I was talking with my brother the other day and the conversation moved towards real estate. My brother had a unique opportunity to buy his own house when he was in college. He lived in a fairly affordable area of town and spent the last two years and then two years in graduate school fixing up the house.
Before he knew it, it was time to move and because the market had just crashed, he opted to turn it into a rental property and earn some money from rent. It has been a few years since he made his decision, so I thought I would ask him about his experience. As it turns out, he isn’t happy with it. He hates being a landlord and wants to get out of the property as soon as it means not taking a huge loss on it.
Traits of a Landlord
In talking with my brother and hearing his dissatisfaction, I realized that there are certain characteristics that make someone more likely to enjoy being a landlord (or a successful landlord). Here are some of them:
There is nothing more stressful than having to pay an extra mortgage payment if you don’t have a large enough cash flow to cover for a vacancy. While my brother does okay, they recently went down to a one-income family. I can’t imagine how stressful that would be. Not only do you have the regular maintenance costs and mortgage, but you also need to make sure you have liability insurance and are covered from any lawsuits. These things costs money – it’s that simple.
Enjoy Staying Busy
Some people enjoy working a 9-to-5 job and then coming home to watch TV or do absolutely nothing. Others, like me, love to keep working on something productive. I don’t necessarily mean a workaholic, but something similar to that. If you are a person that enjoys his/her free time, being a landlord may not be the best fit for you. It takes time to manage a property and deal with the day-to-day things. If you are type of person that likes to keep busy, this may be the perfect fit for you.
Talking with my brother about his experience as a landlord made me realize why not that many people invest in real estate. If you are thinking about real estate, you need to do two things. The first is make sure the numbers add up. Is it going to earn you a nice profit? The second thing is make sure that it is right for your personality. It’s not for everyone and that’s okay.