Step.3 RENT OR BUY?
Owning property is always an investment, especially if you can’t afford it when buying it, which applies to the majority of American citizens, as seen in the recent and continuous surge in foreclosures. You must be willing to commit to your investment like a managerial job in whatever location it is. Having others manage it will cut into your margin, which will already be almost zero. We're not only referring to income properties but also regular single family houses. A regular house means property taxes, home owners insurance, a life long mortgage, and of course the expensive time consuming hassle of constant maintenance.
For the sake of making our point of view as clear and as straight forward as possible, we'll examine the most obvious scenario that pertains to both a renter and a buyer, which is a person renting from the property owner.
again that renting means you’re paying for someone else's mortgage (which
is only partially true) and that buying income property is the way to
get rich (perhaps during inflated bubble periods). The people receiving rent apply that amount to all expenses including the mortgage, and also the period of time in between renters and delinquent tenants etc. In a perfect situation, the apartment lessor would have ideal tenants, living full-time and forever, with a future that didn’t coexist with the overall economy. These apartment owners not only have to manage the property, the tenants, all expected and unexpected expenses, but also face random challenges that will most certainly arise (economic swings, government policy, acts of god). Out of personal experience, we can say that these landlords earn the little you contribute to their equity, but highly doubt it’s worth it. These people are really just banking on a housing bubble that will either grow forever, or finally recover from a recent implosion. If of course, you're already involved in a rental property, it’s a matter of weighing out expenses verse income, the future real-estate market, and the most important factor; the time it would take to generate elsewhere whatever money is coming in. If you own $300,000 in property, then anything less than a lot of annual income is a waste of a full time job, because even the lowest of interest rates will yield multiple thousands of annual dollars, with no work and much less risk. If you have the option of owning property with no real risk or mortgage, you're probably not reading this guide anyway. If so, click a link and take a hike!
With all this said, we must also make clear that we're not totally against buying an income property; maybe even one you can’t afford. If you know what you’re doing and can spot a deal, then hell, buy the thing, and sell it as quickly as possible. Or even buy a cheap fixer upper with the intent of making the repairs yourself, providing you’re a master electrician, carpenter and finance aficionado. But otherwise, if you want to make money in real estate, you can either sell property for a commission, or sell overpriced kits promising to make people rich with real estate!
So, why do we say RENT!
Because you’ll have one less thing to worry about, except monthly rent. -Furnace crap out?
-Toilet causing water damage? Whatever, complain to the landlord. It’s not your problem (except for the temporary hassle of using the bathtub for more than just bathing). But now you’ll have a greater freedom than all those idiot property owners,
so just relax, read this guide, and ponder where you want to adventure
to. Don’t drift too much; we have a lot
more semi-random babble in store. -Go To Step.4 Kids & Pets