Real Estate as an Asset

Real estate is a hedge against inflation because it tends to keep pace with, or exceed inflation, in terms of appreciation. But some people can’t stomach being a landlord. Here are some pointers about including real estate in your portfolio.

1. Your first investment property could be your business location or immediate equity in your business, as my dad told me.

2. Investment real estate has a shorter loan period and higher down payment when borrowing from a bank.

3. Make sure your rental income covers at least principal and interest (P&I), insurance, taxes, and repairs.

4. Anticipate a two- to four-week vacancy after each tenant to clean and make repairs using the security deposit.

5. You can leverage the equity in your property once it has equity in it to buy the next property.

6. You can own real estate without being a landlord by buying into real estate investment trusts (REITs). REIT aren’t doubly taxed like corporate stock; they are pass-through entities. Always be sure you understand investment risks.

You Need a Team Behind the Scenes

Like most things, you need a team of people to count on.

· Find a realtor who understands you’re buying investment property and what your goal is, whether it’s your first or tenth real estate purchase.

· Make sure you have a plumber, electrician, HVAC specialist, general contractor, and roofer you can count on. When there’s a problem, you’ll need reliable, trustworthy contractors to do the job right and at reasonable rates.

Consider getting a real estate license, even if only to be a referral agent where you negotiate a referral fee with the primary realtor.

· Being a landlord can be a huge step. Talk it over with your significant other, parents, or friends who have already done this.

· It’s exciting, and you might find you like it!