January 1st, 2012
After years of hard work you have some money saved up.
How can I make this money ‘work’ for me? you think.
Stocks, bonds and mutual funds
You consider investing in mutual funds, or even taking the risk of investing in stocks and bonds. The closer you look, the riskier it looks. It’s far too unstable for what your goals are.
How about a bank account? It’s very low risk and you won’t have to think your investment every day. You do some research, make some calls, and realize putting your money into a bank account will yield you such little profit it’s not worth getting your bank account bankbook out! The big banks might make money, but you won’t.
What about Real Estate?
As you continue to look for investment opportunities you remember one of your relatives mentioning he did well buying and flipping real estate. You also have a friend who bought a residential property and rented it out to tenants. The more you think about it, the more this makes sense!
So you want to be a landlord?
It seems pretty simple to be a landlord. You buy a residential property and rent it out. The tenants pay you monthly, which covers your mortgage payments. If you buy the right property and manage to rent it at a high rate you will also be making ‘cash flow’ every month!
Mortgage free and cash flow galore
You get out your calculator and see that if you put the cash flow back into the property you can pay off the mortgage in a few years. This means the rent will come directly to you and your wallet. This is serious money!
If you hold on to the house, it might appreciate
You look back at house prices from a few years ago and see houses in your area have gone up in value. If you look back ten years ago, you see they’ve almost doubled. You make a ten year plan and imagine how much your rental property will be worth a decade from now…and you can sell it mortgage free!
You have a fool proof plan and think “why isn’t everyone doing this?”
A closer look at being a landlord
Everyone isn’t doing it, because there are far more challenges than at first glance.
Over the next few months, we are going to tackle important issues and answer questions about becoming a landlord. Lots of topics will be covered, from choosing an area to invest to describing how to fill out an N4 (that’s what you serve when your tenant decides they don’t have to pay rent!)
Happy New Year!