Category Archives: Rentals

Making Money With Cash Flow Rental Property

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Making money from cash flow rental property isn’t as complicated as you might expect, but there are a few things you ought to consider before investing in any rental property. If you want to see a positive return on your investment, you’ll need to ensure that you’ve set yourself up to bring in more cash each month than the property costs you in mortgage fees, property taxes, repairs, maintenance, property management fees, and any other incidental fees. To do this, and to ensure that you have a good model for getting the most out of your rental property.

Handle Your Rental Property as a Business

A lot of people get in trouble in the real estate investing business because they don’t deal with it as a business. They buy a rental property, put an ad on the Internet, get tenants, and assume everything is going to be okay from there. Then, before they know it, they’re dealing with late-night emergency phone calls about the property. There’ll be unexpected repairs, late rent, evictions, maintenance and repairs to get the house in shape for new tenants, and more. In other words, if you don’t handle your rental investment(s) as a business, the results could be catastrophic.

Don’t Underestimate the Value of Good Property Management

If you do not have previous experience as a landlord, you may want to extract yourself from the active part of your investment. By hiring a qualified property management firm to take care of your rental property, you can be assured everything’s taken care of for you, including repairs, maintenance, tenant acquisition, bookkeeping, etc.

You may have a slightly smaller margin than you would if you were taking care of all of these things on your own. Now, consider how much free time you’ll have available to you to seek out new investments and further increase your returns.

Know What to Charge in Rent

Finally, knowing how much to charge in rental fees is essential to a cash flowing rental property. If you base your rent entirely on how much money you’ve put into the property, and how much you need to collect to break even or make a profit, you’ll only have half the equation. You need to see what other comparable rentals are going for in your neighborhood.

In fact, you should figure out what you can reasonably charge for rent before you purchase a real estate investment property. If the rental market in the area won’t support a favorable rate, it’s time to look in other markets. That’s why it’s important to know the areas where you invest and to understand the market before you commit.

Follow these tips and get a good start making money with cash flow rental property in your area.

 

Income Property Can Be Important To a Better Retirement

1598 union stFor those lacking the necessary means to retire in the traditional sense, income property can be a major bridge to a more comfortable retirement.  Because real estate is an inefficient market, it’s possible to find exceptional bargains with very high returns on your investment. This article describes how much you can expect to invest and earn, how to choose a location for your rental property, and how to avoid some problems that might cause trouble if you’re not careful.

How Much Do You Need?
If you plan to finance your property with a mortgage, then you need to take action long before you get ready to retire. Mortgage lending guidelines routinely require applicants to be employed and have at least two years in the same occupation. Lenders also need a large down payment, are as high as 30% or more, if you aren’t occupying the property.

If you’re without the funds to make such a large down payment, consider using your IRA funds. Purchasing the property with funds from a Roth IRA, where you’ve already paid taxes, which means all your earnings and equity will grow tax-free forever. All capital growth and income from rental receipts will grow inside your IRA tax-free. Don’t overlook marketing expenses and periods of vacancy and tenant change-over. Tax considerations will also play into what you can afford.

Depreciation reduces your commercial property value each year, for fair wear and tear, and lowers your tax bill each year you claim it. However, it reduces your present tax basis, and means you might have to pay more tax when you sell. Another of the benefits associated with rental property is the ability to claim a depreciation deduction on your federal income tax returns.

First and foremost, discuss the financials of your plans with a CPA, a real estate attorney, and an insurance agent. Know how much everything will cost.

Choosing a  Location
Purchasing the least expensive property won’t help you realize a return on your investment if you can’t find and keep renters.  It’s essential to take a good look around the neighborhood and purchase a property that reflects the area’s current demographic. Research the history of the area and know whether prices are appreciating, maintaining, or depreciating.

What Will You Earn?
You want to realize at least 8% from the capital invested in the rental, net of all expenses,” says John Graves, managing principal of an independent RIA, editor of the “Retirement Journal” and author of “The 7% Solution: You CAN Afford a Comfortable Retirement.” Expenses include the mortgage, taxes, insurance, maintenance, a 10% property management fee and a 10% vacancy allowance.

If you invest $100,000 in the property, you want to be earning a net income of $8,000 a year, he says. The reasoning behind the 8% is that it compensates you for the risk and lack of liquidity of your investment. If you or your spouse can work on the property by doing repairs and maintenance and/or managing the property, those costs will decline, he says.

Foresee Potential Problems
Investment property owners could run into a number of challenges, including renters who don’t pay, severe maintenance costs and trouble finding tenants.

Many municipalities impose drastic inspections and fees on landlords who want to turn owner-occupied properties into rentals.  Aspiring landlords should assess their temperament before getting into property ownership.

Selecting the best tenants is key
The best advice I can offer to income property owners is to complete an in-depth tenant screening as possible.

The Bottom Line
Owning income-producing property can be a practical resource for providing retirement income and even leave a legacy to your beneficiaries.
Please call me if you’re interested in improving your retirement through real estate holdings.

Do I need Renters Insurance?

This is a must read for all renters. Catch all the info from Forbes.com200 west 109
Maggie McGrath has all the details & she has added a checklist too!

If you were at risk of losing $5,000, $10,000 or even $15,000 and could do something to stop it, would you? Would you sit by and twiddle your thumbs, or would you leap into action and do something to protect your stash?

The answer is a no-brainer: you’d leap into action. Continue reading