If you’re considering investing in property to rent out you might be concerned how much time it’s going to take up, especially if you’re in full time employment already. Is being a landlord considered a job?
Being a landlord is a job, you provide a service which you’re paid for and which results in you paying tax. It may be a full time or part time job, how much time it takes up will depend on how many properties you have and how much work is required to maintain them as rental properties.
Really, the answer to this question is something of a sliding scale. On one end of the scale you can be a landlord in your spare time, doing up your new property or just maintaining an existing one and collecting rental payments from tenants.
At the other end of the scale, you could be a landlord full time, managing a portfolio of properties and making enough each month not to require another source of income.
Regardless of the number of properties, all landlords need to be good at multitasking and stay on top of their game.
In general, being a landlord can be a time-consuming and challenging job, and it can require a lot of work to maintain a property and deal with tenant issues.
Why is being a landlord not a job?
When I tell people I’m a full time property investor and landlord I’ve occasionally run into people that tell me that isn’t a proper job. I ask why they think that, and they usually reply something along the lines of:
Being a landlord is not a job because it doesn’t require you to work regular hours and you don’t need to do much most days. It’s more of a business venture in which the landlord invests money in a property with the expectation of making a return on that investment.
Of course, one of the main differences between being a landlord and having a full-time job is that I do not receive a salary. Instead, I earn income from rent payments.
So, in the traditional sense of a 9-5 position I can see why people think being a landlord isn’t a job. However, there is still a lot of work involved, so rather than working for a company, I consider myself to be a self-employed business owner, and that comes with a lot of work.
What is a landlord?
I consider myself a property investor and landlord. They’re two separate things, so let’s be clear what a landlord is:
A landlord is an individual or company that manages the rental of property to another individual or company.
Generally, landlords will also be the owner of the property, however that isn’t always the case, for example ‘rent to rent’ landlords.
Landlords are responsible for maintaining the property, collecting rent from tenants, and dealing with any issues that arise. They must understand the rules and laws that apply.
What are the responsibilities of a landlord?
Before you invest in a property, you must consider the condition of the property, the price point, and the geographic location, and the renovation work required.
Once a property is ready to rent it out, a landlord’s responsibilities include:
- Finding tenants
- Maintaining the property in a liveable condition
- Making repairs
- Providing heat, water and electricity (but not paying for them)
- Collecting rent and deposits
- Dealing with tenant complaints
You can see there is potentially a lot of work involved. If this is an area you’re considering but you’re worried about taking on so much extra responsibility you can always employ a property management company that will handle the bulk of these issues.
If a landlord hires a contractor to manage these tasks, it may come at the expense of profits. Landlords also need to spend time cleaning up the property after a tenant moves out.
Even if you outsource a lot of the work, you need to be familiar with the lease agreement tenants will be signing as it is a contract between you and your tenants.
There is no concrete number of hours spent managing a property, so it’s impossible to say how long it will take. Some months you won’t need to do anything other than confirming you’ve received payment from tenants, other months you’ll need to deal with situations where tenants refuse to pay rent or are causing damage, which can be time-consuming and frustrating.
Fortunately, we usually find that tenant issues don’t happen too often. It seems that when they do they all happen at once! So we’ll have a very quiet spell then a lot of issues. If you have good long term tenants in your properties then you shouldn’t have too many issues.
How to be a successful landlord
When you start out as a property investor and landlord you may be doing so to supplement your existing income from a full-time job. This will mean additional work, but it will pay off in the long run as long as you put in the work required.
There are a few things that you can do to increase your chances of success:
- Do your research when purchasing a property.
- Screen your tenants carefully.
- Keep up with repairs and maintenance.
- Charge fair rents.
- Evict bad tenants quickly.
It’s important to build good relationships with your tenants. Take the time to get to know them, drop off seasonal gifts as a token of appreciation and make sure you’re available when your tenants need you. Be responsive to their requests and be willing to help out whenever possible. If they ever report a problem we deal with it immediately!
