I should become a landlord? Opportunity or pitfalls?
I downsized for financial reasons, and have been speaking with potential renters. I'm posting to get advice to make sure it's a good decision. The alternative is to spend more time/money into trying to sell the house, or price it lower, or a combination both.
I believe renting is the best option for many reasons. OTOH, not surprisingly I have my doubts and worries about becoming a landlord. I want to think positively and consider this an opportunity to make money in real estate. However I'm more of a flipper and not a landlord type. The plus side is it's a large house in a nice area, so I'm more likely to get good tenants who take care of the place.
I have read quite a lot about flipping & renting including screening tenants, figuring out how much rent to charge, contracts, and so forth.
I know some investors are skilled enough to buy properties with bad credit, but that's one interesting aspect of my situation. I am already into this mortgage. Recently medical bills ruined my credit, so I can't qualify for loans. The only major downside to renting is my equity stays locked up, but I like the idea of potential gains if the market ever improves, and the tenants would be paying down my mortgage. I believe I could get a small amount of positive cash flow even in this economy.
And obviously the usual probable hassles of being a landlord. Many others are in my situation. In fact two friends of mine are. I believe both won't consider renting. One is going to price low to get a quicker sale, and the other is going to wait (and occupy it). If someone needs the equity or is too scared to be a landlord, I can see losing money and selling fast. What are other good reasons? I think most people are too scared to be a landlord and even consider the many benefits.
I could understand if you were going to occupy it or possibly if the place was so nice that you couldn't risk damage. Also I would say most people are scared to be a landlord for valid reasons. They don't have emergency funds to pay in case their tenant defaults, or in case of repairs. I am okay on that front, not good but I could manage. I have plans for how I would handle the tenant's calls or repairs.
I have fear myself because of so many horror stories about tenants. I do feel I could be picky and get a family with an excellent work history and income. Someone who had a stable 20+ year history could still fall on hard times and default, I know. Am I taking that much risk? I feel the risk is exaggerated some and that my situation is less risky since I'm not renting in lower income areas. If I ended up with a bad tenant, I'd probably get more scared and want to sell, but I might try again.
So I have recapped my knowledge on the topic. I hope I get some additional input here. Things I forgot to consider? Thanks!