I’ve been contemplating buying a rental property for a long time. I remember years ago when I was considering buying one, it just didn’t make financial sense. At the time, prices were at the point where I’d end up renting the property for less than the monthly mortgage payment. I can vividly recall reading articles from people like Robert Kiyosaki about how you just couldn’t go wrong with investment properties. He would cite how critical they were to building wealth and seeing your net worth increase. I’m so glad I didn’t listen to him and take the leap back then. If I had bought something back then, I’d still be dealing with a negative cash flow investment property and would have lost a TON of equity.
Fast forward to today and investment properties are a lot more attractive. Every time I do the math on a potential house, I find myself looking at somewhere around a $400 per month positive cash flow after factoring in the mortgage, taxes and insurance. The reality is that I haven’t seen such attractive equations in my life time.
With valuations so attractive these days, I find myself thinking about it almost daily. I think the thing that is keeping me on the sidelines is whether we’ve really found the bottom in real estate. If this isn’t the bottom, it’s got to be pretty close. The reality is that, even in a relatively prosperous area like the Northwest, house prices are much more in line with income levels. When you couple that with historic low interest rates, it’s really hard to find the downside to buying a property.
I said it’s hard to find the downside to buying an investment property, but it’s not impossible. I’ve had to really mull over whether I want to be a landlord. Is the positive cash flow worth the hassle of keeping it rented, dealing with crazy tenants and fixing things when they break? I don’t know. That’s one of the factors that’s keeping me on the sidelines so far.
What do you think? Are you considering buying a rental?