We always send our tenants a gift voucher at christmas. It isn’t a large amount but they appreciate the effort we make to send it to them. It’s so important to build up a good relationship with your tenants.
Make sure your property is well maintained and always looks its best. Keep up with repairs and landscaping duties, and take pride in providing a top-notch rental experience for your tenants and you will find they will have little to complain about.
In addition to the above, there are some long-term strategies to consider.
Create a property portfolio
Once you have built up an understanding of the property investment and rental world the next step is to expand your ownership and take on multiple investment properties.
Familiarity with an area will give you the ability to spot a good investment opportunity when you see one, but that doesn’t mean you should buy just in a single area, you may want to consider buying in a different area to protect yourself from house and rent depreciation if an area should decline.
For more information about property portfolios see: What is an investment property portfolio?
Keep a close eye on the rental market
Properties that are priced too high or too low will not rent as quickly as those that are correctly priced. Landlords should also keep an eye on the competition; if they have similar properties in the area, they should make sure their properties are priced at a similar or lower price than the competition.
Alternatively, you can price higher, but only if you’ve made sure your rental property offers a better standard of living, and can therefore justify to potential tenants the higher rental price.
Keep the property filled
The way a landlord makes money is by collecting rent, no tenants means no income. While an empty property isn’t always a problem (being empty is a great time to carry out work), you want to minimise these void periods.
Having a clear sales process (e.g. advertising for tenants, having tenancy agreements on hand and ready to go etc) will ensure minimal breaks in your rental income. We use a rental agent to find tenants for us but we do the management of the properties ourselves, once they are tenanted.
The Pros of Being a Landlord
There are many pros to being a landlord, but it’s important to weigh the pros and cons before making any decisions.
Money can be made passively (sort of)
One of the biggest benefits is that landlords can delegate most of the duties to property managers, which makes it easier for uninvolved landlords to manage their rental properties. This also means that landlords can take on more properties and have a larger portfolio.
Even if you do all the work yourself, once a property is rental ready and filled with good tenants you’ll find most months do not require much work from you, it becomes income you earn passively. That won’t always be the case, so enjoy the months when things tick over perfectly!
Another pro with regards to income is that landlords usually receive rent payments in advance, which provides a cushion against unexpected costs.
There is a lot of rental demand
Providing you do your research correctly when looking into properties to purchase, you should have somewhere that people want to live. Often people will want to rent in a nice area because they couldn’t afford the cost to purchase a house in the area.
As long as you keep up with maintenance tasks and keep on good terms with tenants you could have them renting from you for many years to come.
Renting out property pays for itself
Working out your monthly bills and how much to charge is a crucial step in the process, if done correctly you’ll find the income covers all costs and makes you a profit. If you’re unsure how to do this see: Beginner‘s guide
Property is a long-term investment
There can be a significant amount spent when entering the housing market, the good news is you should see this as a long term investment. Not only can you earn from the monthly rental, but in the long run you can make a profit when you eventually sell up.
Being a landlord means you have Tax-Deductible Business Expenses
This includes costs like advertising, repairs and maintenance, insurance, and legal fees. If you’re currently employed it is unlikely you’ve had to complete a self assessment tax return, and I would strongly suggest you employ an accountant to do this for you as they will help you understand what you can deduct as expenses and how much you’ll need to pay in additional tax due to being a landlord.
The Cons of Being a Landlord
It’s not all rosy being a landlord. As some people don’t consider it a job they’re unprepared for the time and work involved in making it work.
On-going property maintenance costs
In general, you are responsible for repairs and maintenance on your property. And not just ongoing maintenance, but also upgrading. For example, if a bathroom or kitchen needs replacing, it will be down to you to arrange and pay for.
All of these issues can be costly, and it’s important to remember that these costs will come out of your pocket.
Property rental doesn’t give financial results quickly
The pro of this being a long term opportunity is also a con for some people. Your money will be tied up in bricks and mortar, and while you should get a decent return on your investment…eventually…it takes a lot of time.
