American Apartment Owners Association

A missing lease agreement in California is not a reason to withhold rent

Mon, 04/03/2017 - 10:04pm

Question: A month ago, I signed a one-year lease when I met with the onsite manager at the community’s rental office. I paid the deposit and first month’s rent. The manager took the lease agreement with him, saying he would have the owner sign it and return a copy to me.

I have called him and texted him to ask for a copy, but he is not answering me. Do I have to continue to pay rent?

Answer: Yes. The vast majority of rental agreements are in writing for a simple reason — the terms are clear to everyone.

California Civil Code section 1962(4) specifically states that the agent must provide a copy of the written rental agreement or lease to the tenant within 15 days of its execution by the tenant.

Even though you contacted the manager several times, you should send a formal letter and copy your manager’s supervisor or the owner. Make sure to keep a copy of your letter for your files.

Also, once each calendar year after that, upon request by the tenant, the owner or owner’s agent is required to provide an additional copy to the tenant within 15 days of the request. Your property manager’s failure to comply with this requirement does not relieve you of your obligation to pay rent, but that failure may be a defense in an eviction action filed by the landlord based on a claim that you have breached a term of the lease.

If the owner or owner’s agent claims that the rental agreement is missing from their file, they must furnish you with a written statement indicating that fact and including the following: name, address and telephone number of the person to whom rent is to be paid and the form in which rent payments are to be made to that person. The onsite manager, as well as the owner, is responsible for providing you with a copy of the signed rental agreement under California Civil Code section 1962(d).

Keep asking in writing for a copy and keep paying your rent. If the landlord ultimately files an eviction action because he wants to replace you with a new tenant, you will have some proof that you believe there is a lease and that you have been asking for a copy of it.

However, if you don’t pay your rent on time, the landlord can evict you from the property.

Source: latimes.com

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The Subtle Ways Landlords Keep Out Transgender Renters

Mon, 04/03/2017 - 10:02pm

Transgender and gender-nonconforming individuals face pervasive housing discrimination, according to a recent study. It’s worse than researchers expected, and the people being discriminated against may not even know it.

Researchers at the Suffolk University Law School Housing Discrimination Testing Program in Boston used a pretty straightforward test to determine this. A trans or gender-nonconforming person would respond to a housing rental ad, and then another individual who had similar characteristics but was not trans would go see the same unit. Researchers compared their treatment.

When trying to rent an apartment, the first group received discriminatory treatment 61 percent of the time, the study found.

To make sure the person showing the apartment knew a prospective tenant was transgender, testers were trained to bring up their identity casually, like sharing that their legal name would be different for a credit check.

Thirty-three teams of two people, who worked separately and did not meet, participated in these “matched paired housing discrimination tests” from December 2015 to June 2016, checking out apartments identified in a randomized listing search for studios and one-bedrooms in the Boston area. Testers answered a long list of questions about the experience, like whether they were offered an application or shown other available units. There were major differences in some answers.

Trans and gender-nonconforming individuals were 21 percent less likely to be offered a financial incentive to rent, and 9 percent more likely to be quoted a higher price. They were 12 percent more likely to be told negative comments about the apartment or neighborhood, and 27 percent less likely to be shown extra facilities, like a laundry room or pool.

In one pairing, a tester was told the security deposit would cost four times more than the price offered to the control subject.

“It’s really shocking to see that people are being quoted a higher rental price. That’s just wrong,” study author Jamie Langowski, clinical fellow and assistant director of Suffolk’s Housing Discrimination Testing Program, told The Huffington Post.

It’s legal to discriminate against LGBTQ people in most states. Massachusetts and 19 other states, however, outlaw gender identity-based housing discrimination.

The study adds to evidence that the housing industry, which has a long history of now-outlawed forms of discrimination, allows bias against LGBTQ individuals to flourish, even in states where it’s illegal. A National Center for Transgender Equality survey of trans individuals in 2015 found that 23 percent experienced housing discrimination in the previous year.

None of the testers in the Boston study were explicitly prevented from renting, and some of the individual differences seem minor ― like a control tester being told the kitchen would be freshly painted before moving in, while the other individual was not. But they stacked up to a clear pattern of discriminatory treatment, said Langowski and coauthor William Berman, law professor and director of the testing program.

Part of the problem is that it can be “discrimination with a smile,” Langowski said, so potential renters may be unaware of mistreatment.

Berman and Langowski argue that their study demonstrates the need for federal law preventing housing discrimination based on gender identity.

