At least 5 good reasons to be a landlord
- People will pay you to live in your property
- You can borrow money to buy a property, and people will pay you to live in your property
- The interest you pay to borrow money to buy a property is not taxed, and people will pay you to live in your property
- Depreciation keeps some of the income you receive from being taxed due, and the interest you pay to borrow money to buy a property is not taxed, and people will pay you to live in your property
- Someday, you can sell the property after it is paid off or the debt reduced while, depreciation keeps some of the income you receive from being taxed, and the interest you pay to borrow money to buy a property is not taxed, and people will pay you to live in your property!
Become a Landlord!
Remember that day in Kindergarten when the teacher asked what you wanted to be when you grew up? You said “Landlord”, right? Of course not, it might be possible that no one has ever said that. Occasionally, an entrepreneur might carefully craft a business plan to build and operate a residential rental business.
More often than not people find themselves being landlords with little or no planning. A home is inherited, a job transfer and a home that does not sell, a misplayed foray into “flipping” or households combining resulting in an “extra” home, how ever it happens, it is not unusual at all for people to back their way in to being landlords. Thus the accidental landlord is born.
The accidental landlord’s path is often a rough one. The three T’s of being a landlord, (toilets, trash and tenants) can be a grind. In the beginning it might sound easy enough. Often the accidental landlord had been a tenant themselves at some point. They remember paying their rent – always on time, being afraid if they paid late they would suffer the wrath of their landlord, or having to pay a huge late fee. As tenants they kept their units clean, did their own maintenance and would only call the landlord for an absolute emergency such as a natural gas explosion!
Imagine the accidental landlord’s frustration and surprise when they learn not all tenants are as responsible as they were. Roofs leak, pipes leak, toilets leak, windows break, ceilings fall in – all things that could be repaired, if only the tenant would call and tell you. Or, tenants call/text/email everyday – paint peels (Is that lead paint?), the heat is out (Is the thermostat on?), the AC is out (Is the thermostat on?), the storm windows rattle (Is that normal?), the furnace filter needs changed (my doctor says I have allergies, is there mold in here?) and on and on. And, then the real horns of the maintenance dilemma poke you – do your own – or – hire it done. Hiring it done is professional, but expensive. A landlord’s time is free, so spending evenings and weekends maintaining the properties is more like a hobby. Ideally the accidental landlord will begin to look at their rental properties as more of a hobby before it turns into a complete wreck.
Can I pay someone to manage my rental properties?
Sure, you can! In Ohio a landlord has very specific choices to find someone other than themselves to take care of their rental properties. And, what a great way to make money; just sit back and wait for the rent checks to come in.
Again, in Ohio there are laws that describes how other people can manage your properties. The laws exist to protect property owners. Other people collect rent for you and spend money that is yours; what could go wrong? Bad experiences long ago, led the State to regulate how other people handle your money. Here are the basics.
- Of, course as the property owner, you can collect and spend money, negotiate lease terms with tenants, advertise your property and contract for repairs.
- Property owners can have and employee someone to do all these things too. At year end, the employee must receive a W-2.
- If you hire someone, and they are not your employee, to rent your property and they negotiate leases, or collect rents for you, they will probably be required to have a real estate license. The real estate agent will work for a real estate brokerage, and all on the business related to managing your property should be conducted through the real estate brokerage.
Part of the reasoning behind Ohio setting laws requiring non-employed property managers to have a real estate license is Ohio controls who can have a real estate license. Ohio real estate brokers and salespersons must complete specialized education and successfully pass exams to obtain a real estate license. They are experts in their field and apply their expertise when managing your property. In addition, Ohio real estate licensees are held to a higher standard. And here is the kicker, the State of Ohio makes it a condition of having a real estate license that the State can come to the real estate company’s office, at any time, to examine their financial records. The State reserves this right to check and to make certain your money is being handled properly.
Someone who tells you they can manage your property who is not properly licensed by the State of Ohio lacks this oversight. Ohio takes this responsibility seriously. People who manage property for others and are not properly licensed can be fined up to $1,000.00 per day per occurrence! That can add up quick.