I’ll openly admit, being a Landlord often gives me sleepless nights. There are days where I lose money. That pile of admin just keeps on growing. *sigh*
So why the hell do I do it? Why does any Landlord do it for that matter? Surely it’s better to just sell up and stick the money in a Bank account?
Well as the title of this blog posts suggests, Worry, Risk and Admin are not the only things that Landlords get to experience. There are actually many positive benefits to owning an Investment Property that explain why Landlords sacrifice their sleep, risk their own money and spend countless hours of their own time.
What are these benefits? Please tell.
To answer that, I asked some Landlord friends to explain in one short sentence why they own an Investment Property – here’s what they said, including my own response:
“For long term investment / future pension”
“To supplement our state pension in retirement”
“Passive income”
“Income stream to facilitate earlier retirement”
“pension supplement/ earlier retirement!”
“Long term investment”
“An investment where I hope to make long-term financial gain”
Some fairly consistent answers there. I’d lump all of those into a “Financial Benefits” category. These Landlords are expecting a Financial return from their Investment Property, either now or in the future. Which makes perfect sense. Wherever you have risk (I’d extend “risk” to also include worry and admin!), you should get return.
The risk-return relationship: Generally, the higher the potential return of an investment, the higher the risk.
Stick all your money in a low interest savings account is easy and requires minimal effort. But it also won’t give you the same financial benefits that owning an Investment Property can provide (please note, Im not saying putting money in a Bank account is bad thing!). Being a Landlord might give you a few grey hairs, but those should be more than offset by the rewards on offer.
Lets break those Financial returns down a bit:
In property terms, the Financial Returns referred to above arise in the form of cash in your bank account both now and in the future. Specifically:
- Source of income (means don’t need to rely 100% on your employment / pension income)
- Passive income (Property doesn’t require a set number of hours like paid employment)
- Investment (can give rise to future capital gains which can be converted to cash on sale, or passed to future generations)
What will you do with the Property Income / Capital gains? Thats up to you.; Retire earlier, more holidays, less work, better lifestyle? You chose!
Believe it or not, there are even non-financial types of “Return” for Landlords that can explain why they own an Investment Property:
- Property is a people business. It’s enjoyable working with different people.
- Interest / passion / purpose – Property can be interesting. Its everywhere we look. Its tangible. Its real!
- Helping the Community (despite what press have you believe), as a Landlord you serve an important purpose providing a home in the Private Rental Sector.
So is it worth it?
Absolutely. As Landlords we will frequently feel worried, be snowed under with admin and can even lose money. But there is (or at least should be) a very good reason you are a Landlord. Id encourage every Landlord to have a quick think what their reason is. And then every time your property feels stressful or takes up your time, just remember that reason with a smile.
Would you agree with benefits Ive added in thus post? Would you put something different?
Anyway, I’m off to book a holiday (joke!)
