After the recent recession when millions of people lost a huge chunk of their retirement nesteggs, many people turned to rental properties. In the right areas, it’s possible to earn 10% or higher return on your investment while also watching your property appreciate in value. Rental properties are almost everywhere. In one New Hampshire town that recently suffered the loss of a major employer, rental properties are insanely cheap. For under $40,000 you can purchase a 4-unit apartment building that’s been completely renovated.
If you live in a major metropolitan area, rental properties will be more difficult to find. Chances are you’ll be competing with major investors who are on a quest to scoop up all of the rental units. The most important factor in purchasing rental properties is knowing the area. You must know the area like the back of your hand. You can’t swoop down like an eagle and pick up a rental property without knowing everything about the area in which the building is located.
The final lesson in this course is Retiring From Rental Properties. You don’t need to read the final lesson first, but you should keep in mind that everything runs in circles. As you’re looking for a rental property, someone else is trying to sell one. As you inspect rental properties you’re interested in buying, ask yourself why the current owner is selling. Is he losing money because none of the tenants are paying? Has the neighborhood become unlivable? Is there a luxury apartment complex that you’re not aware of being planned just down the street? Is the owner retiring? The reason why the current owner is selling might shed a lot of light on your decision to buy the property.
Anyone who tells you owning rental properties is easy money probably uses a property management company to handle the rentals and maintenance of the buildings. Are you personally going to replace a broken toilet at 3:00 on a Sunday morning because one of your tenants was drunk and broke it? Will you cancel all future vacations in order to be close to home in case an emergency arises with one of the rental units? Do you have a flexible schedule to cover the hours you’ll lose going to court to evict deadbeat tenants? Rental properties could be easy money, but only if you make the right decisions in all aspects of the venture.