It’s a good time to be a landlord. The real estate market is booming around many areas of the country, including tons of urban areas. More and more Americans are renting their living spaces, and home purchase rates are down, which is good news for savvy real estate investors who own properties available to rent. Income properties are looking good, and you can make yours as profitable as ever in the coming years — provided, of course, that you don’t make a devastating mistake as a landlord.
When it comes to renting out a property, few things are as important as a tenant who is able to pay the rent that you ask. Unfortunately, some tenants fail to pay their rent, and that can be disastrous to your finances as a landlord.
Tenants’ Financial Problems Could Become Yours
Income properties rely on tenants, of course, to make money. Without rent being paid, no income is coming from the property. But when tenants start to struggle financially, landlords can find their own situation is precarious, too. Many areas protect renters with laws that make it more difficult for landlords to collect back rent and evict deadbeat tenants. And compounding the problem is the fact that an occupied property will deteriorate faster than an unoccupied one. If your tenant starts ignoring their rent, you’ll watch your investment devalue while missing out on the profits it was supposed to provide.