Need A Retirement Job?
Become A Landlord.
The best retirement job is the one you create. Retirement often bores people. You can only play golf or go fishing so much. These activities cost money. The ideal solution is to become a landlord and earn money.
The rent you receive from your apartment, condo, or house is not considered wages. This is good news for those who may have taken early Social Security benefits. You will not jeopardize your benefits. In addition, you also get favorable tax treatment on the net rent you do receive.
When you become a landlord, you define your retirement job. If you do not want to unplug a toilet, you can either require the tenant to do normal maintenance or hire a handyman on a job by job basis.
Buying Your Rental Property
Becoming a landlord for your retirement job is not hard to do. It begins with finding the right property that fits your budget. As they say in real estate, the three most important things about real estate is location, location, location.
Now is an excellent time to become a landlord. Prices of real estate are down thanks to the sub-prime mortgage loan crisis caused by the government requiring banks to make loans to people who could not afford them.
Add in the fact that mortgage loan rates are the lowest in history and will likely remain so for the near term. Another plus.
Most of all, you have a slow moving real estate market with a large selection of rental properties available to buy. Slow markets always make some motivated sellers who desire to sell their properties at a favorable price and/or terms for personal reasons.
Banks will most likely require you to put a 30% down payment on non-owner occupied properties. If you intend to live in one unit of a multi-family, you may be able to buy the property with a smaller down payment.
If you can get the motivated seller to carry back a land contract, mortgage, or trust deed, you may not have to put 30% down. Creative offers can work in this real estate environment.
Don't expect appreciation on your investment real estate. The boom years are over for the near term. Concentrate on positive cash flow. You have to get enough rent to cover PITI. That is principal, interest, taxes, and insurance. You also need to factor in a vacancy rate and maintenance costs. Lastly, you need to collect a percentage above these costs for your profit or return on investment.
Renting Your Unit
Now your retirement job as a landlord begins. Be sure your apartment is in good repair and clean throughout. Quality tenants expect this.
Advertising your rentals can be expensive. This cost is part of your vacancy factor. Local newspaper advertising should bring you a mixture of tenant prospects. Our local newspaper also allows advertisers to place their ad online. This is great, as you can give more details about your unit and include pictures.
If you have a lot of units, be sure to create your own website. It costs very little and you do not need technical knowledge to make your own website.
The best part, you can find tenants for a fraction of the cost of traditional print advertising. We use, and recommend that you use, SBI to generate rentals leads.
Craig's list also provides a way to advertise online for free. Our experience is it attracts people searching online who are moving in from out of state locations.
But, beware of online scams. We recently had a "prospective tenant" from England who wanted us to reserve our condo for them sight unseen. They would send us a check for a few thousand dollars above our rent and security deport. They wanted us to take our portion and mail the difference to a third party who was going to "furnish the unit with furniture and decorate it".
This is a good way to lose thousands of dollars, since their check would most likely bounce and you end up sending good money to a crook. To make matters worse, you will still have to find another tenant and maybe lose a month's rent in doing so.
Always meet your tenant in person. Ask any legally permissable questions to screen them. Have them fill out a rental application. Then check with their two previous landlords if possible.
I had one prospective tenant admit she was in the process of a foreclosure and I was told to expect that this would appear on her credit report. At least she was up front and offered the information.
I didn't buy her story that it was her ex-husband's fault since he stopped making their mortgage payment after she moved out of the house when she started divorce proceedings. Even if it was true, she still bears equal obligation to make loan payments until her name is removed from the mortgage.
The current bad economy will create a number of displaced former home owners seeking a place to rent. You must pull a credit report on your tenant and get their written permission to do so. If they refuse, don't rent to them.
Your new retirement job as a landlord requires that you know your state and local laws. Your state may publish this information online. If you live in Wisconsin, you can download the booklet titled The Wisconsin Way - A Guide For Landlords and Tenants.
Use a lease that conforms to your state laws. You can choose to rent on a month to month basis or you can lock the tenant in to a six month or year lease. A longer lease should help you keep your tenants longer and avoid turnover costs.
Once your unit is rented, you can sit back and collect the rent without any more problems, right? Unlikely!
The more units you own and rent, the more situations will arise. Your retirement job will require handling tenant calls for repairs to complaints about anything. Handle them as quickly as you can.
You are obligated by law to keep your property in good condition. You will want to comply with all building codes. So keep your unit in good repair and avoid legal issues.
The nice thing about becoming a landlord, your tenant buys the property for you. You gain equity and create monthly cash flow.
So, if becoming a landlord sounds like a good retirement job to you, do some local research and make a few offers. Your retirement years will not be dull and boring.
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