Thinking of buying Investment Property to lease out? Maybe you’re considering renting your personal home instead of Selling? Or maybe you want to list your home For Sale and For Rent at the same time and see which succeeds first? We can help with all of the above! Here are some tips to successfully lease your property... So read on, make some notes, and for additional assistance, call or e-mail us today!

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Let’s begin with some credentials to provide some credibility to these tips… Jeanette and Tal Kramer have been Full Time Licensed Realtorsâ since January 1991. We’ve personally owned and managed rental properties for over a decade and we’ve assisted numerous Investors in all aspects of buying, leasing, managing and selling rental properties.

Owning Investment property can be the best decision you’ll make to build that nest egg you’ve dreamed of. It’s not just the potential for property appreciation that makes rentals attractive. There are tax benefits as well as rental income to consider too.

In a down market, leasing instead of selling your property can be a smart decision. Collect the income and wait a few years for values to rise, when you can get more money for your property. In a down market, it’s a great time to buy investment properties at bargain pricing to maximize your appreciation down the road.

There are multiple approaches to purchasing rental property. One way is to “Leverage” your purchase to maximize the appreciation return on investment. To do so, you invest the minimum amount of money to purchase the property (+/-25% down payment), just enough so that your monthly PITI payments (Principal, Interest, Taxes and Insurance) are close to the market rent for the investment property.

Here’s a simple example: Buy a $200,000 single family home and put down $50,000 thereby financing $150,000. At a 5.0% interest rate on a 30-year fixed rate loan the monthly payment for Principal and Interest would be approximately $805. Add in $180 per month for taxes, another $50 per month for insurance, and another $65 for private mortgage insurance and the total PITI is approximately $1100 per month. Let’s say the property goes up in value only 3% per year for 5-years. After 5-years the value is now $234,000, which is a $34,000 profit on an initial $50,000 investment, a return of 68% or 13.6% per annum. And that’s being very conservative at using only a 3% appreciation rate.

The point here is the entire property value (originally $200,000) is appreciating at x % annually, not just the original $50,000 investment. The “leveraging” is using the appreciation of the entire property! If values rise 5% annually, that same house has just generated a 22% return annually. Leveraging works and we do it personally!

The other common approach is to invest for the “Rental Income”. Many clients pay Cash for their investment homes and benefit from the rental income to supplement their usual income, add savings to their retirement or simply obtain a better return on investment than their available options. We have clients that have withdrawn monies from low returning investments, put the cash into a rental and are now getting a 10% to 12% return. One client paid $120,000 Cash and rents the property for $1,000 per month. The $120k was only earning 5% in the CD but now earns 12% annually.

With our years of experience we can help guide you through the process. We can help you select and purchase the property, we can secure the tenants and write the leases and we can even manage the property for you. We can do any combination of these options as best fits your experience and needs.

If you’re thinking of investing or converting your property into a rental property, call us. We’ll help make the choices simpler J