This is the third in a series of blog posts I am writing about investment property and being a landlord. In my last post, I talked about what type of property makes a good rental or investment property and how you might decide what kind of property is right for your investment goals. If you have questions or additional topics that you would like discussed, I would love to hear from you.
On to the current topic: Where do you begin with rental or investment property? I’d say, with your bank account! Does your savings account or cash flow allow for additional and previously un-planned expenses? Will it still have enough for you to continue enjoying the lifestyle you’re living or will it require some adjustments? A slight adjustment in lifestyle now in order to invest for the future might be worth it. I will address more of the financials in a separate, upcoming blog, so for now let’s stay on the starting block.
If your bank account and budget say “Go for it” – then what do you do? You ask yourself more questions:
- Near or far? Does it make more sense to own a local rental that you can keep an eye on while driving to or from work or on your jogging route? Or, would you prefer to own an investment in a different location; perhaps where you travel on vacation – or where you see yourself living sometime down the road? The location question is rather personal and to my knowledge the only two people who can answer the question wisely would be you and/or your Realtor. You know what areas you like; she knows what areas are popular for rentals. (On a personal note, when my husband and I were looking for an investment property, we thought we wanted it in Dayton, NV (a rather large “mart” had made plans/promises of building a Superstore right there) – yet once we drove into town, there was nothing in the community to convince us this would be the best place to own a rental. Hence we ended up owning a property in Sparks, NV instead. Also to note, my husband handles the majority of any rental-repairs, so taking into account the travelling time and expense versus hiring a repair technician each time something went wrong kept us on track for finding something closer to home.)
- Who do you see living in your investment?
- Students, retirees, families…? University towns generally attract a younger crowd, where being within walking distance to campus will ring loud and clear – and very likely produce a higher rent.
- Retirees and/or seniors may prefer a ground level living arrangement (far away from schools and the associated noise). Few stairs, easier to meet and greet neighbors while tending the yard, and you very likely have scored a true winner.
- The working crowd can often time go either way… close to work in an apartment, with easy access to public transportation will be high on the list of some; just as a single family home in the suburbs will be desirable to others.
- What would you prefer?
- What does your Realtor suggest?
In the end, you need to go with your instincts after doing the research, and you’ll likely do fine. And remember, in the upcoming piece we’ll address what it means to be a landlord vs. hiring out the work to a property manager.