But under President Donald Trump, there’s already been a rollback of LGBTQ legal protections. Trump signed legislation this week that weakens rules protecting lesbian, gay, bisexual, transgender and queer federal contractors from discrimination. Earlier this month, the administration withdrew a policy that prevented schools from discriminating against transgender students.

With a flurry of discriminatory legislation under consideration and an uptick in hate crimes against transgender individuals, housing discrimination ― widespread, but often subtle ― might not be advocates’ biggest concern. But Berman argued it’s nevertheless an urgent issue.

“There are significant consequences if you lose the ability to live where you want to live only because of who you are,” Berman said. “It affects every part of your life. It affects your ability to have economic opportunities, like commute or proximity to work, health, proximity to health care, education … so even if you don’t know it, you’ve lost a very significant opportunity.”

Berman and Langowski acknowledged that 33 pairs is a small sample size, but said it’s still the largest study of its kind and produced statistically significant results. The research was conducted in partnership with the city of Boston and funded by a grant from the U.S. Department of Housing and Development.

Fair housing programs ― some of which root out discrimination based on race, age, disability and sex around the country through similar paired tests ― don’t appear to be at risk in Trump’s proposed budget cuts to HUD, though some organizations are worried that they will no longer be a priority.

“Are we concerned when we see budgets that require significant cuts? Absolutely,” Berman said, “because the work is important and we want to see it continue.”

Source: huffingtonpost.com

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FOUR HOT FLOORING TRENDS

Mon, 04/03/2017 - 2:01pm

There are a number of flooring choices out there on the market, and it may be hard to pinpoint which flooring type is best for a new build. But some products are winning over buyers more than others for the benefits offered. Remodeling contributor Kacey Bradley presents four flooring trends that homeowners love right now.

1. Hardwood Floors, Where Gray is Still King Hardwood floors, and similar wood-like floors, are a classic choice only gaining more popularity. The primary preference is for gray-toned wide planks, without too much sheen on the finish. However, the going-green trend is gaining on gray flooring. As green trends increase, demand for wood flooring is likely to shift toward locally-sourced and sustainable materials.

2. Luxury Vinyl is No Contradiction, it’s a Hit Echoing the wood floor and sustainability trends, luxury vinyl is no contradiction, though it sounds like it. According to the World Floor Covering Association, it’s the quickest growing area of the industry in the last two years. Amazing photo technology has developed that makes it possible to very closely mimic wood grain. Clients and their guests will have to do a double take to tell the difference. Luxury vinyl may be done in plank or tile, but plank is the more popular choice, with many pros and a few cons. The luxury plank vinyl is water- and moisture-resistant and may be glued in place. It’s also low maintenance, fiberglass reinforced, antistatic, affordable, and provides a natural look.

3. Stone Flooring is Durable and Timeless Stone is as old as the Earth itself and was used to build countless beautiful buildings over the course of history. Today, stone is one of the top flooring trends that homeowners consider for a floor remodel, due to its low maintenance, customization, sense of luxury, and the fact that it’s long-lasting. Stone flooring is primarily popular in kitchens, and the stats prove this: transform the kitchen, and the client can expect as much as a 7% increase in home value.

4. Recycled Carpets Reclaim the Floor Continuing the sustainability trend, recycled carpets—where old carpeting and plastics are recycled into fresh and clean carpeting for client homes—are popular. Since 2002, it’s estimated that 3.6 billion pounds of old carpet have been recycled.

Remodelers may encourage homeowners to recycle their old carpet for an upcycled upgrade from a carpet reclamation center. Remember, it’s bold color that clients are loving. Regardless of which trend the client is interested in, this idea will also improve the sustainability practices of remodeling businesses.

In addition to a floor that looks great, clients also deserve a floor that will stand the test of time, scrapes, moisture, and everyday wear and tear. Hardwood, luxury vinyl, stone, and reclaimed carpet each offer a unique set of pros and cons the remodeler will need to help the client navigate.

Keep in mind the importance of sustainability trends and practices as you speak with your client, and remember to always put their best interests first.

 

Source: remodeling.hw.net

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How to Successfully Screen Tenants For Your Investment Property

Thu, 03/30/2017 - 10:51pm

Believe it or not, effectively screening tenants can help you to eliminate as much as 95% of rental problems. That said, for those of you who find it difficult to relax when experiencing vacancies, then you’d probably want your property to get rented as soon as possible, right? Well, familiarize yourself with these tips to ensure that you’ll be able to screen the tenants properly.

