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Being a landlord entails a great deal of responsibility as well as – at least initially – costing a lot of money. Yet many people still choose to do it, and a lot of them make money. It might be something you are contemplating for your own career path. Is it, however, financially worth it to become a landlord?
For some, it’s not a career they chose, but one they fell into (perhaps after inheriting a house or being unable to sell one), but that doesn’t mean they won’t actually see the benefits of being a landlord eventually. Let’s take a closer look to see if becoming a landlord is something you should be.
Long Term Security
Being a landlord and renting out a property can offer a continuous income that can be saved for a pension (depending on specific requirements, your tax status, and contribution limits) or for a “rainy day.” Not only that, but if your living condition changes, you could always live in the home yourself (as long as you don’t violate any contracts made with renters).
Is becoming a landlord right for you, personally?
In other words, if you’re looking for something that will offer you a long-term, mostly passive, income, being a landlord could be just right for you. At the very least, you can sell the property once you have paid off enough of the mortgage to make it worthwhile. Even if you employ a property management service to help you (something that is recommended for peace of mind and to make being a landlord easier), the cost of paying them will be a good investment when you consider the overall income you can make.
Tax Benefits
Another advantage of becoming a landlord is that you can deduct your rental property from your taxes. Some expenditures, such as advertising, could well be deducted in whole, while other deductions are dependent on the proportion of your property that is leased out. Heat, hydro, water, and house insurance are examples of typical costs which might be deducted.
In this way, your profits can grow quickly. Even if you’re not making too much on top of the amount of mortgage you still have to pay each month, when you add in how much you can save in tax benefits, you may look at the money you’re making a little more favorably.
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It’s A (Mostly) Passive Income
Passive income is usually described as a stream of money generated with little or no continuing work required by the person receiving the passive income. Passive income is, in other words, income that is not proportionate to the amount of time spent physically earning the money.
For many people, earning an income without putting any – or much – work in would be the ideal way to live. It would give them the time they need to spend with family, participate in hobbies, or even work on another business. Although being a landlord isn’t a completely passive income, if your tenants are happy and no repairs need to be done, it can be for a lot of the time.