Are you interested in retiring early? Are you tempted by the lure of generating income from rentals? collecting rent for income is one of the most important reasons why savvy investors like real estate. After all, there is nothing more secure that someone else paying for your mortgage. However, can you rely on this investment income for your retirement?
Let’s explore what is involved with rental property ownership:
Financial Obligation: Even if you are renting the property, you are still obligated to make the mortgage payments even if you are unable to rent the property. You are also responsible for Federal, State and local taxes due on the property. Other financial obligations include insurance payments on the property.
Maintenance requirement: From Westernization to gutter clean-up, rental properties require round-the-clock attention. This is a lot of work specially if you don’t have help and are not handy with tools. We have written extensively about the rules to decide when you need a property manager. Maintenance requirements specially for older homes do justify hiring a property manager.
This also means that you keep all the common areas safe and free of hazards. You will also need to keep structural elements such as roof, walls, floor and stairs in good condition. All the electrical and heating/AC systems have to be maintained properly.
24 hours availability: Your tenants need to be able to request help any time of the day or night. This means that if there are plumbing problems that could flood the house, you need to be able to dispatch help to your rental property within minutes.
Finding good tenants: This is easier said that done, but tenant screening is a huge challenge for most small landlords. This is yet another reason to hire a property manager.
Bottom line: Keep in mind that just like any other profession, managing properties for income requires skills and time. If you devote enough time and energy you can master it. But if you would rather play golf in your retirement and play with grand kids, then you should hire a property manager.