I am so pleased to have Jennifer Streaks, the well known personal finance expert, speak to me today. I have known Jennifer for a number of years. I had asked her about her thoughts on being a landlord and how that fits into a person's overall finances. She was gracious enough to give her insight.
Before we talk about being where being a landlord could fit in someone's overall financial picture, where should a person be financially before taking the plunge?
Jennifer Streaks:
Becoming a landlord can be profitable, but also expensive. Before pursuing this type of investment one should be financially sound, meaning having an emergency fund and a savings account. Most importantly, you need to be able to carry the mortgage on the rental property for several months if you cannot immediately find a renter or a major repair is required.
If you were to look at an individual’s finances, when would you say they have too much of a concentration in real estate?
Jennifer Streaks:
Too much of a concentration in real estate? I think you do what you can afford. Just make sure other savings and retirement vehicles have been completed.
If someone was starting out would you say concentrate on your 401k or a real estate portfolio?
Jennifer Streaks:
Definitely concentrate on the 401K first. An investment in real estate is not liquid, meaning that if you need cash next week or even next month, real estate is not an investment you can immediately go to, but your savings, emergency fund or 401K is. Be sure that you have enough cash saved in case anything were to happen.
Any rules of the road to follow?
Jennifer Streaks:
Rules of the road: when collecting rental payments make sure to save a percentage for necessary maintenance down the road.
Let's say a person wants to invest, what is the best to save up for a downpayment?
Jennifer Streaks:
The best way to save for a downpayment is just do it. Having it automatically taken out of your paycheck and let it build up. Also, if you see a property you think might make a great investment property before you have the total downpayment, try to work with the seller or the bank to put less down.
Should people buy for value or income?
Jennifer Streaks:
Buy for value or income? A little of both. You want to buy in any area where you will see your investment grow (overall value) and also buy a property to maximize what you can charge in rent (income).
About Jennifer Streaks
Jennifer Streaks is a nationally-recognized expert on personal finance and affordable lifestyle living. She delivers practical and cutting edge information to help you face the challenge of getting and keeping your financial house in order. Due to her extensive background in consumer finance, she has been an on-air commentator for years and is an established financial author having written for The Huffington Post, Motley Fool and Black Enterprise. Jennifer has been featured on ABC, MSNBC, FOX Business and HuffPost Live, her sought after financial tips show consumers that you can achieve an “affordable lifestyle” and that finances do not have to be a chore. Follow her on Twitter @JStreaks and like her on Facebook.com/JenniferStreaks. Visit her website at www.JenniferStreaks.com