Tuesday, July 17, 2007

Are Rentals The Way To Go?

Are Rentals The Way To Go? What do you think? I know alot of people that own homes simply as income earners. To rent out their homes, to pay the mortgage and earn equity. I even know a few that have their retirement wrapped up in rental property. Is this a wise idea? Do you think that the industry will hold and rentals will be able to provide the income necessary for a comfortable retirement?

Well, I have asked a couple of the people I know that are using rentals as a form of income, either for retirement or as an investment to supplement their current income. One lady I know owns a home in what used to be an upscale neighborhood, now it is more of a college town. I asked her if this hurt her situation in being able to rent out her home. Her response was, even college kids need a place to live. While she did agree that the quality of renters did diminish slightly the quantity of renters jumped drastically and through the sheer quantity she was able to find quality renters that have been there for quite some time now and she is quite happy with the situation. When asked if she thought that the market would be enough to sustain her through her retirement she replied "I have taken out a second mortgage on this home and put it towards the purchase of another rental. The rent from this home alone is enough to pay the first and second mortgages on a 15 year loan. So yes, I do think that this will greatly sustain me and even if the rental market falls through then I will have the equity in the property to sustain me."

Another Gentleman I know is in the early stages of retirement and owns some rental property that he is currently trying to sell. When asked about his situation he replied "My rentals are sustaining my retirement, but I am getting too old to do the upkeep on the property. To try and hire out the work I would have to raise the prices on my rentals substantially and that would cause more vacancies and it is hard enough as it is to find good renters anymore. To try and hire people on what I charge now, it would bankrupt me."

So there are two side to every story, but I think that my opinion stands at, "If you have the means and ability to buy a rental property it would be a great way to supplement your retirement." As for finding good renters, Rentals.com and other agencies are a good way to go.

Even my suggestion for new couples looking to purchase a new home would be, look into a duplex, where you can live in one side and rent out the other to help with the new mortgage. It would be a great way to start and a good thing to be able to fall back on in the years to come.

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