A foray into the world of investment property ownership can seem like the easiest thing in the world to a would-be landlord. But in reality it is a lot of hard work, and there are many new landlords who find that they are in over their heads. If you feel you may be in this boat, know that you are not alone. However, it is important to identify when you have bitten off more than you can chew so that changes can be made.
Signs that It’s Just Not Working
- There is no profit – this is an issue that’s pretty self-explanatory. You need to make money, not just break even, for an investment property to be worth your while. There may be months here and there when you have more money going out than coming in. But at the end of the year, it has to work out so there is something in it for you. If you have a year in the red, it doesn’t necessarily mean you need to immediately abandon ship. But you do need to invest some serious time into figuring out what’s not working.
- The house is costing you too much time and money – this is linked closely to the issue of profit, but it stands alone as well. If your investment property needs constant maintenance and you are spending all of your time over there, then it’s too much. The cons are going to quickly outweigh the pros. Sometimes a home from an investment standpoint can just be a lemon, even if it is perfectly suitable for purchase as your own residence. You just need to have different priorities with an investment property and know when to walk away.
- The property market is going downhill – you need to be able to rent your property while the market is high to make a decent profit. You also need to be able to turn a profit when you decide to exit the rental market. If there are signs that you will not be able to do either of these things in the near future, you may want to cut your losses and escape sooner rather than later.
Of course, there are solutions that could help you deal with all of the above. You need to start carefully considering your options. If you’re having more of an issue with time than with money, hiring a property manager might be an option. Others include reassessing your rental rates, investing in software to help you get organized, or finding a partner who will help you handle the load.
Are there any other signs that you’ve experienced in your career as a landlord that make you wonder if you're just too far over your head?
Comments(3)