Wouldn't it be great to just have money appear in your mailbox every month, without your having to do a thing? When you own rental property, you’ll often hear the term “passive income”: You rent out your building and the cash just comes to you! 

Unfortunately, it doesn’t quite work that way. Investment properties do still need to be taken care of, in terms of finding renters, maintenance, and upkeep. But it may not be as hard as you think to successfully manage investment property. 

As the population ages, more people are looking to supplement their retirement income, and investing in real estate can be a good choice. Rental apartment searches were 46% of home type searches in 2016, according to a new joint report by Chase and Google, which means there is a big market out there for decent rental housing. By starting now, before you’re ready to retire, you’ll be building a nest egg that really could pay for itself in the future. Once the mortgage is paid off, all the rental income comes straight to you! 

Being a landlord is basically running a business, though, so it’s critical that you know what you’re getting into. It’s important to investigate your mortgage options for investment properties as you begin your research, and I’m available to review the types of mortgages available to you any time. Here are a few other things to consider before choosing to invest in rental property: 

How Passive Do You Want Your Income to Be?

Often you can choose the level of time and effort you want to commit to your investment. If you really want to experience passive income, you may consider hiring a property management firm that does everything from finding tenants to filing your tax documents, saving you lots of time and effort. If you’re more of a hands-on person, your rental property will need regular maintenance, and you can get in there and do the jobs yourself in order to save some money. 

What Are the Risks?

If you’re directly in contact with your tenants, you’ll need to be prepared for calls at all times of the day and night if something goes wrong. A burst pipe or leaking roof can’t wait. 

Financially, you’ll need to be able to weather periods when your property sits empty and you’re not getting any income toward the mortgage, as the market ebbs and flows. The ideal is to find long-term tenants who take good care of your property and pay the rent on time. 

It’s up to you to decide whether the benefits of a somewhat passive income, a diversified investment portfolio, and an increasing amount of cash flow justify the risks involved in investing in real estate. As an experienced mortgage lender, I’m happy to review your financing options with you and discuss the numbers. Together we can determine if owning a rental property is the right investment for your future! 

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Nicholas Dolata
Mortgage Advisor
Peoples Home Equity
550 Broadway
Sonoma, CA 95476
Office: 707-931-4963
Cell: 707-721-6536
Fax: 415-366-6860
NMLS: 1230641
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