Better Homes and Gardens Real Estate Life

Category: Finance

  • Step 10. Building Wealth through Homeownership

    step 10Buying a home is viewed as a symbol of the “American Dream” for many and provides a sense of security in an often-unstable economy. Many desire this, but are not sure if it is a tangible financial investment that can turn into a profitable venture long-term. Understanding the meaning of wealth can help you make the entire process more reassuring in the long run.

    What is Equity?

    Equity is the amount of home that a person actually owns. This total is not the mortgage amount, but loan balance subtracted from the value of the home. If this number is positive number, congratulations, there is equity in the home and therefore wealth. If the number is a negative number, then the buyer will likely owe if the home is sold and be indebted at the sale.

    Example:

    Home market value    $322,000

    Mortgage Owed          $100,000

    Your Home Equity      $222,000

    If you sold the home at the market value, you would have $222,000.

    This value can fluctuate dependent on the market, but statistically stays within a 10% average, making homeownership a smart choice. Equity is valuable to the consumer because a homeowner can use these untouchable funds later in life to pay for burdens or unforeseen costs such as home improvements, a new home, college or emergencies. This of the home as a savings fund that will not be touched until the transfer of ownership.

    Overall, this is a popular way to increase wealth because the net worth of the family increases over the years. According to the Federal Reserve, the median net worth of a homeowners in 2016 was between $225,000-$230,000. For families that rent, the average net worth was $5,000.

    How Does Equity Grow

    Equity grows with the value of the home, not just the amount paid down by the homeowner. If a home is in the right market, values can increase as the area becomes more desirable, increasing the property value and the equity margin. For example, if a home is appreciating at a rate of 4% per $10,000, this can be leveraged from a $10,000 investment to a $100,000 investment.

    Benefits to Homeowners

    • Forced savings: This is a way to create a steady savings without having the cash in hand to put into a savings account. For buyers who may have a hard time putting money aside for the future, this is a great way to save funds without manually putting the money aside.
    • Value Versus Renting: People who rent have nothing to show for their payments towards a property when they depart a home. This is the downside to renting. Renting is great in the short-term, but provides zero benefits to most Americans when trying to save for wealth.

    When weighing the pros and cons to a home purchase, consider long-term goals. If a goal for the family is to save for future needs, purchasing a home in the right market can make profits that outpace even the stock market. Weigh the options and choose what is best for the family by discussing the decision with lenders, agents and family.

    Build Wealth
    Build Wealth

  • Should We Buy a House Before or After the Wedding?

    Many of today’s couples want to experience what it’s like to live together before they tie the knot. As commitment looms, it only makes sense to stop renting and buy a house – or does it? There are a variety of factors couples should consider before buying a house together.

    Decide on One or the Other

    Buying a house and getting married can drain finances. It is crucial for you and your partner to decide which is more important right now. If buying a house before getting married is your goal, there are still many things to consider.

    Both of Your Credit Scores Could Matter

    If you buy a house before marriage, you will likely be assessed individually. In the best-case scenario, you and your partner both have excellent credit and can secure a loan. If one of you has poor credit, it may be better to buy a house after marriage to increase the likelihood of obtaining a loan. Once you’re married, the individual with better credit has the option of applying for the loan on his or her own.

    Student Loan Debt Will Be a Factor

    One of the biggest hurdles for young couples looking to purchase their first home is outstanding student loan debt. The amount you owe affects your credit score which, in turn, will affect the loan amount you get approved for and the interest rates that follow. Depending on your situation, it may be in your best interest to focus on paying off student loan debts – and your wedding – prior to purchasing a home.

    Marriage Status Doesn’t Change the Mortgage Rates

    Mortgage rates are a huge factor when determining the best time to buy a home. You want to get the best rate possible. However, your marriage status doesn’t affect mortgage rates in any way. Whether you buy a home before or after marriage makes no difference in the loan amount and interest rate you’ll qualify for unless your credit score changes.
    Start the Excitement of Marriage Sooner

    Inarguably, one of the best things about buying a home before the wedding is being able to start life together before you exchange vows. This allows you to enjoy the joy and excitement of married life well before the big day. Living together is also a great way to bond with one another on a new level.

    Consider State Laws

    If owning a home together is a high priority in your relationship, you’ll want to research state laws. Some states do not allow couples to share legal ownership of a home if not legally wed.

     

    Deciding whether to buy a house before marriage depends on a variety of factors. Aside from love and commitment, there are legal and financial issues that should be considered to ensure that you make the best choice.

     

  • You just got a mortgage preapproval. Now what?

    If you are in the market for a new home, getting pre-approved for your mortgage is one of the first steps you must take. In fact, a mortgage pre-approval should be obtained even before you start your home search.