5 Ways to Screen for Future Tenants:

1. An Application Form Can Do Wonders Before anything else, make sure that your prospective tenant would complete an application form. Don’t worry; if you have never written one before, there are a lot of rental application form examples from the local real estate association. Likewise, you can also create one using a Microsoft Office template and you’re good to go.

The application form should cover everything necessary regarding the rental property and the policies the tenant should obey. For best results, make sure that the application form contains financial information, personal information, and employment information. It should also state that a criminal history report, background check, or credit check can be requested, and the tenant would give full authorization in case it’s needed.

Pay attention to the following:

– Current income: The income of your prospective tenant should be enough to cover the rent and other living expenses.
Current and previous employers: It’s important for you to have an idea how long the tenant has been at their current job, and if he or she has been switching jobs every couple of months.
Financial information: Credit cards, bank accounts, balances, and minimum monthly payments could help you get a better picture if your tenant would be able to pay the monthly rent on time.

2. How Much Do You Earn Every Month? Don’t be afraid to ask this question as it will help you determine if the prospective tenant is indeed capable of renting your property. As a landlord, you obviously want a tenant who earns regularly and would have enough to settle his monthly bills. For example, if the monthly rent is $2,000, then you’d want a tenant that earns more than $2,500 every month.

However, you should also keep in mind that the monthly income wouldn’t be able to tell the whole story either. That’s why additional information, such as how much debt they have, will help you determine if they can really pay or not. By running a credit card check, you’ll know how much debt they have.

3. Ask If They Will Have a Security Deposit and First Month’s Rent Ready When They Move-In Their answer to this question would indicate their current financial situation. Wherein, if your prospective tenant doesn’t have enough money ready, and would request if it’s possible to pay the security deposit after a week of moving in, then this should raise a red flag. You have to think carefully if they can even afford paying the monthly rent. You don’t want to start a tenant relationship with your tenant being indebted to you from the start.

Furthermore, as much as possible, don’t allow a tenant to move-in if they haven’t paid the whole amount yet. Never negotiate or make exceptions, no matter what. Always require your new tenants to settle in full before moving in.

4. How Many People Would Be Living in the Apartment? Ideally, you wouldn’t want more than 2 people occupying a bedroom. Likewise, the fewer people in the apartment, the less damage it’s going to bring on the property. Aside from that, a lot of municipalities and fire department also have a limit on the number of people that can reside an apartment.

5. Ask Your Tenant If He Has Ever Been Evicted Before Although there are possibilities that your prospective tenant won’t be 100% honest, it’s still worth trying. Basically, directly asking the tenant whether they have been evicted before could also be beneficial for them as they will be able to explain why it happened. Keep in mind, even good folk’s fall on hard times, and don’t let the eviction fully disqualify them. However, you should also be wise enough and weigh if you really should give them a shot.

Finally Finding a great tenant isn’t as easy as it may sound. However, with the help of a screening process, you’ll be able to learn more about your prospect and it’ll also help you avoid any problems in the long run.

 

Source: realtybiznews.com

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America is building more apartments than renters want

Thu, 03/30/2017 - 11:05am

The US apartment market remains overdeveloped, with supply outpacing what prospective renters are asking for, especially in the most expensive segment of the market.

US apartment occupancy slipped to 94.5% in the first quarter from 95.1% last fall, according to the apartment-data provider Axiometrics. Properties completed in late 2016 and 2017 are “scrambling” to find their initial residents, especially in the luxury market, the firm said in a report Thursday.

Over the past two quarters, demand for apartments was more than 100,000 short of the number of units that were available.

“Apartment markets are still solid, but we knew that this would be a year when apartment supply would outpace demand,” Jay Denton, vice president of RealPage’s Axiometrics business, told Business Insider. The company estimates that new deliveries would average 102,000 units per quarter for the rest of this year, compared to 82,000 in late 2016 and early 2017.

Two things are driving the current oversupply. The first is that the first and fourth quarters tend to be seasonally weaker because some people put off apartment hunting until the weather is warmer. The other reason is that the housing market has recovered to a point where it is difficult for apartment owners to maintain the level of occupancy they had in the past.

“This year’s deliveries will provide relief from previous product shortages in much of the country,” said Greg Willett, RealPage’s chief economist. “Still, it would be surprising if overall demand kept pace with completions for the remainder of 2017, and there are clearly some individual neighborhoods becoming overbuilt in the luxury product segment.”

Some new properties are offering concessions like a month of free rent to encourage lease signings. This is common when buildings are going through the initial leasing phase. But Denton added that New York, for example, is seeing more concessions being offered compared to a few years ago even for apartments that are not brand new.

