Since owning rental property for the past 23 years is what allowed me to retire at the age of 45, I can offer some tips on how to rent to decent people who will pay their rent on time and won’t trash your house or apartment.
Before I share those tips, let me first tell you that owning and managing residential rental property is not for the weak of heart. There are times you will be required to be confrontational. You will have to say no. You will, in some cases, have to evict your tenants. You will have to take money from their security deposit to cover damages and they will fight you on this. If you don’t stand up for what is right, your tenants will walk all over you.
I learned this the hard way. In the early years I absolutely had to have tenants in the two apartments that were below my part of the first tri-plex I owned. I couldn’t make my mortgage payment without them, so I pretty much ignored red flags and rented to anyone and everyone. I went against what my gut was telling me about some tenants, since they were waving 100 dollar bills in my face and I needed that money. Sometimes I got lucky, but more often than not, I didn’t. This is not a smart way to do business. Below, I offer the following list of tips on how to become a successful landlord.
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Even though the recession is technically in the past, many individuals and companies are still feeling the pinch. On top of that, there are concerns that a double-dip recession could be on the way. What does this mean for you? Well, it could very well mean that you could see your job in danger. You never know when the ax will fall, and you could be laid off at anytime.
If you are reading the signs, and concerned that your job may be one to go, it’s time to prepare. You want to be ready to spend as little time unemployed as possible. Here are 3 things you can do to help you prepare ahead of time — just in case:
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When it comes to making money decisions, we all like to think that we are rational creatures who will make the best decisions for our self-interests. Unfortunately, much more goes into any decisions we make than a simple cost-benefit analysis. Advertisers and retailers have long understood the irrational impulses that drive consumers, and economists are starting to catch up. That is where the (relatively) new field of behavioral economics comes in. Where classical economists were once baffled by apparently irrational money decisions, behavioral economists look at the psychology of decision-making and can help us to understand the psychological barriers to making good money decisions.
One common way that your brain is fooled when making a financial decision is an effect called anchoring. An anchor is a price point that gives you an idea of how much something should cost. Suppose you go out for a nice meal with your family. You want to order a bottle of wine for the table, but not knowing much about wine, you’re not certain what you should purchase. You see that the wine list includes a $100 bottle of wine, so seeing the $50 bottle listed next to it seems like an incredible steal.
You have to ask yourself if that is really the case. You probably would have been just as happy with the $25 bottle, but since you came into the situation without a clear idea of how much to spend, you’re likely to fall victim to the anchor price of $100. Restaurants understand this effect very well, and will often only keep one bottle of the expensive wine on the premise. It’s only there to sell the “mid-priced” wine, as no one’s really going to order it.
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This is Veoletta’s story on how she was able to retire early. She will be sharing her financial tips from time to time on MoneyNing.
I began planning for retirement when I was 24. I knew I would never have a job that provided a pension or medical benefits so I bought a three unit HUD foreclosure in Alaska for $90,000. The house was trashed and I didn’t have the money to pay a professional to remodel the three units so I learned how to do it all myself, saving thousands of dollars in the process.
I needed the three unit home because without the rental income from the two apartments downstairs, I couldn’t afford to make the mortgage payment. I also got two roommates and as a result, the mortgage and all the utilities were paid for by other people and I lived free.
My intent at the time was to keep the home forever. It would be paid for when I was 54 and with the tenants downstairs, I would have a steady income and a free roof over my head for the rest of my life.
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My time is just as important to me as my money. Perhaps even more so because while my income has increased, I still have the same 24 hours in a day that I always did. Recently I made the decision to give up one workday a week to doing volunteer work. It’s been a tough adjustment and I have had to turn down paid work to make it possible, but I don’t regret my choice for a minute.
I’ve come to realize that my time spent volunteering doesn’t only benefit those I’m helping, it’s also helped me in many other ways. If you’re at a place in your life where it’s feasible to volunteer a few hours of your time, I urge you to consider it. You’ll not only be making a difference for the causes you believe in, the time you spend volunteering are also a wise investment in your personal development, which in turn will help you meet your financial goals.
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It’s a deceptively simple question: do you want to own your home in 15 years or 30? We all know the pros and cons of each term — the shorter mortgage term has higher monthly payments, but you build equity more quickly and pay less over the life of the mortgage, whereas the 30 year term frees up money each month to be used elsewhere. But how do you know which is the right term for you? Here are some questions to ask yourself to help you determine which mortgage term to choose.
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