I'm still shocked at how often people are surprised by the fact that I manage rental property. They all hear the horror stories and ask me how I can handle the "stress." I've been managing properties for about 4 years and have 10 units all together.
As with every job or any hobby, it takes a little time before you get over the learning curve and the tasks involved get easier and easier. Landlording is the same way and I hate to let the secret out of the bag, but it's actually a lot easier than everyone thinks!
In this guide, I hope to provide a series of tips and strategies for investors to follow so that they can learn from my mistakes and experience.
Investing in rental property can be a very smart financial move for your overall wealth. Using the power of leverage, you can earn a larger cash on cash return when the market appreciates than with most stock market investments.
For example, you can buy a 4-family property in Reading for about $125,000. To finance this property, you'll likely need to put down 10% or $12,500. If the building appreciates 10% over the next 5 years, you'll have a gain of $12,500. This is a 100% return on the money you invested or 20% return per year.
Another great benefit is the tax write off associated with your property. You can write off the interest on the loan as well as the taxes and any business expenses that come with managing the property. The interest on a $112,500 loan for that building in Reading would be about $9600 per year. Taxes would be roughly $2,000 per year, and business expenses may be around $5,000 for the year. The total write-off would be $16,600! A sizeable savings will result.
Last but not least, you will hopefully earn some cash flow from the month to month mangement from the tenants. And as rents go up, your 30 year fixed mortgage will stay the same. So every year will get a little more profitable until you finally pay the building off. Then it's on to easy street!
Cincinnati is a great market to build a portfolio. Feel free to contact me for information on how to start your own investing and check back in the future to read more tips and techniques on how to become a top notch landlord.
