How Much Do You think You Need to Retire/What Age Will You/Spouse Retire: General Retirement Issues (Part 2)

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@arisamp

I can’t find my older posts, so here are some random musings:

  1. How hands-on are you going to be? Are you going to manage it yourselves? Find your own tenants? Do your own repairs? Can you afford/are you willing to give up 10-15% of the gross to hire a manager?

  2. Cash or mortgage? Especially for condos, this makes a big difference. Many condo developments are difficult to finance if they won’t be owner-occupied.

  3. Do you have a thick skin and a spine, or are you a sucker for a sob story? If you are not willing to send the “notice to quit” after the rent is 3 days late, and be willing to evict, landlording may not be for you.

  4. Are you familiar with Fair Housing laws, lead paint laws, and the specific laws covering rentals in the state where your rentals will be? They vary a lot from state to state.

  5. What is your system for analyzing whether a particular property is a good investment financially?

  6. Do you have the skills to evaluate a potential property’s condition before you pay to bring in the inspector? Particularly with respect to deferred maintenance.

  7. Can you afford to carry it if it’s empty for months at a time or the tenant stops paying rent?

  8. Are you familiar with the tax laws around rentals? Even if you use an accountant, it helps to understand schedule E, and especially form 8582.

  9. What legal structure will you use? Someone suggested an LLC… This is not a decision to be made lightly as there are legal and tax ramifications for whatever structure you choose. These can be tricky to understand (for example, while an LLC can provide some asset protection, if you manage the property yourself you will be sued anyway so the LLC is pointless. A big umbrella policy may suit you better).

I did find my post on how we screen tenants. Perhaps it will be useful:

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