Finding viable sources for steady income without increasing the amount of work required in a given week is tricky. You want more money, but if you spend all your time working, what good is the extra cash? You should consider purchasing an investment property to supplement your income over time without adding to your weekly burdens.
Image via Flickr by Philip Taylor PT
While the housing market is in full-blown recovery mode, the crash fundamentally changed the way that consumers view the industry. Millennials in particular are starting to question the quality of an investment in housing. This line of thinking creates an opportunity for savvier consumers. People who research the recession learn that homeowners performed better financially than renters from 2007 to 2009. Owning a home is better than renting, yet conventional wisdom questions this logic.
Taking Advantage of Market Misconceptions
Because so many people have a misconception about the cheaper way to live, you as a potential investor have a rare opportunity. The housing market, while stable, is not poised to explode in growth anytime soon. While prices are static, buyers have a natural advantage. You can pick carefully among many options to find the best potential revenue generator.
Choosing the Right Property
Since you don’t want to spend your non-work hours fixing up your property, you should choose a location that is turn-key. In lieu of that, decide how much of your free time you are willing to spend performing general handyman tasks. If you are willing to get your hands dirty, you can build some sweat equity in addition to earning rental revenue. Base your decision upon your current skills and inclination to spend your free time improving a home where you will never live.
Planning for the Client
Understand that if you become a home investor, you are effectively becoming a landlord. There are new responsibilities that you’ve never had before. Consider taking a few online classes at a school such as Marylhurst University to learn how to carry out these new tasks. A financial planning course is also a good idea since you will have more income than ever before.
Meeting the Client’s Demands
At some point, you’ve been a renter, which means that you understand those needs. You need to satisfy your renters by providing an easy payment structure for them. You need to provide emergency contact information so that if the pipes burst, the roof leaks, or something catches fire, the renter can reach you immediately. Appreciate that if you choose to become a rental homeowner, you are adding more responsibilities to your daily life. If something breaks, you are the person responsible for fixing it.
Planning an Exit Strategy
Flipping homes is a viable way of making money. If the housing market improves, your asset should increase in a value, as the rising tide lifts all boats. Such a scenario provides you an out if you decide that a rental home is not right for you or if you would rather have the extra money now rather than gradually over time.
Buying a rental home is a serious decision. Weigh the benefits of improving your financial future based on the considerations above before making your choice.