Becoming a Landlord

For those who are calling it quits from the traditional 8-to-5 world, either through retirement or downsizing, it might be worth considering a new career - that of landlord.

While being a handy-man might not fit into your traditional image of retirement, it could be a strategy that can kill several birds with one stone, especially for those who buy a small multi-family building, live in it and manage it at the same time.

$100k Duplex - 11% net cash on cash return

Owning and living in a multi-family house (a duplex or 4-plex, for example) can provide relatively predictable cash flow, the potential for price appreciation over the long term and, of course, a place for you to live. It could hold particular appeal for retirees against the uncertainty of the stock markets and the almost paltry interest rates on savings accounts.

Of course, unlike a stock, which you can just buy and pray that it does well during the market cycles, real estate is a bit more stable investment. But maintenance and business decisions will be on your shoulders.  That said, you should look at buying any investment property with the same eye toward price and expected returns as any long-term investment.

From a price perspective, this may be the best time to get into the landlord business. Low real-estate prices and the lowest interest rates in years make the cost side of the equation more favorable. Financing for smaller owner-occupied buildings is very much like a home loan; lenders will require documentation of rental income.  But that shouldn't be a problem.  The rental business has taken off over just the last year.  Rents have been on the increase across much of the country, even in places like Florida where home prices have continued to decline.  Families losing their homes to the bank (an unfortunate situation, to say the least) still need a place to live so landlords can pretty much look at long-term tenants for several years.

Also, there may be some tax benefits from being an owner/occupant because you can use part of the building as a business. This allows for deductions for things like depreciation and expenses that can be taken against rental income.

It should be mentioned that, as with any investment, there's no guarantee that when it comes time to sell you won't lose money.  While it's a long term thing, you should always keep track of the market.  This will help you decide when it's the best time to sell.  

Are you looking for US investment properties? Are you looking for a discounted short sale or bank owned property?  John Breaux can be reached at johnb@southernreo.com or  +1 504-208-4331.