I’ve been in the business of real estate investing for over 15 years now, owning and managing single- and multi-family rentals. The following is an excerpt from my book, The Landlord Chronicles:
“Since embarking on this journey, I’ve been approached by a variety of individuals who want information and advice about starting up their own real estate investing career. They’re people who:
- Are newly divorced or widowed
- Are in their 20s and 30s and want to supplement their income
- Are in their 40s and 50s , looking to escape the 9-to-5 grind associated with their jobs
- Are unemployed due to downsizing at their companies
- Have faced discrimination in the corporate world and decided to control their own destiny by striking out on their own
- Are in high income tax brackets and want to take advantage of the incredible tax breaks available to real estate investors
- Have taken early (or even late) retirement, in good health, and are “re-inventing” themselves as they take a new direction in the business world”
As you can see from the above list, a wide variety of people find this to be an attractive option, and for good reason! You can do it full or part time, depending on how much free time you have to spend. Also, you are your own boss. You make your own schedule, and can determine how much or little time you spend “on the job.”
Especially with what’s happened to the real estate market over the past couple of years, now is the time to buy if you’re interested in becoming an investor. In 2009, there were close to 3 million forclosures! And it doesn’t look like the situation’s going to improve in 2010 or 2011, either. Now is the time to buy . . .
Many of the people who lost their homes still have decent jobs; they just couldn’t afford the huge jump in their mortgage payment when their adjustable rate mortgage took effect after a couple years. The initial $800/month was manageable. But when it jumped to $1200 they couldn’t handle it and they lost the home.
The vast majority of those people are being forced into rentals. Bingo! There’s tremendous opportunity out there for us investors. I just bought a little 3-bedroom, 1 1/2 bath house for 1/3 of its market value. There were seven other offers on the table, so I had to give my highest/best offer, but still . . . I got it for a bargain basement price. There are thousands of homes across the country that are being offered at 1/3 of their market value.
So why not jump in and become a landlord? If you buy and hold for investment, you’ll make good rental income and build wealth over the time you own the home. If you have the cash, great. Go for it. If not, you’ll probably need to put 15-20% down as an investor. (Unless of course, you buy a multi-family and live in one of the units. You’re not classified as an investor if you do it this way. Check with your CPA.) Loans are harder to obtain these days . . . banks have tightenend their purse strings . . . but if you have a good relationship with your bank, they may be willing to work with you.
So, if you’ve been thinking about investing in a rental, now may be the perfect time. Prices may never be lower. Invest now, and that pot of gold will await, as you make money by renting, while the property value increases through the years.
Prepare well, trust yourself, and go for it! 🙂