    What Pre-Approval Means

    A pre-approval is not the same as getting pre-qualified for a mortgage loan. Pre-approval involves approaching a mortgage lender and asking for approval to obtain a mortgage in the future. The mortgage lender will look at your credit score, employment history and current financial situation and use that information to determine the amount you can borrow for your home purchase. If you are approved, you will receive a pre-approval letter that can be used as a bargaining chip when you buy your home. Sellers love to see a buyer who has been pre-approved already, as it shows that the buyer is serious and has come prepared with financing to buy the home.

    What to Do After Receiving a Mortgage Preapproval

    Once you receive your mortgage pre-approval letter, it’s time to start shopping. You can begin browsing for homes online to see what type of property will fit your pre-approved budget as well as your needs.

    With a mortgage pre-approval letter in your back pocket, you now know what you can afford to spend, how aggressive of an offer to make and how stable your financial situation is for a home purchase. Now that you’ve narrowed down your options, you can have a better idea of which homes to look at. To get an even clearer understanding of what homes are available to you, reach out to a Better Homes and Gardens real estate agent who has both the experience and the market knowledge to help you find the home of your dreams.

    When you find a home you like, you can use the mortgage pre-approval letter as a bargaining tool. When you decide to make an offer on a home, make sure the seller knows that it is an offer with a preapproved loan behind it. This will increase the chances that the offer will be accepted. In fact, some sellers will accept a lower bid from someone with a pre-approval letter over a higher bid from someone without one.

    Does a Pre-Approval Letter Last Forever?

    Pre-approval for home loans is not an infinite tool. Lenders are well aware of the fact that your financial situation can and will change with time. Check the letter to see how long the pre-approval will last.

    Also, remember that a pre-approval is not a guarantee of the loan. It means that you are approved to get a loan, unless something changes. The lender will ask more questions when you are ready to actually buy a home, and many factors, including the appraised value of the home, any title problems on the property and any changes to your financial situation, will be considered before you are actually granted the loan. With that said, unless your circumstances are unique, most pre-approvals turn into loans once your offer is accepted.

    For more information about the home buying process, reach out to a Better Homes and Gardens real estate agent. Our real estate professionals would be more than happy to help you better understand the real estate process.

  • Your house is underwater. Now what?

    What do you do if you need to sell a house that is underwater? The term underwater refers to a situation where the market value of a home drops below the amount you owe on the mortgage.   This can have detrimental effects on the financial standing of the home if the market does not improve. For instance, if the lender on the home’s mortgage does not receive a monthly payment, and you as the homeowner are either already in default on the loan, or if you are in danger of falling into default, then being underwater could leave you very limited choices when it comes time to sell a home. However, the good news is that there are ways for you to sell your home even if it’s underwater.

    Do a short sale on your home. If your house is underwater and you need to sell your home now, a short sale is likely the best choice. While this option has its downsides, like the possibility of it  reflecting negatively on your credit score, or leaving you with debt even after your home sells, it is often a better option than dealing with a negative mark of a foreclosure. If you do a short sale on your home the difference between what you owe on the mortgage and the amount it sells for is called a deficiency. The deficiency is sometimes waived if all parties agree to do so.

    Delay your home sale by earning rental income. Alternatively, if you don’t have to sell your home now, you could rent the house out to help alleviate some of the costs of having a mortgage. You would need to consider whether the rental income would be enough to cover the mortgage payments. If there is enough space in the property, there is also the option of staying in the home while renting out a spare room or two. If everything falls in line, then turning your home into a rental property is a viable way to get out from underneath your home’s mortgage.

    Refinance with HARP.  There is also the option of refinancing with a program like HARP (Home Affordable Refinance Program). If your loan is owned or guaranteed by Fannie Mae or Freddie Mac, the program allows you to refinance your home loan as long as you are not behind on your mortgage payments. There are usually refinancing fees that come with HARP if you qualify for the program. However, it is put in place to help people who are unable to refinance their mortgages through traditional means because their homes are underwater.  Refinancing your mortgage to make your monthly payments more affordable is an alternative to selling your home now.

    If you’re realizing that your options for selling your home are limited, reach out to a Better Homes and Gardens Real Estate agent to see if a short sale is the right choice for you.

  • Financing a Home Purchase with Bad Credit

    Financing a home purchase under favorable conditions may not be a problem; however, for millions of potential homebuyers who have been negatively affected by the recent financial crisis, securing home financing for your dream home may be challenging. “Challenging” however, does not mean “impossible.” Just because your credit score and/or credit history is less than perfect does not mean you have to give up your dream of owning a home. Less than perfect credit simply means that you will need to be more creative, and possibly more patient, when it comes to financing a home purchase.

