Hard to imagine having extra money to invest these days, but some thrifty money managers do have some money they’re looking to invest wisely. Buying investment property like a small home or condo can pay for itself in the long run, and look good on your portfolio. If you buy a duplex or twin, you can live on one side while renting out the other side, you can basically live rent free if you use the payment from your renter to pay the mortgage.
Living rent free doesn’t mean you won’t have headaches if you choose the wrong renter.
First make sure you are the personality type who can or wants to be a landlord. Sounds silly, but not everyone wants to spend their time taking care of their own home and making sure everything is functioning properly in a second home. You may not have the disposition to take someone to court if they aren’t paying the rent. Weigh all the costs, the good and the bad, that come with being a landlord.
Make sure the rent contract or agreement is clear about the due date for payment, when rent is considered late and what fees are attached. Also make sure you and your renter understand the policy concerning checks and insufficient funds. Make sure you choose reliable renters who understand the agreement and are willing to honor it.
You should also give some thought to necessary repairs for any property you rent. Try to sock away a rainy day fund or repair fund so if a pipe breaks you have money ready to fix it. Also, you may need to keep a Mr. Fix It type on retainer if you not that handy at do-it-yourself projects.
If you still want to own an investment property but don’t want to handle the day-to-day responsibility of being a landlord, you can always hire a management or rental company to help you with this endeavor. Basically, they’ll manage the property from everything to making sure the rent is paid, to helping you hire someone to landscape if you wish.
Our final property investment advice – give some thought to how long you want to keep this property. You may get more out of your investment the longer you hang onto it, but you also may have to spend more for upkeep. This is true especially if you have several renters and will need to repaint and clean carpets every time a tenant moves out.
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