More People Adding Real Estate to Portfolios

The Federal Reserve estimates that individuals, rather than corporations, are now landlords for roughly 60% of the nation’s rental units.

Rising home appreciation rates in many areas of the country have attracted investors, who might otherwise have put their money into stocks and bonds. In addition, more real estate brokers are specializing in income properties, making it easier for individuals to find and purchase suitable rental units.

If you’re thinking about real estate as an investment, be aware that you may not see a positive cash flow until a few years down the road. With a well-chosen investment, however, the rent you are able to charge will eventually exceed your mortgage payments and other costs, generating monthly income. Although there’s no guarantee, of course, the value of your rental property is also likely to increase over time. Before making an investment decision, be sure to follow these tips:

*Check the market to ensure local rental vacancy rates are favorable.
*Consider starting small, with a single-family unit or double, to get your feet wet as a landlord.
*Shop close to home. Even if you hire someone to manage the property for you, chances are you’ll need to visit it occasionally.
*Check the property thoroughly.
*Hire an inspector.

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