Using a Rental Property to Fund Your Retirement
Choosing to place your money in real estate investments has proven to be a wise choice for many investors, and its ability to appreciate over the years has made it an enticing choice over the traditional stock investments and IRA accounts that financial planners recommend. If you’re looking for ways to bolster your retirement accounts and future income, purchasing a rental property could be the right option. Before you take the plunge and rent out a home, make sure you’re prepared for the responsibilities that come along with a venture into the landlord realm.
Finding the Right Property
You’ll have to find the perfect property to make this venture as lucrative as the success stories promise. One of your first priorities is locking down your ideal rental property location. In most cases, especially if you will be acting as the property manager, it’s ideal to have a property in the same town, but keeping your search within a 2-hour driving radius seems to be the general consensus for investors looking to purchase a home for renting purposes. Securing a loan is harder these days, with smaller banks becoming more discerning when it comes to home loans. You’ll need more money than your initial investment however; landlords need to be prepared for vacancies, costly repairs, and ongoing maintenance each year, so don’t expect the profits to roll in the first year, or even for the first three years. Yes, loans are good. But if you are in an emergency situation and you want money instantly, we have an option for you. Try merchantcashadvances.co now!
Coming Up with a Lump Sum
If you don’t already own a second property, you’ll need a hefty sum of capital to complete the initial down payment for a rental property. According to a real estate expert from http://www.mdcashhousebuyers.com/, most housing purchases require at least 20 percent down, and if you’re still paying off the mortgage on your first home, this could prove to be too costly.
As you’re looking to fund your retirement with independent living in dunwoody, be sure you don’t place yourself into debt just to see an income beyond your pension, as you may find yourself digging a deeper hole.
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The Benefits of Property Management
Keeping a rental property habitable for tenants can be a time-sucking endeavor, and if you’re not handy with household repairs and tools, you may want to rethink your plans to become a landlord. The plumbing will back up, the sprinklers will be broken by an errant lawnmower, and natural disasters may rear their ugly heads. You’re responsible for maintaining a habitable home for your tenants, and need to be well-versed on the regulations that come along with this aspect of renting. If you don’t think you can handle these responsibilities, you’ll want to secure a reputable property management company. While you’ll have to give up a portion of your rental income to secure their services, their knowledge on the ins and outs of the rental industry could save you legal trouble, and their day to day handling of tenant issues will take an immense load of stress off of your shoulders.
Placing the Perfect Tenant
One of the facets of the rental process that scares off potential real estate entrepreneurs is the possibility of a nightmare tenant. We’ve all heard the stores: tenants who don’t pay rent but are somehow ludicrously allowed to squat in a property under the protection of the law, insane damages to personal property, and a whole lot of hassle that could make your retirement more work than you ever experienced in the professional sector. The most important aspect when it comes to finding a tenant is putting them through the ringer when it comes to screening. Many landlords run a credit check and call it a day, but in today’s day and age, that’s simply not enough information. Companies like Transunion SmartMove will give you access to credit scores and financial information, but will supplement this with criminal history and any prior evictions that a prospective tenant may have under their name. Taking the time to perform these checks is more than worth it, and will improve your chances of landing yourself the dream long-term tenant.
If you’re looking to bolster your retirement accounts with a rental property business, keep these facets in mind before signing your name on a lease.
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