For many, buying a home is not possible, and they're left with renting. At the beginning of 2021, around 43.32 million housing units were being rented by Americans.
When you own an investment property, you can let your rental through an agency or become a private landlord. If you're new to investment property real estate, you probably aren't sure which is better.
There are several benefits to both options. Letting through an agency means you employ the expertise of a real estate agent vs. doing everything yourself.
This article covers what you should know about For Rent By Owner properties. So, if you're dipping into real estate investing, keep reading.
What Is "For Rent by Owner" (FRBO)?
Instead of listing an apartment or home with a brokerage firm or leasing agent, 'For Rent By Owner' describes apartments or homes rented directly by the owner or landlord.
This can be a good option for landlords and tenants, as you can save on fees. However, it's important to be aware of the risks involved in renting directly to your tenants, such as the potential for scams or misunderstandings.
Whether or not to become a private landlord is a personal decision. There are advantages and disadvantages to consider, and the best decision for you depends on your circumstances.
Pros of Private Rentals
There are several reasons why someone would want to become a private landlord. Here are two advantages worth noting.
Higher Rental Income
The first benefit you gain from being a private landlord is you can keep more of the rental income. This is because you will not have to pay a commission to a real estate agent or property management company.
Closer Landlord-Tenant Relationships
You communicate directly with your tenants if you're managing your own investment properties. This can help foster a closer relationship, benefiting all parties involved.
Cons of Private Landlords
Of course, nothing is without its disadvantages, especially in real estate. Here are some reasons to avoid offering your property as For Rent By Owner.
It's All On Your Shoulders
One of the most significant cons is everything lands on your shoulders. You'll collect rent, manage communications, and handle property maintenance as the property owner.
You May Have Difficult Tenants
When you manage your rental units, you interact directly with your tenant. Having an FRBO property means you may have to deal with difficult tenants independently.
Hire a Great Property Management Company to Help
As you can see, offering a For Rent By Owner property has both pros and cons. For this reason, it's essential to weigh the benefits and risks carefully before making a decision.
Some key benefits of being a private landlord include higher income, more control, and better relationships with tenants. However, some risks include handling all aspects of property management yourself. Ultimately, your best decision depends on your circumstances and preferences.
Contact us if you'd like to benefit from the services of a full-service property management company in Houston, TX. Our experts will help you grow your investment portfolio.