Higher Interest Rates

Banks will typically charge a premium interest rate when you purchase a rental property, since it carries a different risk profile than a regular residential mortgage.

Taxes

Rental property owners get taxed twice - in annual property taxes, as well as income taxes on any profit from the rental property.

Maintenance

Before being purchased or leased, houses and rental properties must undergo an examination. Whether the home needs new windows or a roof, property owners need to be prepared to pay to fix any issues.

If you can't afford to pay for maintenance, don't even think about starting a property management company. Landlord and tenant laws require you to make major repairs as soon as possible. You may be held responsible for additional penalties if you don't.

Collecting Rent

You'll have outstanding tenants who pay on time every month. You'll have nice tenants who make mistakes now and then but will let you know when they will pay. Then there are the tenants who don't pay and don't contact you. You'll have to play bill collector from time to time as a landlord.

Before you begin, ask yourself if you're comfortable confronting your tenants.

Dealing with Problem Tenants

The vast majority of your tenants will pay their rent on time, treat the house as though it were their own, and keep the neighbors happy. However, you will inevitably have a problem tenant at some stage.

If you want to be a landlord, you'll have to deal with tenants arguing with each other, tenants causing harm to your investment, and tenants who don't pay their rent. You'll need to be well-versed with your state's eviction rules, and you'll need to be ready.

Despite all the risks and considerations, there's a lot of upside potential to owning an investment property. So be sure to do the math!