The two of us were talking last night and agreed that fundamentally, owning and renting real estate is still a good investment when it’s done by “traditional means”. What are traditional means?
- Buy a diamond in the rough in a good location (walkability, schools, transportation, etc.)
- Putting 20%+ down on a loan
- Getting a loan with good terms appropriate for your circumstance
- Doing home improvements overtime mostly with cash
- Having adequate insurance
- Paying more than the monthly minimum towards principle
For most, this should be a long-term investment. Avoid putting 0% down on an interest only ARM and flipping the house hoping to make a 100% profit. That may work on occasion, but it will just as frequently backfire. Think 2008.
If you make this long term commitment, eventually you can rent your place for extra income. If you’re considering becoming a landlord, be a money conscious landlord and know what you should expect and do in advance.