It is widely reported that a large percentage of Americans are woefully prepared to afford retirement. Likewise, we read almost daily about the rising cost of college and the growing burden of student loans. What can we do to insure we and or our children are not tripped up by these looming problems? Clearly the short answer is to save more in anticipation of these challenges, but all too often real life expenses get in the way. While certainly not a fit for many people, I still think rent property is a solid solution for many families with the right skill sets.
The advantage of owning rent property is three fold. First, it is a forced savings plan. The amortized mortgage payment, paid for by the tenants, automatically reduces the loan balance. In a sense, it is a monthly savings plan. Second, despite economic ups and downs, a well maintained property in a good area should appreciate with time. Third, rent property is an excellent way to teach your children a number of very important life skills: evaluating prospective tenants, developing financial management, and learning about common residential repairs.
So how does one begin? Ideally it would be great to take a course, but I am not aware of one right off. I would be willing to organize a short class if several of my readers were interested. Otherwise I would suggest that anyone wishing to explore rental management to talk to me or another long-time landlord to see if it is a fit for you.
Obviously finding the right property is the next step. I suggest that investors find rent houses that are relatively close to home. It is important to do a drive-by on a regular basis and it is helpful to be fairly close for showings. Like any real estate investment, location is the key. I always stress to clients that they need to also give as much thought to the eventual sale of the property as they do to the initial purchase. Sometimes a “real deal” may cash flow, but be a real loser when it is time to sell out defeating the long-term goal.
Interested? So what to look for? As mentioned, location is key for the ultimate success. I avoid streets crowded with renters’ cars and with poorly maintained yards. (Don’t be one of these landlords!) Trees are a real plus. If the property does not have them . . . plant them and arrange for the tenants to water them. They will grow quicker than one might suspect.
I prefer hip roofs instead of gable roofs, and avoid Masonite siding – exposed gable roofs and Masonite siding require frequent painting. For flooring, I prefer porcelain tile instead of the popular vinyl plank . . . it holds up much better (keep spare tiles). For carpet on smaller units like duplexes, I have been very successful with short nap commercial glue-down type carpet installed over a thin pad. It cleans great and looks good for years.
For more landlord tips, you can find more articles I have written on the subject at SpeakingOfAustinRealEstate.com or call me at the office. I am always available to answer questions.
PLEASE READ: Texas law requires all real estate licensees provide the Information About Brokerage Services (IABS) to prospective buyers, tenants, sellers and landlords.
JEFF STEWART, CCIM, SRES
Broker Associate / Stanberry & Associates