With this economy I am considering investing in real estate to use as rentals for income.It seems to be the best place to invest long term.Is it?

Asked by Dooney, Galt, CA Wed Oct 12, 2011

I am on SS,and recently was awarded $500,000.I have never invested and with this economy it makes sense to me to invest in real estate which can produce rental income.Most people are saying its a headache,but with good property mgmt.I dont see the problem.I have lots of medical expenses so I have the write offs.I realize I lose the advantage of paying interest as a tax break by paying cash .I am looking to buy 3 houses in the Galt,Ca. area. If I did have a renter problem,at least I wouldnt have a mortgage co. on my back.Whats your thought? The money I am using is a workmans comp settlement.

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My NC Homes…, Agent, Chapel Hill, NC
Thu May 31, 2012
I'd suggest you proceed slowly and with reasonable expectations. I'd also look around for a very experienced by broker who works with investors and can offer you guidance. I've attached a link below on how to find such a buyer broker.

The general rule of thumb I suggest to my investor clients is 10 years gross rent is maximum acquistion cost. In other words if a property will rent for $1,500 a month , that's $18,000 a year or $180,000 maximum purchase price. Obviously if you can find a home that offers this type of rental income for under $180,000 that's to your advantage.

The other advice I'd offer any new real estate investor like yourself is never procrastinate when it comes to collecting rent. Someone should be knocking on the door the moment the rent is more than 24 hours late. If they don't collect the rent right then and there, you should immediately start the eviction process. You can always stop it, but never under any circumstances procrastinate.. Tenants must pay rent on time or they must go there's no middle ground if you're going to be counting on this money for your cash flow.
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GTOptions, , Indian Beach, NC
Thu May 31, 2012
The first and foremost thing that comes in our mind is too buy low and sell high, whether what type of investment it may be. You are very comfortable with Real-Estate investment but there are other investment that are being most popular in financial market and also giving the opportunity of making money.
Web Reference:  http://www.gtoptions.com/
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Alyssa P. We…, , Sacramento County, CA
Thu May 31, 2012
Depending on the condition of the home and your experience in real estate, it could be great. Working with a property management company costs around $40-90 per month, and they will usually take a fee around half of the first month's rent when they first rent out the property, but it will save you time and a headache. It's a simple equation to look at a properties rental value against the purchase price to determine your return on investment.
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Michael Luck…, Agent, Elk Grove, CA
Wed May 30, 2012
I agree. When considering an investment, the normal road of travel we all wish to move in, is to buy low and sell higher. We can only hope at the time to sell, the investment has appreciated.
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Tina Lam, Agent, San Jose, CA
Sun Oct 16, 2011
In this uncertain economic environment, I personally believe that real estate offers the best pockets of opportunity for retail investors like yourself. Buying the right property can get you a far higher yield than stocks and bonds at far lower asset valuation.

Of course, the challenge is knowing what to look for as you don't ever want to dive into just any rental opportunity. The difference in investment return performance between the wheat and the chaff is quite substantial, often 2-3x.

Work with a local experienced real estate broker who can guide you to the best deals. And, given that you're on SS, I would recommend you pay cash for any properties you may buy, since you won't likely qualify for any meaningful tax advantages through a leveraged purchase.
Web Reference:  http://www.archershomes.com
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Doug & Bud Z…, Agent, Placerville, CA
Sun Oct 16, 2011
Real estate investing is has increased and offers great opportunities. However, it does have unique challenges. Save some of your noney for a reserve and start with only one for a trial base.

We have information that may help you on our website: http://www.sierraproperties.com
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Johnny Huang,…, Agent, Walnut Creek, CA
Thu Oct 13, 2011
You should talk to a financial planner. Always plan on "what if"...what if your tenants don't pay, what if you need to evict your tenants, what if you can't find tenants.

A lot to consider, but income property boils down to cash flow. Always be in the positive each yearly projection.

Don't start over extending yourself but doing 3 houses at ones IMO. Start with one, and get to know the ins and outs of property management, then do more later on as you understand the process. That way when you hire a management company, you know what to look for.
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