I get asked all the time if people should buy investment property for either passive or retirement income. I believe strongly in investing in both types of income, but you have to be careful how you go about it. I’ve seen too many people invest in real estate only to have it backfire. Here are three tips about investing in rental properties.
1. The biggest mistake I see is that they try not to spend much money out of pocket. You have to keep in mind that you’ll be spending money on repairs, cleanup, and any other messes your tenants made while living there. Because of this, you need to make sure you’re in a decent financial position before buying a rental property.
2. If you have somewhere between one and 10 properties, you’re taking on a lot of risk. Once you own more than 10 properties, you can start running your investments like a business and make some serious cash. If something goes wrong in one property, it’s not as catastrophic because you have 10 more still earning income.
3. Put as much money down on the property as you can. Whether it’s 10%, 20%, or 30% down, make sure you have the cash ready. A lot of investors try to get around this by using other people’s money, but this can be risky. I’ve seen too many investors use other people’s money only to lose the property when they can’t make their payments.
Hopefully these tips helped you understand what goes into buying an investment property. If you want a free consultation about getting into investment properties, please reach out to me. I am always willing to help!