FINANCIAL FOCUS: 4 Things You Didn’t Know About Becoming a Landlord
Owning rental properties is an income generator for many, with more and more people breaking into the landlord game all the time. If you’re like most people, you may be interested in beginning that journey but unsure where to start, which is why we’ve given these four fast things you didn’t know or perhaps hadn’t considered for becoming a landlord.
- It’s more affordable and not as complex as you think. There are a range of options for purchasing a rental property, and a skilled mortgage loan officer can point you in the right direction. Know that some mortgage loan products may be off the table because they don’t allow for the purchase of rental properties, and other conditions could vary depending on the loan type you opt for.
- A trendy solution for those looking to invest in a home for themselves while knocking out student debt is purchasing a multi-family home. This may take a bit of cost/saving analysis on your part, in order to calculate expenses, such as maintenance and any needed reno-work. Consider also your mortgage payment and what you’d like to spend each month – know that any seasoned landlord will tell you to NOT depend on rental income to make any mortgage payment, but with serious vetting you hope to land a happy, cooperative tenant.
- You don’t have to be a handy man to own and operate rental property – property management companies exist to do that for you. You’ll want to seriously vet and choose a property management company the same as you would individual contractors on any other job. Go to your choice of search engine and type in “Property management companies near me” and start prowling the internet for what your area has to offer. Don’t let your fear of home maintenance hold you back.
- Which brings us to our next subject: income tax. Rental income is taxable, and that being said, there are some potential tax advantages to becoming a landlord, like deductions for some expenses and improvements on the property. Speak to your tax advisor about what is considered rental income and deductions.
While breaking into the landlord game is a big first-step, fiscally-speaking, KECU is here to give you the support you need to own it. Give us a call to find out more about lending options.