Some of the fastest-growing markets for rents have not seen rapid enough economic recoveries to return construction to aggressive levels, RealPage said. Also, demand for apartments in the low-to-mid price range continues to be strong, keeping rents elevated.

This chart shows the markets where rents increased the most in Q1.

 

Source: businessinsider.com

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In these apartments, millennials don’t even have to change light bulbs

Thu, 03/30/2017 - 9:06am

How many millennials does it take to screw in a light bulb?

None, if they live in one of Rane Property Management’s apartment or townhouse complexes in the region.

That’s because the father-and-son development team of Anthony and Nicholas Cutaia has carved out a niche by marketing many of their rental properties to millennials and other young professionals who want a high level of services and amenities.

Tenants can call management if a light bulb goes out, and someone will come over to replace it.

Forget about carrying laundry down to the basement or a laundromat, because every apartment has its own washer and dryer.

Rane even sends someone around to pick up the garbage, so that tenants don’t have to lug it out to a trash bin.

“I’m capable of changing a light bulb,” said Liz Callahan, 30, who works with members of her generation as program manager for the Buffalo Niagara Partnership’s BN360 young professionals group. “If I had the option to not climb a ladder and change a light bulb, would I? Probably.”

To be sure, there are other property management companies that offer high-end services and amenities. And the services Rane provides are reflected in the rents the company charges, which range from $1,080 for an 805-square-foot one-bedroom apartment on Grand Island up to $2,230 for a 1,653-square-foot three-bedroom, two-bath townhouse in East Amherst.

But the Cutaias said the apartments and townhouses appeal to their target audience. And they had better, because Rane keeps building more.

Rane Property Management has $150 million in apartments and townhouses under construction or nearing completion in Amherst, Grand Island, Hamburg and Lancaster, Anthony Cutaia said.

“We can’t get to the level where we put too much into the unit. We keep making them like a house,” said Anthony Cutaia, Rane’s president. “It seems like every little feature we add, people are willing to pay for it.”

A living room in a model apartment at Rane Property Management’s Heron Pointe apartment complex at 1993 Grand Island Boulevard on Grand Island. (John Hickey/Buffalo News)

Cutaia said he grew up in the development business in the Toronto area. He came to this country in the early 1980s and is an American citizen now.

Rane’s first project here was Dockside Village, a complex along Transit Road just north of Wolcott and Dann roads, which opened in 2006.

The Cutaias work with a group of about a dozen investors to provide the financing for their various projects. Further, Cutaia said, they are partners with Morgan Communities of Rochester on about half of their projects.

The projects underway or soon to finish include:

  • Clifton Heights in Hamburg, where the clubhouse is set to open in June and the entire project should be finished by June 2018.
  • An expansion at Dockside Village, where Rane is adding 244 units to the existing 276 units at the complex, almost doubling its size to 520 total. The work started four months ago and pre-rental of the new units has begun. People should be able to start moving in starting in mid-summer, and the last of the 18 new buildings should be finished within 18 months.
  • Fairways at Lancaster, which boasts 76 upscale villa-style apartments for seniors. The project, which should finish up by May, was built on the former nine-hole Harris Hill Golf Course in Bowmansville. Rane initially planned 250 apartments at the site, but after running into opposition from neighbors, scaled back the development to the townhouses. Rane left three holes of the golf course for residents to play.
  • Heron Pointe, on Grand Island, where Rane is building 232 apartments in 20 buildings. Work started about six months ago and should wrap up within 12 months. The first 40 or so residents already have moved in, and the clubhouse is open. A pool and cabana area will open by summer.
  • Lockwood Villas, Amherst, located on Sweet Home Road, near Dodge Road, has 69 units of townhouse-style apartments that should be finished by June.

That doesn’t count Rane’s proposed development of two, five-story buildings in northwest Amherst, on Niagara Falls Boulevard, near the former Evergreen Golf Course. The buildings would have retail and garage parking on their first floors and a total of 152 apartments on their upper floors.

That project has a price tag of $15 million to $18 million, Cutaia said.

“We have investors who believe in us, and we put up a lot of our own capital as well, and away we go,” Cutaia said.

A number of developers offer upscale apartments with expensive design touches and attractive amenities within their complexes. Rane does that, too, but it really tries to win over its 20- and 30-something tenants with a focus on attentive service.

Cutaia said tenants can call building management, leave the old light bulb on the counter, and someone will come over to change it.

