The prospect of earning passive income through real estate is certainly attractive, but the investor should be prepared to handle the pros and cons related to it. Becoming a landlord is not a ball game, but a little bit of careful investment will give you financial independence and hassle-free retirement days. The general belief is that passive income is what you earn without doing much work, it is something that comes in from the side. But landlords have their own problems and if you are new in the field, then you need to do a lot of careful analysis before making an investment. Here are some tips that will help you with the analysis:
Is it a good time?
If you are planning to rent your home and earn income through it, then find out if it is a good time to do it. The Joint Center for Housing Studies at Harvard University says that it is now a good time to rent homes. The percentages of people that are renting homes have risen to 35%, as compared to the 31% in 2004. The Great Recession and the subsequent economic problems have lead to a lot of economic problems, forcing people to quit the dream of owning their own home. There were plenty of foreclosures during that time. People who are already steady in their jobs did not have to worry about paying the mortgage, and people who have homes to rent out have benefited from this situation. Reports have come in that around 43 million people have rented homes in 2013.
If you are a family just starting out with young kids, then it would be a great time to invest in a home that will eventually give you rent. Once you have paid off the mortgage, you can earn very good income which would be beneficial when your children enter college. And once that hurdle is crossed, the money would be beneficial for your retirement.
Becoming a landlord calls for responsibilities
If you are investing in a rental income, you are responsible for its maintenance as well. Your tenants may call you for every leaky tap and every missing shingle. Sometimes, you may be faced with a bad tenant who tends to leave behind a trail of destruction while he vacates. If you are sure you can handle issues like this without much of a headache, then you can become a landlord and earn passive income.