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Investing in property for extra income or retirement savings is not a new concept, says Cheryl Turner, a John. R. Wood Properties broker associate.
Real estate may seem like a solid investment, with increasing rents, available financing and solid appreciation making the opportunity even more attractive these days. But, property investment is not for everyone, Turner says. There are a few important things to consider before deciding if it’s right for you.
“You have to know your numbers and know the rental market, or work with a good Realtor who’s going to help you put those numbers together,” Turner says. Costs include not just the asset, but maintenance, insurance, taxes and more.
“If you can’t make a certain return, well, then it’s not something you ought to be doing,” Turner adds.
You also need to know how the particular area you would like to invest in is performing, because “real estate is so regional,” Turner says, and just because one neighborhood is doing well doesn’t mean the next one over will be. In addition, some communities may comprise more seasonal, retired residents, while other areas may include more year-round workers.
Real estate also requires maintenance. “It’s not just something that you’re going to buy, sit back and not pay attention to,” Turner says.
If you’re not handy, you’ll have to hire service workers to maintain the property. If you don’t want to oversee the team yourself, you’ll need to hire a management company. Those costs add up.
With that said, Turner sees a current shortage of rental properties in Southwest Florida—especially with homeowners who suffered Hurricane Irma damage in temporary spaces and part-time residents in town for the winter—which means this could be a good time to explore investment opportunities.
If you’re unsure of whether to invest in real estate for greater earnings down the line, Turner suggests visiting an accountant who can assess your tax situation and help you decide what’s best.