Make sure you can lease out the property. An increasing number of subdivisions, condominium, and townhome developments forbid owners from leasing properties to renters. Before you buy, make sure the area is landlord friendly.
Figure out what to charge for rent. The amount you charge for rent determines whether the investment is a deal or a dud. Your real estate agent should be able to provide rental data. Local newspapers and online classified sites, such as Craigslist, can also help you figure average rents in the area. Property management companies are another good source.
Do the dirty work and thoroughly inspect property. Donâ€™t let the nice paint job fool you. Take a look in the attic. Crawl under the house. Yes, you should hire a home inspector, but itâ€™s also good to see for yourself what you are buying.
Maintain a separate emergency savings. Apart from your personal savings, you should have a separate savings account for your rental property. It can take months to find new tenants, plus even minor repairs between tenants can add up.
Is Now the Time to Buy Real Estate?
An expanded version of this article will appear in the December 2009 issue of Black Enterprise magazine.
Wealth For Life Principles
1. I Will Live Within My Means
2. I Will Maximize My Income Potential Through Education and Training
3. I Will Effectively Manage My Budget, Credit, Debt, and Tax Obligations
4. I Will Save At Least 10% of My Income
5. I Will Use Homeownership as a Foundation For Building Wealth
6. I Will Devise An Investment Plan For My Retirement Needs And Childrensâ€™ Education
7. I Will Ensure That My Entire Family Adheres To Sensible Money Management Principles
8. I Will Support the Creation and Growth of Minority-Owned Businesses
9. I Will Guarantee My Wealth Is Passed On To Future Generations Through Proper Insurance And Estate Planning
10. I Will Strengthen My Community Through Philanthropy