    What Does Your Credit Score Mean?

    In the United States there are three major credit bureaus that gather information about you and assign you a credit score. When it comes to home financing, your credit score is a huge factor in determining whether or not you will qualify for a loan and what your interest rate will be for your mortgage loan. Credit scores typically range from around 400 to 900. Individual lenders will decide what they consider an exceptional score, an adequate score, and a poor score; however, most lenders will not offer the best rates to anyone with a credit score below around 700-750. Scores between 600 -700 may be considered acceptable, but not good enough for the best rates while scores lower than 600 are usually considered to be in the “poor” credit category.

    Conventional Loans

    When it comes to home financing, a borrower with excellent credit often has the option of qualifying for a conventional loan. These lenders will typically not consider a borrower with less than a credit score of around 700 or higher. Though a conventional loan requires a higher down payment, the interest rates are usually lower than other options. There are a variety of conventional loans to choose from, so it is recommended that you meet with a lender in order to get a better idea of what type of loan is the right fit for you.

    FHA Loans

    One option for a borrower with a credit score in the “acceptable” to “poor” categories is to apply for an FHA loan. Because these loans are underwritten by the Federal Housing Authority (FHA), the eligibility guidelines are a bit more flexible than those for a conventional loan. Currently, a credit score of 580 is needed to receive maximum financing. Those with a credit score in the 500-579 range may still be eligible but can only finance 90 percent of the home’s value. A score below 500 will not qualify you for financing through an FHA loan program. Along with being more forgiving with regard to your credit score, FHA loans also require much less of a down payment – 3.5 percent versus 20 percent for a conventional loan.

    VA Loan

    Like FHA loans, a VA loan is backed by the federal government – in this case the Veteran’s Administration (VA). Also like FHA loans, eligibility requirements for a VA loan are more borrower-friendly than those for a conventional loan. There is no set minimum credit score needed to qualify for a VA loan; however, most lenders want to see a score around 600 or higher. Before you get to your credit score though you must qualify as a veteran, the spouse of a veteran, or one of the other narrowly defined categories of people who qualify for a VA loan. As with an FHA loan, the down payment required for a VA loan is much less than a conventional mortgage loan – in some cases no down payment is required!

    Rent-to-Own

    Another option that is gaining in popularity is what is called a rent-to-own option. In essence this is a legal agreement whereby the owner of the property finances the purchase, or acts as the lender, for the borrower. Financing a home purchase through the use of a rent-to-own agreement can be an excellent solution for anyone who has bad credit and needs time to resolve their credit issues in order to qualify for a mortgage loan. Though these contracts can be written with a wide variety of terms in them, the basic concept is that the borrower will have possession of the property as well as legal rights to the property while paying an agreed upon purchase price to the seller through monthly payments. Generally, State statutes or precedential cases govern rent to own agreements and it is crucial that you understand how your state views these agreements in the event of a default on the part of the home buyer/home renter. A well drafted rent-to-own agreement can provide a buyer/renter with the ability to have possession of the home while working on credit issues; however, make sure that a seller does not take advantage of your desire to own a home and include only terms that are favorable to the seller in the contract – it’s definitely recommended that you reach out to a real estate professional for more information.

    Don’t let you dream of owning a home die just because your credit is less than perfect. Home financing is possible for people with bad credit—you just need to explore the options and find one that works for your situation.

  • What Are Mortgage Points?

    If you are in the market to purchase your first home, you have likely been bombarded with a tremendous amount of information that you need to learn and understand about the home buying process. For most buyers, a mortgage loan must be secured to cover the cost of purchasing the home. Also for most buyers, the financing portion of purchasing a home is typically the most complicated, yet important, aspect of the process. You may have heard the term “mortgage points” used by a lender during discussions about securing a loan. Understanding what mortgage points are will help you get one step closer to finalizing the purchase of your home.

    Mortgage points, also commonly referred to as discount points, are essentially just a way to pre-pay interest on a mortgage loan. When you start shopping around for a lender, one of the most important factors you will consider is the interest rate the lender offers you on the loan. Even half a percent difference in an interest rate can make a significant difference in the amount of money you repay over the lifetime of the loan. One way that a borrower can lower the interest rate charged by the lender is to purchase points. One point is equal to one percent of the loan amount. If, for example, you take out a $200,000 loan you would pay $2,000 for each point. In return for paying for points, the lender will lower your interest rate by a fraction of a percent (usually around 0.125 – 0.250 percent). The idea, therefore, is that by purchasing points upfront at the start of the loan you will be paying less over the life of the loan (as a result of the lower interest rate). A borrower, however, should do the math to ensure that this is actually the case before agreeing to pay points on a loan.

