Investment opportunities abound
Indications are that this year is a great time to begin your real estate investing activities. Investment opportunities in rental property continue to abound. In addition, current home ownership levels as a percentage of overall U.S. population continue to dip. Even with the advent of the current economic rebound across the country, renting is still preferred over home ownership…even when home ownership affordability has continued to get better. According to recently released statistics from the National Association of Realtors, with home prices increasing slightly the last two years in a row nationwide, coupled with relatively historic lows in mortgage interest rates, it is now an excellent time to become a home owner.
Renter insecurity as a market force
As a percentage of average per capita gross income, monthly costs of home ownership (with mortgage debt) are running about 16 percent of gross income, compared with 21 percent a year ago. Clearly, most new home buyers want to stay on the sidelines, preferring to rent instead. This is most probably due to their feeling insecure about their job situation, or the stagnation in their gross incomes over the last few years. Regardless, investment property becomes much more attractive when renters continue to rent – and rents keep rising in the process.
Now is the time – calling all landlords
According to an article posted on MainStreet.com, now is a great time to become a rental property owner. In the article (“For Passive Income, It’s a Good Time to Become a Landlord,” MainStreet, by Brian O’Connell, 2/3/15), Mr. O’Connell points out that “this is a good time to change your life and buy a rental property…a key part of wealth creation is creating passive income — money you earn while not actively working for it, and that’s where being a landlord can help. The idea is simple: Buy a property, rent it to reliable tenants and let them pay down the mortgage for you until the home is paid for. At that point, the entire value of the home is yours, along with any rent you earn after the mortgage is paid off.”
Do you have the right stuff?
Mr. O’Connell goes on to sum up what is primarily necessary to get into the real estate investing business: “It really does take the right stuff to be a great landlord. An entrepreneurial spirit, a hands-on, can-do approach and some good old-fashioned business savvy (along with time) are the ingredients in mastering the rental property game. And right now, it’s a game that’s paying off handsomely for the right players.” I think special attention needs to be heeded to his choice of words when he says “the right players.” This requires a fair amount of personal self-reflection in order to succeed.
And the right temperament?
In essence, this writer’s point is that it takes the right temperament and personality to be successful when real estate investing in rental property. Will you be the property manager for your investment property? if so, be prepared for those late-night emergency calls and some difficult tenant situations, not to mention the chore of screening tenants. Or, you can pay a property management company to do these activities for you. Just be prepared to spend between ten and fifteen percent of your gross monthly income (whether your installed tenants pay or not). It’s your choice – but be sure you run the numbers as to the feasibility of choosing the property management company route. Either way, you’ll want to maximize your investment opportunities now while, as Mr. O’Connell points out so very succinctly, “this is a good time to become a landlord.”
photos courtesy of houstonmortgagetexas.com, zillow.com, lawofficewalterjennings.com, tenantscreeningblog.com, anchorloans.com