Is becoming a Landlord something that you have ever thought about? Perhaps the last time you meant with your financial planner he/she said to you that you should buy an investment property. Or maybe it is time to move from your current home, it is just not working for you anymore. You are finding it too small or the floor plan just isn’t right. It is time to move and you do have money for the down payment for the next purchase. It would be easy to keep the current home and turn it into a rental. But you feel like this is something you know nothing about. What do you do? Why should you become a Landlord? Lets go over some of the benefits of investing in real estate and answer some of those questions you have.
The advantages for investing in real estate are numerous. Investors can enjoy predictable rental income from your tenants (cash flow), appreciation on their investment, tax benefits and the diversification that your financial planner was suggesting. You also have greater control over your investment. Investing in real estate is less risky than investing money in the stock market. Andrew Carnegie was one of the most successful businessmen ever. At its peak his fortune was worth over 300 billion (in 2007 dollars). He is attributed with saying that 90% of all millionaires become so through owning real estate. He died in 1919. However real estate is currently on the list for the top-ten creators of billionaires. But you are looking at just owning a couple of properties. Data released in 2017 shows that 47% of rentals were owned by individual owners. That is people like you!
What does all of this mean? It means that people just like you can own real estate and be successful as a Landlord. You can build wealth and appreciate the benefits of owning rental property.
Setting yourself up for success includes many little details. It is time to meet with professionals that can help you. Talk to a mortgage lender, your realtor and a good attorney. Ask lots of questions. How much do I need for down payment? Is this a good area for appreciation? Is this fixer-upper worth the investment and why? How much can I charge for rent on this property? What interest rate will I be charged on an investment property? Armed yourself with information. Research, research, research.
Maintain a business mindset. Your rental property is a business with legal obligations that you must follow. Learn how to manage the property effectively. Create systems for handling maintenance requests. Have your list of professionals that you can call including a handyman, plumber, electrician, realtor, attorney and locksmith that are available for you. Know your rights and understand the rental laws. Have a local attorney draw up your lease. It is your most important document for your new rental business. It will protect you and provide you and your tenants with a guide and expectations of both of you!