom line. You could also use a tenant management platform. But this will take time, money, and it won’t completely eliminate the need for dealing with tough situations. You can also do more to prevent these situations by improving tenant screening and shoring up your policies in writing. But regardless of what actions you take, complicated problems come with the territory of rental management.
Where you are a landlord also matters. One day the neighborhood may be hot, but in a few years, it’s not. Pay attention to what’s going on in your local market. If conditions head downhill, even the most experienced landlord may be in for tough sledding. In California, for example, the laws favor tenants over landlords.
What to do about it: Watch national and local real estate trends closely for signs of a downturn. It could be time to swap out your rental real estate and use the appreciation to your advantage by scooping up property in a different state.
What to do if you’re tired of being a landlord
Forbes recently noted that “rental properties are usually accompanied by short-term tax benefits and long-term growth, but due to the pandemic leading to a rise in property value, most landlords are thinking it might be time to sell.”
If you’re feeling stuck and tired of being a landlord, the good news is that you have options. Of course, if your property is market ready you could work with a real estate agent. But going this route requires some caution as many Realtors have very little experience. Not only that but the fees could set you back six percent.
What if the property is not market ready though? You might be overwhelmed by the idea of renovating everything or feel forced into selling at a steep discount.
Further reading: Should I List a Damaged House on the MLS or Sell it Myself?
Instead of doing that, Sundae is here to help you get the best return on your property. If your home is not market ready but you want to release the responsibility of being a landlord, you can work with us. We’ve seen time and time again people getting small returns on their property and we want to change that. In our world, the seller comes first and we want to provide the most financial value.
To help make this happen, we offer a cash advance of up to $10,000 for eligible sellers to help with moving expenses. If you need any advice or want to talk through things, get in touch with us. We’re here to help.
If you’re feeling tired of being a landlord and you want to sell as-is, we can help you. If you want to sell your property now in preparation for an economic downturn, we can help get you the highest price out there. You don’t have to be stuck in a job like being a landlord forever if you don’t want to. And you don’t have to be shortchanged either, with the help of Sundae.