Category Archives: Rentals

Owning real estate is the American Dream.  Part of the dream is to own income property that will complement your investment portfolio.  Owning income producing real estate with someone else paying for it, doesn’t get any better for you as an investor.  There are many benefits to owning investment property such as growing equity and gaining tax benefits.  But beware and be aware;  there are pitfalls  too.

Income property could be as simple as a two family, owner occupied home where you live in one unit, and the other is occupied by a tenant paying a fair market rent for the apartment.   Perhaps you might be more aggressive and buy a 3 or 4 family home.   It could even be a condo that served as your first home, and you kept it to use as a rental property after you moved out.  These options are a great way to get your feet wet as an investor.

So what can go wrong?  A lot!

No property or component of that property will last forever, so expect that there will be repairs.  It could be simple or it could be major.  You should maintain a reserve fund for these occasions and have a list of “expert” maintenance people that you can call.  “Must haves” are electricians and plumbers, as these are the most common emergency calls.

Vacancy is a part of business.  A tenant gives notice and moves out.  Ideally you want to have a seamless transfer of occupancy but that may not happen.  You definitely need to get the apartment cleaned and you may need to paint it.  You may need to shampoo the carpets or even replace them.  At minimum you may lose that time as rental time.  If you ask too much for the rent, you may not get potential tenants applying for tenancy, so being realistic will help minimize vacancy times.

Bad tenants happen.  Sometimes you can know it ahead of time and sometimes it just happens.  It’s important to make a good choice up front.  Having a qualified real estate agent handle the rental process for you is a good idea.  The agent will screen applicants to determine qualification.   The agent will check credit reports, verify employment and contact previous landlords and other references.  In the end, as a landlord, you want to be certain that the tenant can not only pay the rent on time, but be able to pay the utility bills for their unit.

No matter how hard you try, what resources you use in the rental process, or how strong a tenant might appear on paper, it is inevitable that you, as a landlord, will eventually go through the eviction process.  There are several scenarios that one might go through in this process, but ultimately you could end up in court.  Be prepared to incur legal fees, lost rents and a drawn out process.  Keep good records and notes.  Document everything as it pertains to the problem tenant, gather witnesses as needed, and the outcome, when it occurs, will more likely be in your favor.

So don’t be afraid to invest in income property.  It is a great way to build equity, and expand your investment portfolio.  Start small and grow.  Be patient.  We know what happens to real estate over time, regardless of the corrections that occur.  It moves higher in value!  Be in it for the long haul and you will be glad you did!

About the author: Roland Spadafora is a Broker Owner at RE/MAX Legacy.  Over the years, he has owned a few investment properties with success.  Currently he manages 15 units in Woburn for a Trust.  He is hoping to grow that portion of his business. He can be contacted through his website at www.spadaforateam.com