Rental Property Frustrations - Unexpected Repairs
This is where I recommend purchasing a vacant property that has been completely renovated, is new construction or that you completely renovate after purchasing.
Sometimes there is a really good and unforeseen reason a seller is selling an already cash flowing property. Sometimes, they are just retiring from the business, moving away or sometimes they are just tired of all the late night phone calls because the toilet is blocked, the roof leaks, the stove stopped working, the windows are drafty, the washer has stopped working or any other variety of reasons a tenant calls. Sometimes you just shouldn’t inherit someone else’s problems.
Starting out with a newly renovated or new property means there should be few if any maintenance issues. Then pick a great tenant, a great tenant will take care of a home as if it were their own.
One of the ways I mitigate unexpected repairs is by purchasing a home warranty at the time of purchase and continuing to renew it. I also build the deductible into the tenant’s lease and make them responsible for the $75 or $100 fee. I have found, if they have to pay something towards the repair it cuts down on the frivolous calls and makes them more cautious in the use of the property.
A cash flowing rental property, if done right, will be an excellent long term investment and quite often will yield you higher than the average return on your 401K, IRA and definitely more than your savings account.
Consult a financial planner that is familiar with using self directed IRA’s to invest in real estate and an experienced Realtor that understands investment property, rental properties.