Before you decide your other residential property can become a rental property and garner you a nice profit each month, there are a few things you need to keep in mind before you take this plunge.



1.     Your Rental Income is Taxable



If you think you will laugh all the way to the bank each month after your tenant pays, think again. You have to issue a receipt to your tenant for the rent amount that your tenant will use for his tax deduction. Even if he doesn’t claim a deduction with your receipt, as a landlord, you have to declare the rental income and pay taxes on it.



2.     The Rent Amount will be Used for Expenses



Your property will require periodic maintenance, repair, and upkeep. This expense will come out of the rent. As a rule of thumb, you should set aside about two months of rent every year for maintenance and upkeep. Remember, you will have to paint, get the property cleaned and repair appliances after your tenants vacate. This expense too will come out of the rent amount.



3.     You may not get the Kind of Tenants You Want



Depending on where your property is located and the amenities around it, you will attract a certain type of tenant. Well, whether you like it or not, you may not always pick up a tenant you like. At times, you may be forced to give your property to a tenant even if you don’t like him because it is better to rent out your property than let it remain vacant.



4.     Tenants can be Hard to Evict



If you decide you don’t want a tenant any longer, you may find it really tough to evict him. Many tenants are well-versed with the laws governing them and you should know your rights as a landlord. So if you don’t have a valid reason for eviction, you are stuck with the tenant until the lease period expires.



5.     Tenants can Leave Before the Lease Expires



Tenants can leave before the rental agreement comes to an end. This can be expensive, as you will have to once again get the property cleaned, repair appliances, and manage those minor repairs. Then your search for a new tenant begins. During this period, you will not generate any income from your property.



Since being a landlord can be tough, especially if you have to handle everything, most landlords tend to use property management companies. These companies make sure you get the kind of tenant you desire and will handle every aspect of your rental property, right from minor repairs and general upkeep to collecting rent and conducting a background and credit check on prospective tenants. A property management company offers you peace of mind and lets you enjoy the real benefits of being a landlord.