Buying Rental Property...Properly
With all the home renovation shows, loosening of ADU regulations, a slowing economy, historically low-interest rates, and the mood of millennials to rent instead of own...Income Property has been on an uptick since 2008.
Real estate has become Americans' favorite long-term investment, which is one of our tips, buy and hold.
Ponder these realities before making the decision.
1. It's not as easy as it looks! Before you leap in, consider whether you have the time and skill to manage a rental. Accounting, contracts, late-night plumbing and the ability to collect money or evict.
2. Playing the long game. Through the thick and thin, find a way to hold on to your property.
3. Make sure you're landlord material. You can always pay 6-10% of your rental income to a property management company.
4. Budget for the unexpected. Maintenance and emergencies always come up. Be prepared by saving 20-30% of the rental income.
5. Always renew your leases. In the contract be sure to state the lease can change every year.
6. Good location equals less cash flow but more appreciation while a lessor location could mean more cash flow but less appreciation.
7. Taxes, with an investment property you can write off nearly all of your expenses. Late night plumbing to legal fees. The tax benefits and long term investment returns keep investors looking for more.