Entrepreneur magazine recently reported that there are over 10 million small and medium sized landlords in the United States. That number continues to grow as more and more retirees search for ways to supplement whittled-down employer pension plans and protect themselves from economic downturns. As Jason Hartman advises, buying rental income real estate is not only the soundest possible financial investment, it’s also an investment in yourself, as you become a real estate entrepreneur.
What are the characteristics of a successful entrepreneur? In general, good entrepreneurs are self-motivated individuals who aren’t satisfied with the status quo. They want to be in control of their destinies and not at the mercy of others. They’re willing to try new strategies with the potential for better outcomes. Because retired first responders and those about to retire possess all these characteristics and then some, becoming a real estate entrepreneur offers a stable, secure way to take control of your financial future – and avoid living at the mercy of a vulnerable pension plan.
Within the limits of the Fair Housing Act and the local business and housing codes, you can decide how the property should look, who can live there, and how much rent to charge. You’ll be able to buy and sell properties as you choose, and establish your own schedule for maintenance and repair. You can decide what income level you want – and plan accordingly.
When you’re getting ready to launch a real estate investing career, think of yourself as an entrepreneur form the beginning, and take steps to establish the business aspects of managing your investment. Some areas to consider:
Invest in multiple properties. With good credit and the likelihood of consistent rental income to even out your debt-to-income ratio, you can most likely buy three or four rental properties of various kinds, optimally in different markets. This is a strategy Jason Hartman advocates, since it spreads the risk over a number of properties in case you run into problems in one area.
Maintain a home office. Although many entrepreneurs are reluctant to claim home office tax deductions for fear of triggering an audit, rental property ownership and management is a legitimate business with entirely appropriate exemptions for space, travel and other expenditures related to conducting the business of managing your property.
Keep detailed records. As we’ve noted in previous posts on this topic, owning and managing rental property entitles you to a number of tax deductions related to repair, maintenance, travel and hiring any contractors, managers or other assistants you need. Documenting all these things and filing all receipts establishes you as a professional running a business.
As uncertainty grows about the future of pension plans, there’s never been a better time to take control of your retirement income by investing in rental real estate – a move that puts you in charge, as a landlord entrepreneur. (Top image: Flickr | 401 (k) 2012)
The Heroic Investing Team