If you've ever considered becoming a landlord or investing in real estate as a means to build your nest egg you'll want to pick up a copy of Suzanne P. Thomas' book: Rental Houses for the Successful Small Investor. When good quality single family homes are going for bargain prices in many parts of the country now may be just the time to consider adding these properties to your portfolio. If you want advice from someone who has successfully invested in houses as a means of building wealth this is the book for you.
Thomas bought her first rental house at the age of twenty-three and was able to semi-retire less than ten years later. She shares what she's learned in this very detailed guide. This is no get rich quick book -- it's a serious, thorough discussion of the many things you need to think about when adding landlord to your job description.
Wondering how the finances of buying rental properties work? You'll get your answers here in chapters about the financial aspects of buying and owning houses to rent. Thomas has included sections on how to calculate rates of return, how depreciation works, what tax savings are possible, how to account for project maintenance costs and much more. She walks you through the calculations that you'll use when you're trying to determine how profitable a particular property will be. By the time you're done with these chapters you'll be armed with the knowledge you need to find the right place in your price range.
There are so many factors to consider when you're searching for the right home to buy as an investment. This book will give you a framework to use in selecting just the right house. Thomas acknowledges that some types of properties work better for certain buyers. Some people will be up for the particular challenges of fixer-uppers. Others with more money than time may choose to only look at new homes. There's even a quick calculation to decide between one home over another.
Once you find the right home you'll need to think about mortgage loans unless you're prepared to pay cash. The author writes at length about financing options for rental properties. She devotes an entire chapter to adjustable rate mortgages, her favorite, and covers the ins and outs of this product in depth. Thomas' method is to prepay her adjustable rate mortgages by adding an extra amount towards principal each month. She also touches on many other aspects of borrowing and types of loan products including portfolio lenders, the secondary loan market, bi-weekly mortgage payments, one hundred percent financing, construction loans and more.
After you've bought your rental house your next goal is to find tenants. Thomas shares her experiences as a landlord and thoughts on who makes a good tenant and how to find them. Where should you advertise for tenants? How should you check for references? Should you allow pets? What about smokers? When are the best months to rent an apartment? Who pays for insurance? Do you need to hire a property manager? What terms and conditions should you include in your lease? Who is responsible for maintenance? You'll find answers to all these questions and more.
The buying and selling of rental properties has special tax treatment under current tax laws. There's a chapter on 1031Tax Deferred Exchanges when an investor is selling one investment property and buying another. It's a complicated topic but with this overview you'll be well on your way to understanding how a 1031 Exchange may save you money on your next transaction.
With low interest rates and plenty of inexpensive houses for sale this is an excellent time to invest in rental houses. Before you do you'll want to read this book from cover to cover.
Elizabeth Bolton is a Cambridge real estate agent helping sellers and buyers of rental properties, condos and single family homes in Cambridge.
