Is Being a Landlord Worth It?

A sign indicating the availability of a home to rent stands outside a building in Philadelphia, Pa., on June 22, 2022. Matt Rourke/AP

Real estate has been a popular investment for a very long time—for those who can afford it. But in recent years, trends such as house flipping, “house hacking” (living in one room of a property while renting out the others) and short-term vacation rentals have made real estate investment much more accessible, especially for millennials seeking a second income stream in an uncertain economy.

Though the potential profit is tempting, being a landlord may not be for everyone. Rental properties involve significant upfront costs, time commitment, legal liabilities and ethical dilemmas that can put a dent in your dividends. So before you take out a loan to buy an investment property in an “up-and-coming neighborhood,” here are three things to consider.

Know What You Can Commit to

There are many ways to oversee rental real estate, from being fully hands-on to hiring someone else to manage a property you’ve never seen in person. When weighing your options, assess the time and money you can commit to a potential rental and the market you want to enter.