Location, Location Location…one of the oldest truisms in real estate and it still holds true today. Most new investors are only familiar with the city or state in which they live. They may know what is available down their street, or in their neighborhood. But is that the right place to own a rental? Just because you own your family’s home there, doesn’t necessarily mean that your neighborhood has the right features to get the returns you need. Is it a big rental market? Are large companies entering your area and bringing jobs with them? Were the properties built in the last century? More often than not, your own neighborhood is not going to bring you the returns you are looking for.

The high volume of real estate investors is driving up the cost of investment properties. Inventory is also low further increasing competition and prices. It’s becoming increasingly difficult to find properties at prices that make investing worth while.

When it comes down to it, the numbers are everything. What is my acquisition cost? What are the carrying costs? What are the rents? If the sales price is too high, the rents too low and if your mortgage payment, association fees, repairs, utilities, taxes, insurance, and all other carrying costs eat up all your rental income you won’t get the ROI you need.

Buying an existing home, especially one that may be 10, 20, or even 50 years old, means that you will soon be faced with needed additional costs…new roof, new boiler, renovated kitchen, updated flooring, peeling paint and lots of other items that can cost you thousands.

Though owning real estate sounds right to you, spending your time managing the property on a daily basis does not. Finding tenants, creating leases, responding to complaints, supervising repairs, chasing late payments is not what you want to be doing. Your time is best spent with your family and your primary job. You don’t have the time or expertise to be the landlord.