A Couple of Tips for wannabe Real Estate Investors


Although the past couple of months have been a headache with the rentals, it typically isn’t like this.  Usually we receive rent, pay the mortgages and that’s about it.  Every so often we get a call about something minor such as a leaky pipe, and usually I will call a plumber and it will be fixed.   Rarely do we get a major call for something like needing a whole new furnace.  Side note:  Yes we did get that call last year and yes a new furnace happens to be very expensive.  But all in all, so long as you have paying tenants, land lording isn’t bad.  So maybe you think you could get a rental property.  If so I encourage it, with just a couple of hints.
1)      First and Foremost if you plan on acquiring a rental property make sure there is a Cash flow.  What is cash flow?  It is money left over after receiving rent and paying for the taxes, mortgage, water bill, and any other expense relating to the property.  If you do not have a cash flow with a rental property then really, it’s not an investment, since it’s just sucking money out of your pocket.  Trust, me the property will find a way to suck money out of your pocket even if you have cash flow.  I recommend making a MINIMUM of two hundred extra dollars in cash flow each month.  DO NOT TOUCH this extra money for toys, a vacation or anything that is for your own entertainment.  Let it build and save so when a doozy comes along-and it will-you will have the means to take care of it.  Side note:  Cash flow is the very reason we have been able to keep our head above water.  It also helped contribute to closing costs on our second rental property.
2)      LOCATION, LOCATION, LOCATION!!  It matters where you buy.  For example, if you bought where Danny and I bought-in the inner city-then rental prices, taxes, and cost of the home is much cheaper, BUT, you will also find more tenants not paying rent and more evictions.  Solely from my experience I recommend picking a more desirable area, where the neighborhoods are safe, the rents are higher and the properties are more likely to increase in value at a more rapid pace.  Resale value makes a HUGE difference so I suggest one thinks this over when buying.
3)      A list of businesses and their phone numbers:  There will be problems, and if you are a current home owner you know this.  So a list of businesses with their information will come in handy.  A local plumber, oil guy, handy man, your accountant and etc.  It’s nice to have this information plugged into your phone and in a file somewhere.  It’s also great to have an accountant.
4)      EMERGENCY FUND-  Even though you have cash flow, it is important to always have an emergency fund on hand.  Because cash flow can go quick if you haven’t gotten rent in several months and the oil tank needs to be filled. ;-)  Remember if you renting, you better be in this for the long haul.  They call it buy and hold for a reason, because if you buy and sell two years later then say goodbye to all of your money.
      There you have it.  Four small tips to making real estate work. There is so much more, but I needn’t bore you.  Besides, I'm still learning myself.  Any tips for me?  Any questions?  Please ask, I adore your comments and questions.

Comments

Post a Comment

Popular posts from this blog

My Love Story Part 1

To tell my love story, I have to start from the beginning, which involves a mini love story before the love story-a chance for you to see the real confused and pushy jerk within me. We all have doubts and confusion about what is the right thing to do, what we really truly want in life, just most of you aren't crazy ridiculous like me. No matter,I will still share the story, because it is the story of me...and how I eventually met and married the love of my forever, Danny. Enjoy! It is a little bit all over the place and yeah I don't edit-no time for that. And feel free to judge.::::: "I'm not supposed to be here!" The words rattled into my head. Here I was standing in the hallway of a church building awaiting for the young single adult festivities to officially begin. Men and women bustled about, introducing themselves, laughing, playing games, while I stood there frozen in place, my heart beating with anxiety. After all, I didn't belong here, I
Read more

Meal Time Sentences

Image
Our lovely flash cards that we DO use!!                        I am not a very good teacher.   I should be going over letters and numbers every single day with Ellyanna, but I’m not.   I should be teaching her how to trace and write them out, but of course I’m not.   I save it all for preschool, which is only two days a week.   I’m far from perfect.   But I am taking little steps.   I do something small every day, something I like to call meal time sentences.               What are meal time sentences?   Let me back track here.   A couple of years ago we bought “Your Baby Can Read” because I just had to have it and insisted that our daughters would be becomes real life geniuses in result.   Of course being the mom that I am, I was gung ho for the first couple of weeks and then easily stopped.   “Your Baby Can Read” comes with videos, which we placed in the car DVD.   Ellyanna grew sick of it quickly.   A lot of whining sounded once the theme song to these DVD started.    But B
Read more

Pregnancy Fears

I'm scared. I'm scared because I am five weeks pregnant and I have no symptoms that I usually have. I am not sick, smells are not revolting to me and I feel normal, just fine. Which makes me wonder, am I pregnant? Is there a live baby in there...or did I lose it already?? And I want another baby so bad, that this overwhelming fear weighs on me, and makes my heart heavy. Every time I see a newborn, those precious just from heaven babies, I melt. And the thought stirs me, I'm ready, ready for another baby. And I know I'm only five weeks along, but I I recall those horrible symptoms being nearly instantaneous. As crazy as it sounds, those symptoms also brought comfort. Like I always knew I was pregnant because the harsh reality was I wouldn't be throwing up like a crazy if I wasn't. Never mind I could not manage to take care of myself let alone Elly. Oh I am just scared and I don't know what to do about it. I called the doctor the other da
Read more