Something that I have been wanting to get into is rental real estate. It isn’t for everyone though, and I have been debating it for years and I’m still not sure. If it was easy, then everyone would be doing it!
I have heard of people who love having rental real estate and it has really helped them grow their income, but I also know of people who have left the rental real estate market because they had a lot of bad luck.
Here are things that you may want to think about before you get into rental real estate:
If you plan on getting into rental real estate, then it can really be beneficial to know how to repair things around a home.
You can also save a lot of money this way because you won’t have to hire out for anything that goes wrong, and with rental real estate many things can go wrong. The house will age and things will just break, or you may have a bad renter who breaks things (don’t assume that they will pay for the damage).
Can your income cover a bad rental month?
It’s always nice to think that rental real estate will make you rich, but that is rarely the case. What if you had a bad month where the monthly rent only covers the repairs that you have to make? What if you have no renters or your renter doesn’t pay?
You still have to pay the mortgage payment each month, so you will want to make sure that you have enough saved just in case you have a bad rental month.
Do you want it to be passive?
Even though having rental real estate is a lot of the time called “passive income,” for the most part it usually is not. Unless you have a property management company manage your rental real estate, there can actually be a lot of work required, especially if you do not have good renters.
There are a lot of things that go into having a rental home – you may have a bad renter or you may have a good renter, something might break in the house that you will need to repair ASAP, and so on.
If you want it to be more passive, then you will probably have to fork out more money in the beginning and while you own it. You will need a good property management company, you will have to find great renters, and you will need a house that won’t need a lot of repairs.
Do you plan on getting into the rental real estate market? Why or why not?