Could You Become a Landlord?
If you're interested in buying a house with more room than you need — a two- or three-family home, perhaps — you can rent out the extra space to help cover the cost of your mortgage. A landlord's success will depend on several things, of course, and there is a lot to know about the responsibility you'll be taking on.
Having an apartment to rent can be a particular relief for those in less stable professions — those who are self-employed, for instance, those whose industry goes through major swings, or those whose job is otherwise subject to the vagaries of the marketplace. No matter what happens at your work-place, the rent check will be slipped under your door each month; there will be some money coming in.
There are other benefits besides the steady income. The repairs and new installations you make to that rental apartment are deductible from your federal tax return. The apartment's share of your repairs to the house as a whole — a new roof, for example — is also deductible. So if you live on two floors of the house and the tenants live on one, one-third of the price of a new roof can be deducted.
Check with your accountant for the latest on tax deductions and depreciation allowances. They are always changing.
Most real-estate investors start with small rental properties. From there, you could find yourself launched on a very profitable sideline or a fulltime career as a landlord of several houses, maybe even small apartment buildings.
On the other hand, here are some points to give you pause with this type of purchase. There will be people — strangers — walking around, above, or below you. If you have lived in an apartment building or a house converted to two or more apartment units, you are probably used to this and it may not bother you. Others may find it disquieting, for a while at least, but you'll adjust to it soon as it becomes an everyday part of your life.
Private homes that have been converted to two or three separate living units — the type of purchase you will probably be seeking — do not usually appreciate as quickly in market value as single-family houses. They can also take somewhat longer to sell when you are ready to move.