By Sara Huebener
I've always been an advocate of owning real estate as part of one's financial portfolio, and, whenever possible, including investment properties among that list. I believe that if one can tolerate the nuisances that go hand-in-hand with investment property for a considerable period of time, ownership of investment properties can reap big rewards.
On Christmas Eve, we purchased another investment property. It was a bank-owned townhome in solid structural condition, but rough shape (if that makes sense). The home has some unique and attractive features such as beamed and vaulted ceilings, large rooms and a finished basement. And with a purchase price at 46% of its most recent sale price and 65% of the price of comparable actives, it appeared to be an attractive investment.
We are in the process of wrapping up Week 3 of the rehab on this home, including long, 3-day weekends of work. It has cost a handful of people hundreds of hours to work on plumbing, replace locks, fixtures and appliances, patch walls and doors, replace vanity tops and shower doors, paint, and CLEAN. The home is almost ready to go. I am wrapping up the final pieces later today with paint and the carpet. It is looking great and we are hoping to turn this into a clean and safe home for someone.
Such homes are seldom the "easy money" they are portrayed to be on HGTV, even after the repairs are completed. Owning rental property can an interesting experience. It is important to screen tenants well, and even then, nothing is guaranteed. We have had good renters in some of our units, and not so good ones at other times. Our best renters have always paid rent on time and kept the unit in good order. Even so, a Sunday night call about a broken washing machine is not uncommon. One tenant I had in a rental in Apple Valley riddled my months with headaches from non-payment of rent, trashed the unit and ultimately needed to be evicted. Fortunately there was a co-signor. On the other hand, my friend Pat had a renter for 20 years who was absolutely wonderful. He was very fortunate.
It will be interesting to see how this one goes. We have bought and sold rental properties over the past eight years. I expect it will continue to be an ongoing piece of our long-term financial plan. It's not easy, but neither is working while raising a family or saving for college. Preparing for the future is just "something we do". If you think you can tolerate the workload that goes into maintaining an investment property, I would encourage you to try to pick up a property soon. There are some amazing deals out there right now!
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