As for garbage, he said, tenants don’t like having to drag their refuse across the parking lot to a trash bin. So management provides them with containers, tenants put the garbage-filled containers out in the hallway between 6 p.m. and 8 p.m. and someone comes by in the morning to pick it up. That’s in the newer, larger complexes with elevators, and Cutaia calls it “trash valet.” For the townhouse-style units, with attached garages, tenants can wheel their trash right out to the street for pickup.

“I don’t know how to put this politically correct, but millennials don’t want a lot of heavy lifting,” Cutaia said. “They like to be serviced, so we service the heck out of them.”

The properties also offer 24-hour emergency service, so if a smoke alarm goes off, an employee will come right away.

Cutaia showed off Heron Pointe, which is partly completed, to a reporter last week. The clubhouse features a fitness center, a theater room with a large-screen TV and a bar area that can be rented out, though residents must provide their own alcohol. It opens up on the soon-to-open 46-foot, salt-filter pool and cabana area, with a gas grill. It also will have a playground for children and a dog park for pets.

A two-bedroom, two-bathroom townhouse-style apartment there rents for $1,425, Cutaia said. That type of unit includes an attached garage. It comes with gas or electric fireplace, all of the kitchen appliances included, a washer and dryer, balcony or patio and large walk-in closet.

Empty nesters, and snowbirds, also like the townhouse setup without the hassle of owning a home.

Those features and services don’t come cheap, however. Many of the rents Rane charges are higher than a monthly mortgage payment in the area. Cutaia said once property taxes are factored in, the costs are closer.

The difference between the millennials who seek out Rane’s properties in the suburbs and the young professionals who want to live downtown, or in the Elmwood Village, Cutaia said, is Rane’s millennials are slightly older and more likely to be in a steady relationship, or to be married with a child. “It’s the transition time,” he said.

Callahan, the Buffalo Niagara Partnership’s employee, said she soon will move into The School Lofts @ Abbott, the former St. Thomas of Aquinas School in South Buffalo, which Karl Frizlen converted into apartments. Callahan said she appreciated that she won’t have to lug her laundry to her parents’ house, a laundromat or to the basement because her apartment will have its own washer and dryer.

The millennials she works with through BN360 are working 40 hours a week, some of them have families, some are trying to get startup businesses going and others are involved in sports, so a chance to outsource a task such as housework is appealing.

“I think if you look at a lot of life hacking and time management articles, it’s not about being lazy, it’s just about priorities and using your time more efficiently,” Callahan said.

 

Source: buffalownews.com

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5 worst real estate investing mistakes

Thu, 03/30/2017 - 9:02am

Investing in real estate is glamorized on television and in the media. Having attended a “no money down” seminar or watched one of the many beautiful reveals on HGTV’s “Property Brothers,” you might be tempted to rush into the real estate market. Before spending a dime, learn to identify and avoid real estate investing mistakes.

NOT UNDERSTANDING YOUR CREATIVE FINANCE OR ADJUSTABLE-RATE LOAN

Not knowing the limits of your loan payments can cost you thousands of dollars. Interest rates are at their lowest level in decades. If a seller offers a “creative finance” deal or the lender recommends an adjustable-rate mortgage, tread carefully. Depending on the terms of the loan, your payment might increase when interest rates rise, which is expected to happen throughout this year and beyond.

IGNORING THE DOWNSIDE OF YOUR REIT INVESTMENT

Many investors enjoy the juicy dividend payments associated with investing in real estate investment companies or trusts, commonly called REITs. Yet, like all investments, the price you pay for a real estate investment trust will fluctuate. Be aware that both the dividend payment and value of your REIT investment can go up and down. As with any investment, it’s important to understand what you are buying before you invest in a REIT fund.

FORGETTING THAT INVESTING IN PROPERTY IS HIGHLY ILLIQUID

Real estate investing isn’t the same as investing in the stock market. You can buy or sell a stock or fund online in minutes, with the click of a mouse — that’s not the case when investing in real estate. Large transaction costs are common in the real estate industry. Buying and selling rental properties or buying a home involves many steps and a lot of time.

THINKING THAT FLIPPING HOUSES IS A QUICK WAY TO MAKE MONEY

Don’t believe what you see on HGTV: Flipping houses doesn’t happen in one hour. If you’re hankering to flip residential real estate, read some real estate investing books first. Buying a property at auction frequently requires an all-cash purchase, and you don’t even get to view the inside of the house. If you overpay, you won’t make a profit.

