Jumping into investment real estate this year ? Good info with a quick easy read, my basic criteria for useful information:

Here’s a huge oversimplification of the article links shown below:

ROI – your rent should be at least 1% of the purchase & set-up cost of your rental. e.g: You paid $85k to buy and rehab, it better rent for $850. Further, expect around 50% of the rent to be expenses (less if you have a mortgage).

My add to the thoughts: Annually evaluate your properties against each other AND against what else you could swap the lesser performing houses for. i.e: You can sell it for $200k/ it rents for $1250/mo., find another that will rent for the same that 1.costs less OR 2.costs the same but will rent for far more.

Renovations – Think practicality and ROI. Don’t go cheap for cheap sake and don’t over pay because its so snazzy. This is a business, not a glossy magazine.

My add to the thoughts: MANY. We’d need to sit down for this as each person, area, and property has different types of strengths and weaknesses. These need to be evaluated up-front BEFORE buying. I still believe that ‘the profit is made at the time of purchase’.

• http://affordanything.com/2016/04/28/one-percent-rule-gross-rent-multiplier
• http://affordanything.com/2016/11/01/rental-house-kitchen-renovations/

You want to invest but are afraid you won’t get paid. You also realize that a lawsuit against that mean `ol landlord can make the most honest look for ways to sue. Enter the Self Directed IRA.

Lets summarize:

Concerns:

1. Not get paid
2. Lawsuit lightening rod

1. Have prospective tenant get a Section 8 commitment before purchasing investment
   • &/or make offer on property subject to expected tenant getting Sec 8 approval – works with non foreclosure properties.
2. Invest not as individual but as SD IRA / LLC holding title: actions would potentially be limited to the insurance policy related to that property –
   • Make sure you do not manage the property during occupancy of tenant or when they are home or tell them all the wonderful things you preformed on the property, then liability may be added to you as the one who built the steps

    

Want to learn more ?

• Take a look at our Pinterest area for visual charts etc.
• There is more info on our SD IRA page and FreeRent101.com sister site.
• Consider attending a local SD IRA event – we’ll attend with you if you wish.
• Give us a call. We’ll chat by phone &/or meet informally.

“Income property can be an important bridge to retirement for those without quite enough to retire in the traditional sense,” says J. Camarda, a real estate investor, Certified Financial Planner, and Chief Investment Officer of Jacksonville, Fla.-based Camarda Wealth Advisors. Because real estate is such an inefficient market, it’s possible to find awesome bargains with a very high return on investment, Camarda says. And if you can manage the property yourself, you can collect more income.

Well, speaking from 2 generations of experience, I must agree. Dad helped put us through college with his investment properties that we would work on in the summer. When I got to college, I didn’t have enough funds to pay for the final year tuition, room and board. So I found a small house, cleaned it up over summer with a bathroom/kitchen gutting, and let 2 roommates pay 100% of my room cost. I held that for 10 years after graduation making a monthly income and having a nice equity build paycheck at the eventual sale. What did I do with the funds ?…bought local rentals for a new income stream closer to home. 30 yrs and some 50+ tenants later I can recommend this strategy if you have a mentor you can call on from time to time. ( ps, we’re available ! )

Feature article link

additional resources:

http://www.hgtv.com/income-property/show/index.html