THE SECRET TO SUCCESS YOUR RICH UNCLE FORGOT TO TELL YOU...
You've done it. You are living the american dream. You are in your home and you are able to manage those monthly payments comfortably. It's been a few of years and, based what your neigbor's home just sold for, you have a little equity. You're thinking, "Maybe it's time for a change." You think maybe you should "move on up" to that bigger home in the "nicer" neighborhood. You may be right. Now may be the time for you to sell your home and "upgrade". Before you start packing, consider this....
What about investing in rental property? Maybe you don't think of yourself as an investor. Only people like your rich uncle own rental property. Ever wonder how your uncle got rich?
Yes, it's a risk. If you don't have a renter for a couple of months, it get's tough to make those mortgage payments. Even worse, what if your tennant destroys your house and doesn't pay the rent. It can be quite costly in California to evict a tennant. Not to mention the call on a Tuesday evening stating that the water heater has caught on fire and now there is no hot water.
These are all very real things that have happened to my husband and I personally, but I would do it again and again. Nothing ventured, nothing gained. When we bought our first rental property, we never thought of ourselves as "landlords". Chris was working as an exterminator and I was running a day care in my home. We were living in an 1100 sq. ft. home in a modest neghborhood. It had not been long since we had been renters. Chris got the idea that we should refinance the house and get a better interest rate. We called our mortgage broker (who was also our realtor) and asked her for advice. Chris thought maybe we could use equity toward a rental. I thought he was crazy. Our broker initially did not take the inquiry seriously. I suppose we were not very impressive during our transaction. She looked into it and found that our credit had increased substatially in two years. She found us a cute halfplex in a nearby up an coming community. We did not hesitate. We wrote an offer the first night out looking. After a short escrow (a daily bout of buyers remorse), we found ourselves proud new real estate investors. We placed our ad and found our first tennant. A year and a half later, we bought our second rental. (New broker and Realtor, but that's a dfferent story). We've learned a lot in the last few years. Credit screening - a must. Always hire a professional - no more do-it-yourself. We've still got a ways to go and a lot to learn, but we're game.
I look at our experience this way. If we can do it, anyone can. There were, and still are, very stressful moments in our investment career. We have to try. The alternative is not trying. We realize that in order to retire, we need residual income. Now don't get me wrong, we're not rich...yet. Through our experience we have become people with goals. Our goal is to leverage our income now to buy us time in the future. We can see our dreams now. Investing in real estate has done that for us.
We would love to hear from other investors or those interested in becomming investors. Post your comments or just give us a call or e-mail.
Regards,
Janet Gaut