Investment Advice: Are You a Landlord? Is That a Good Move? What About For Retirement?
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My husband and I are considering various investment vehicles. He has a 401K with excellent 6% matching that we max out, but we want to diversify. We may get into the Roth IRA thing, but beyond that we aren't sure if we want all our eggs in the market basket. We are 29 years old. We live in a cheap wood frame house that will be paid off in less than 3 years. Our plan is to keep this house, live here while we save a down payment for our longer term home and keep this place as a rental property to continue generating an income for us. Of course we are wary of getting into landlording ... the expenses and headaches ... but we are also interested in maybe owning a few properties in this area and having an income that will follow us into old age and make retirement comfortable. If anyone has actual and real experience with this kind of thing, we'd love to know. It would be nice to know the real profit after expense of say a $600-$700 month unit as well. We definately aren't rich ... his income is just under $100K and I will earn decently when I'm done with graduate school. Our plan centers around lower cost residential housing (not ghetto-grade, just lower-middle-class stuff). Thanks in advance for any advice!
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Answer:
There are headaches in any investment vehicle you would use to accomplish your retirement goals. This is a great idea for your retirement age. You would have to educate yourself so as to be successful and make as few mistakes as possible. Keep the houses while you are young and is able to do the maintenance or if you do not want to be bothered with the maintenance then hire someone to do this for you. Normally material and labor are a tax deduction on your income taxes. When you no longer want to keep up with the tenants and other things associated with the rental market, sell the properties at around 65 years of age to your current tenant with you acting as the bank collecting the mortgage each month for a nice nest egg each month. You would foreclose on the new homeowner if they fail to pay the monthly mortgage. If they have paid the rent on time each month, then they would pay the monthly mortgage. You have built in buyers and ones that you know. Make sure you use an escrow and title company when you sell your property to your current renters. These companies would prepare the proper documents as well as the note in your name so as you are able to collect the mortgage payments each month. By the time you reach retirement age your tenants would have paid your mortgage off for you. I would suggest you would join the local American Apartment Housing Association. This company is set up to assist those landlords and would have all the necessary rental forms you would need to be successful. They would have vendors to assist you with screening potential renters. They might offer vanilla legal information. There is a small fee for membership. The other thing you might consider joining is a local real estate investment group. This group. this group would keep you abreast of the current trends in the real estate market and might offer inexpensive properties to purchase. Again there is a small membership fee. Normally both organizations would allow you a couple of free meetings. You might google both these organizations followed by the state in which you live. I hope this has been of some benefit to you, good luck. "FIGHT ON"
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Other answers
There are headaches in any investment vehicle you would use to accomplish your retirement goals. This is a great idea for your retirement age. You would have to educate yourself so as to be successful and make as few mistakes as possible. Keep the houses while you are young and is able to do the maintenance or if you do not want to be bothered with the maintenance then hire someone to do this for you. Normally material and labor are a tax deduction on your income taxes. When you no longer want to keep up with the tenants and other things associated with the rental market, sell the properties at around 65 years of age to your current tenant with you acting as the bank collecting the mortgage each month for a nice nest egg each month. You would foreclose on the new homeowner if they fail to pay the monthly mortgage. If they have paid the rent on time each month, then they would pay the monthly mortgage. You have built in buyers and ones that you know. Make sure you use an escrow and title company when you sell your property to your current renters. These companies would prepare the proper documents as well as the note in your name so as you are able to collect the mortgage payments each month. By the time you reach retirement age your tenants would have paid your mortgage off for you. I would suggest you would join the local American Apartment Housing Association. This company is set up to assist those landlords and would have all the necessary rental forms you would need to be successful. They would have vendors to assist you with screening potential renters. They might offer vanilla legal information. There is a small fee for membership. The other thing you might consider joining is a local real estate investment group. This group. this group would keep you abreast of the current trends in the real estate market and might offer inexpensive properties to purchase. Again there is a small membership fee. Normally both organizations would allow you a couple of free meetings. You might google both these organizations followed by the state in which you live. I hope this has been of some benefit to you, good luck. "FIGHT ON"
loanmast...
The libraries and bookstores have excellent books on how to be a landlord. Grab your car keys and take a drive. Learn, before you take any steps. We had a horrible experience with renting. They damaged the place, and did not pay rent for 3 months before they left. Consider REITs. You can do this within the roth. A lot easier.
Go with the flow
The key to rental property is doing the maintenance yourself and handling the renters. Renters are hard on a house, your will have to do twice as much maintenance than you would on your own house. It is better to rent under the going rate, so you find good tenants. Never rent to a tenant who can just barely pay the rent, they will skip out on you and take your lawn mower too. I have done it twice, the first time worked out ok. The second time I barely broke even, got nothing for my time. If you do it right, you end up with a free house after 20 years. Figure you may have 11 months rent a year, You have to repaint every three years. You have to replace the carpet every 6 years, totally update every 10 years. You also have mortgage, taxes, insurance.
Mark M
The key to rental property is doing the maintenance yourself and handling the renters. Renters are hard on a house, your will have to do twice as much maintenance than you would on your own house. It is better to rent under the going rate, so you find good tenants. Never rent to a tenant who can just barely pay the rent, they will skip out on you and take your lawn mower too. I have done it twice, the first time worked out ok. The second time I barely broke even, got nothing for my time. If you do it right, you end up with a free house after 20 years. Figure you may have 11 months rent a year, You have to repaint every three years. You have to replace the carpet every 6 years, totally update every 10 years. You also have mortgage, taxes, insurance.
Mark M
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The libraries and bookstores have excellent books on how to be a landlord. Grab your car keys and take a drive. Learn, before you take any steps. We had a horrible experience with renting. They damaged the place, and did not pay rent for 3 months before they left. Consider REITs. You can do this within the roth. A lot easier.
Go with the flow
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