Some people have a natural affinity and knack for finding great pieces of real estate. You
should consider these issues if you’re thinking about becoming a landlord:
- If you are moving and considering turning your residence into a rental, ask yourself this: If I were buying a piece of rental property, would I choose this one above all others available? If not, sell the house while you can still avoid taxes on the profit.
- Will you have to pay someone to manage it or will you live nearby and check on it?
- If you manage it yourself, will you follow up on late payments and be ready to evict a family, if necessary?
- Are you familiar with zoning regulations where the property is located?
- Will real estate be a part of your retirement portfolio?
- Are you a handyman and/or do you have access to a reliable DIY person?
- Are you flexible enough to answer calls about termites on a Saturday afternoon?
- How will you finance and how long will it take to “cash flow” (ie, put money in your pocket each month)?
- Are you buying just for a stream of rental income or will you try to sell after a few years and make money on the growth in value?
I’ve always like Nolo.com’s landlord products. If you decide to try your luck at owning rental property, I recommend you download their Leases & Rental Agreements and maybe Every Landlord’s Legal Guide. They also have a Tax Deduction guide, but since you probably shouldn’t be filing your own tax return if you own rental property, you should ask your super-smart CPA for suggestions.