Those looking for a quicker return are better suited to the flipping market, where you purchase a property, renovate it and then place it back up for sales at a higher price than your cost of purchasing and renovation.
You must treat being a landlord as a business
You are essentially running a business, and as such, you must treat it as such. This means keeping up on regular maintenance, screening tenants carefully, being available when things go wrong, and keeping track of income and costs.
It also means pricing your rent appropriately and not taking advantage of your position as a property owner. Remember, you want to maintain good relationships with your tenants – they are the people who will be paying your mortgage! You wan to avoid voids at all costs, so treat your tenants well!
Liability and Staying Compliant with the Law
This can be daunting, as there are many different laws governing rental properties. You also have a responsibility to protect your tenants from harm, which can include ensuring that the property is up to the legal standards. If you fail to meet your legal obligations, you could face significant financial penalties.
One way to do this is by working with an expert who can help guide you through the process. Check out our experts for further information.
Having to fill vacancies by finding good tenants
You want to find people who will respect your property, pay their rent on time, and not cause any problems. Unfortunately, there are plenty of people out there who are looking for a place to live but won’t be good tenants.
Here are some tips for finding good tenants:
- Screen applicants carefully
- Check their credit history
- Do a background check
- Ask for references
If you take the time to screen applicants carefully and do your research, you’ll be more likely to find good tenants who will respect your property and pay their rent on time.
Of course, this process can be outsourced. Many local estate agents will be happy to find tenants for you, for a fee. We prefer to outsource this process so it is done correctly and no mistakes are made.
Having to deal with occasional bad tenants
Even with a brilliant screening process, the occasional bad apple will slip through the process and end up causing you trouble. These are the tenants who do not pay their rent on time, who damage the property or who simply make life difficult for everyone involved.
Unfortunately, this can lead to legal issues, it is important to make sure you’re prepared by having the right people to assist you.
Is it still profitable to be a landlord?
One of the key aims most people have when investing in property to let is if it can earn them enough to be their main source of income, perhaps even giving up the main day job.
Landlording can be a very profitable venture, providing you’ve picked the right property in the right location, keep it filled and have a good rental yield.
It’s important to do your research before getting started. Location is key when it comes to making money as a landlord, and you’ll need to consider the cost of renovation, advertisement, tenant screening, and more.
It’s important to remember that if the rent is too low, landlords will not make enough money to be a sustainable main income. Conversely, if the rent is too high, tenants may struggle to afford the monthly payment and you may have no income due to an empty property. Do your homework and find a happy medium that works for both you and your tenants!
Is it hard to make money as a landlord?
Making money as a landlord can be difficult if you’re not prepared for the responsibilities that come with it. It’s important to do some cost analysis before diving in and make sure you understand the expenses you’ll be facing.
Landlords need to factor in things like mortgage payments, property taxes, insurance, and repairs when budgeting for their venture. Additionally, they need to be prepared to spend time managing their property and dealing with tenant issues.
Despite these challenges, there are ways for landlords to make money. By choosing the right home and investing wisely, landlords can see a healthy return on their investment. And thanks to British Gas’ contracts on boilers and controls, they can save money on some of the large expenses they face.
Is being a landlord hard work?
Being a landlord can be hard work. It can be especially difficult if you are a first-time landlord. There are a lot of things to keep track of, and it is important to make sure that you are doing everything you can to protect your investment.
To help you get started we’ve put together this beginners guide that covers all the basics.
Is it worth becoming a landlord?
There are many factors to consider when deciding if becoming a landlord is the right choice for you. In my case I have a very clear answer for this question:
Yes, it is worth becoming a landlord. Doing so gives you the opportunity to build up a portfolio of properties and make money from them. You can also use this experience to gain valuable skills in property management, marketing and sales.
This won’t be the case for everyone, but if it’s something that interests you I can tell you from my own personal experience that as long as you’re willing to put the work in, it can be a very rewarding path to take.