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Are you worried about not having enough money for retirement? I think we all have concerns, especially lately with the volatility of the stock market. Rental property can definitely provide a source of income that will allow you to retire from your job or provide an additional source of income during retirement not to mention providing a hard asset for your investment funds.
Having owned numerous rental properties myself, I strongly believe that buying rental properties is a good financial move h
owever, you need to consider a few key factors.
1.
Investing locally is the best strategy since you have a better knowledge of the area, the laws that govern it, and the ability to manage your own property if you choose to.
You lose those advantages when looking at properties in an unfamiliar area.
2. Expect to spend between 1 and 4 percent of your property's value every year on maintenance expenses. Fortunately, most of those expenses are deductible from your rental income so keep your receipts!
3. Repairs can be expensive so be sure to take this into consideration and allow room for repairs when setting your rental income amount. When you set your rental income at an amount over the mortgage, taxes, etc., most of the repairs will be covered by the overage. It is best to also have an emergency fund to deal with unexpected repairs so you don't have to dip into your personal savings to pay for surprise repairs.
4. If you talk to anyone who has owned rental properties, you've likely heard a few horror stories about the kind of damage renters can leave behind. A lot of damage can happen in a short amount of time if you allow it to, and the only way to prevent it is to visit your properties frequently. Good tenants are worth their weight in gold so choose your tenants wisely and carefully. I am a strong believer that it is better to have a rental property sit idle for a few weeks than to rush into a lease with a tenant who is likely to be irresponsible.
5. Realize that there may come a day when you have to file an eviction. Although it is a fairly simple process it takes time and all steps must be properly followed in a timely manner. I recently sent an email with that process which you can revisit on my website at :
6. Be diligent to set rules and stick to the terms in the lease - even if those terms end up costing someone else money. In fact, setting firm ground rules is the best way to let tenants know that the rules matter, and that there are consequences for late rent payments, damages, or a failure to maintain.
Buying the right rental properties is a challenge in itself, but the act of being a landlord is by far the hardest part. However, owning rental properties can be the key to financial retirement freedom if you do things the right way from the start - or at least learn from your mistakes along the way.
If you would like to learn more about investing in real estate call or send an email to
saragordon@realtor.com
and we will help you get started in building your rental retirement portfolio.
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