Rental Investment Risk – Is it Worth Becoming a Landlord?

Emerge Realty owner Liz Clay has spent the last several years building a successful real estate career that offers clients a unique real estate experience whether they are buying or selling. With her background, Liz Clay has helped clients with a wide range of goals, such as those looking to become landlords through rental investment.

Rental investment has become quite a temptation in recent years, with relatively low interest rates and home prices available in many locations. However, there are several things that make rental investment, and taking on the role of a landlord, a risky decision and something that individuals should give a great amount of thought. One of the things that can increase the financial risk of rental investment is the need to take out a mortgage on an investment property. Even though there might appear to be a safe difference between what the monthly rent and what the monthly mortgage, borrowing money to expand one’s investment portfolio can be very risky, especially if the rental investors are retirees who no longer work. There is also risk associated with the potential disasters or vacancies that landlords must deal with.

Recently, vacancy rates for rental properties have been increasing, causing more risk and potential for financial loss among rental investors. This can lead to many landlords offering rental deals, such as decreased rent or free rent for the first month, which can cause financial struggles for the landlord. Further, in recent years, applicant histories have been getting worse, with many potential tenants having experienced past foreclosures and previous evictions, making them riskier tenants, and thus increasing the risk of rental investments.