Investing in cash flow positive residential rental units
or
Becoming a Landlord
Part 1
Late rent, damages to the building, tenants fighting… Why would anyone want to become a landlord?
Well to be honest not everyone should be a landlord, just like options trading is not for everyone, some people simply do not have the patience and perseverance to make investing in a rental unit a good bet.
However for those that do, being a landlord can be a fantastic way to have your cake and eat it too. You hold an asset that is likely to increase in value over time and generates income for you at the same time. As long as you are able and willing to deal with the challenges that come with being a landlord, and most importantly of all, treat the rental units you have as a business, then being a landlord can have many benefits and be a relatively safe investment. People no matter what need a place to live, so even though it is true that no industry is recession proof, renting people a place to live is pretty close.
I will quickly go over some of the pitfalls to avoid, and some techniques that if used properly will help you maximize the potential your investment property. I am only going to brush the surface of these topics; some are incredibly complex and I may add articles in the future and go more in-depth, but for now the basics of each.
To start, nothing is ever going to be as successful as it could be without a good plan.
So before looking at an income generating property the very first thing you should do is decide what you want to get out of it. Your plan can be as simple as, I want an extra $400.00 a month to spend on my hobbies, to a full-fledged business plan complete with marketing information, mission statements and demographics. The important thing is that you know going in what your expectations are, and how you are going to measure the success of the venture. It will also help solidify the type of investment you want, a young professional who is investing early to build wealth is going to have a very different set of goals than a retiree looking for some extra passive income for retirement who wants to protect current wealth.
Let’s allow this information to percolate before we get into a step by step plan. See us next week for Part 2.