UNDERESTIMATING COSTS

Whether you’re seeking to buy rental properties, industrial real estate or even retail real estate, it’s easy for costs to get out of hand. Always overestimate — rather than underestimate — the costs. Real estate management is expensive and includes closing costs, fees, commissions, insurance, repairs, maintenance and carrying costs. When a tenant suddenly moves out, you face a month or more without rent.

Source: crescent-news.com

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Should real estate be part of my retirement plan?

Thu, 03/30/2017 - 8:57am
Jake Walker in Michigan asks: I am 25 and wonder how I’ll retire since I won’t have a pension like my parents. Last year, I bought a rental property and my return was much higher than what I saw on my 401(k) and Roth IRA. I look at this as a way to diversify my portfolio and also generate cash flow in retirement. Basically, my version of a pension. Is this a good approach to have?

Jake Walker is doing a lot better financially than most of us are at 25 years old. Since he tells us he’s already maxing out his 401(k) and saving money in a Roth IRA, adding real estate to his retirement portfolio could be a smart move.

“I think it’s a really smart idea to look at real estate as an income-producing pension replacement,” said Maggie Kirchhoff, a CFP at a Colorado- based firm called Business & Personal Finance.

She’s seeing more Millennial clients looking at rental property as an option and became a landlord herself to add diversity to her portfolio.

As you’ve probably guessed, there are some downfalls to investing in real estate. If you don’t already have your own emergency fund and stock investments in some traditional retirement accounts like Walker does, you’re probably not ready for a rental property. (And becoming a landlord may never be for you.)

But there are still ways to make real estate a part of your investment strategy.

Here’s what financial planning experts have to say:

Why it could be a good idea:

1. The more kinds of investments you have, the better.

Diversification is important, especially when you’re saving for something so far into the future. You invest in a variety of stocks because when one sector falls, others hopefully don’t. And you invest in bonds because they aren’t as volatile as stocks, and tend to move in the opposite direction. Diversification reduces the risk of losing a big chunk of money at once.

“Real estate is great for adding diversity to your portfolio. It’s tied to the market like anything, but it’s not going to be correlated the way stocks and bonds are,” said Angela Coleman, a CFP at the Kentucky-based Unified Trust Company.

She said not to expect property value or rent to ever jump significantly. While that sometimes happens, steady growth over time is more likely.

‘ll get from charging rent.

In the beginning, you won’t see a lot of this money. First, you have to cover your mortgage payments. Then you have to pay for things like insurance, taxes and any homeowner fees. Expect those three expenses to take up at least 25% of the rent, Coleman said.

And don’t forget about the cost of any maintenance the property needs or gaps between tenants. She suggests putting aside some money from the rent to build an emergency fund.

But hopefully you’ll have paid off the mortgage in 30 years and by the time you retire. If you choose to continue renting out the home, you’re looking at a stream of income. Or you could choose to live in the home or sell it altogether.

Why it might not be for you:

1. Surprises. You never know when the AC might break, the roof could leak, or a pest problem could turn up.

2. Becoming a landlord can be a lot of work. “There’s always the worry that you can’t find a quality tenant. Finding tenants, processing their applications and running background checks is definitely time consuming,” Kirchhoff said.

You could hire a management company to do that work, but that will eat up even more of your rental income.

3. It’s a big commitment. You’re not tied to contributing to your 401(k), IRA or mutual fund. But that’s not the case with a rental property, said Coleman. You must pay the mortgage, taxes and insurance. And if the roof leaks, you have to fix it.

If you decide to invest in rental property:

1. Build an emergency fund separate from your personal savings. Save at least the amount of the highest deductible on your insurance policy, Coleman said.

2. Do your research. There are different laws in different states that landlords have to follow, Kirchhoff said.

3. Be prepared to put at least 20% down when buying a property you’re going to rent.

If it’s not for you:

Maybe renting out a house or apartment is more responsibility than you’re willing to take on right now. Or you may live in an area where property is just too expensive. You can still make real estate a part of your retirement savings by investing in Real Estate Investment Trusts, or REITs.

“It could be a good idea to invest in an exchange-traded REIT for someone who can’t quite jump in on owning property yet,” Kirchhoff said.

REITs are funds that invest in variety of real estate, including residential and commercial, or mortgages. An exchange-traded REIT trades just like a stock so you can invest in one through an IRA or other retirement account. While it shouldn’t make up the bulk of your investments, adding a small percentage of real estate funds adds another level of diversity to your portfolio. But it won’t, of course, generate cash flow like you’d expect to see from a rental property.

 

Source: money.cnn.com

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