I believe real estate is the greatest vehicle out there for most people to create true wealth. But most people think it will happen without any long term planning. Or sacrifice. Or effort. Nothing could be further from the truth. And if you are going to have to put in time, effort, money and thought to this venture shouldn’t you also have a clearly defined target in mind?
Determining your criteria should be #1 on your list of things to do when starting out (or re-starting out) on your real estate income property career. Are you a twenty/thirty something with a good, steady income and $20,000 or less to invest? Or are you a mid-forties/early fifties investor with high income, a good nest egg and other interests beyond your work and holdings? These two categories would probably have very different ideas of what would fit their criteria when owning a “successful” rental property.
Here are some things to consider;
- Cash flow or appreciation or a mix of both
- Below market value home that needs upfront repairs (and therefore a good chance of instant equity after money/time investment) or a turn key property with current tenants
- Inner city, suburb or fringe city property
- Maintenance provided property or one you can maintain yourself
- Close to home or anywhere with a property manager
Of course, the loan vehicle you use could greatly sway the cash flow issue. Are you conservative and older or are you younger and have more time? If the latter, maybe an interest only or negative am loan would work to increase your holdings faster. If the former you’ll want to consider your time line for retirement and income goals at that time.
Rental properties can provide the Golden Parachute for the common man that we hear the corporate executives get. (Well, maybe not a $2,000,000 buyout with only 24 months of service…but along those lines.) To discuss this issue further I invite you to email me or leave a comment. Your input is appreciated.