    Mortgage points should also not be confused with an origination fee or origination “points”. The term “origination fee” may be used to refer to a method of buying down the interest rate; however, the term may also refer to one-time fees charged by the lender to set up the loan. In the latter case, your origination fee may be used to pay for lender attorney fees, document preparation fees and the like but will not result in a lowering of the interest rate on your loan.

    As a general rule, the longer a borrower plans to remain in a home the more sense it makes to pay for mortgage points up front because it takes years for the fractional savings provided by purchasing a point to add up to the initial cost of purchasing the point. Consider the following scenarios:

    Scenarios A – You take out a 30 year fixed rate mortgage for $200,000. You decide not to pay points and receive an interest rate of 6.0 percent. Your monthly mortgage payment will be $1,193. After one year you will have paid out $14,316, after ten years — $143,160, and after 30 years — $429,480.

    Scenario B – Same 30 year fixed mortgage but this time you purchase two points at a total cost of $4,000 to you up front. The lender lowers your interest rate to 5.5 percent. Your monthly mortgage payment will be $1,130. After one year you will have paid out $17,560 (monthly payments plus cost of points), after ten years — $139,600, and after 30 years — $410,800.

    Scenario C – Same 30 year fixed rate mortgage but with the purchase of four points at a cost of $8,000. Lender lowers your interest rate to 5.0 percent. Your monthly payment will be $1,069. At the end of year one you will have paid our $20,828, after ten years — $136,280, and at the end of year 30 — $392,840.

    As you can see, purchasing points will save you a considerable amount of money if you plan to remain in the home for long enough to realize the savings. The difference in total out-of-pocket expense between scenario A and C at the end of year ten is less than $7,000 though it climbs to closer to $40,000 by the end of year 30. For this reason, a borrower should take the time to analyze whether purchasing mortgage points is the best way to spend his or her money.

  • Getting a Loan to Flip a House

    There is an unwritten rule in real estate that stipulates you must not run out of money. For this not to occur, one must do everything in one’s power to secure other people’s money. There are a few ways to hustle for money, but the ideal way is through a loan. Once you secure a loan, you can invest in flipping homes where you can profit handsomely.

    The process of flipping houses is straight forward. This objective is to sell it for more money than invested.

    • Buy a distressed property
    • Clear the house of Its title and taxes
    • Renovate the property
    • Sell the property as a move-in ready home

    The property must be purchased at a low enough price to enable you to invest enough money to renovate the house, enabling you to sell the home at a premium due to its improvements.

    You will want to reduce your financial and operational expenses by securing low-interest rate on the loan and complete the process of flipping a house quickly. Having a work crew ready to start working on the house the very day that you buy it, ensures you will not fall behind schedule.

    The Options to consider when financing flipped houses include either choosing investors who will finance the project or seeking out bank financing. Your decision is based on two concepts:

    • How much money the house will cost
    • The risk involved

    Working with Investors is favorable as it is a direct option to secure money, and you will not need to pay it back all at once. Investors expect a return on their investment, but they are not entitled to monthly interest checks. Instead, the Investors’ return is variable, and it is not expected to pay the investors unless the project makes a profit. The money is considered a “lower risk”, up-front, but a “higher cost”,  long-term.

    Financing the project through banks and mortgage companies is another option of securing money. In the current market, it is ideal to finance flipped houses through variable rate mortgages, as the rates are extremely low. It is important to make sure there are no points associated with these loans as they are non-refundable interest costs. As these loans have a fixed rate, at least for a few years, the interest risk is reduced greatly.

    Straight bank loans with short terms such as ninety days require that the money is paid back at the end of the term. These loans demand that you have excellent credit. Be aware, you must buy, legitimize the title, renovate the physical property, sell it, and close the deal in the chosen time-frame. The period from the sale of the house to the closing can be just sixty days.  A positive note is banks willingly roll the loans over when you have a bona fide buyer under contract. Unfortunately, the interest rates can be eight percent or more.

    Before you jump into the business of flipping houses, assess your cost of money and the risk associated with your debt. It may start off as a lucrative, business adventure, but the reality is that you need an endless supply of money to sustain your investments. In most cases, you will most likely be forced to find additional cash through loans to make a profit in flipping houses.

  • Do I Need to Put 20% Down?

    Home buyers across the country ask if it is required to put 20% down on a house to qualify for a new home. It is not difficult to grasp why that “20%” figure strikes such fear into the hearts of potential homeowners, especially the young and not-so-wealthy. The average for home sales has reached $347,000 as of 2015. When you consider that 20% of an average sold home, priced above, is more than $69,000, it resonates that one needs serious savings to provide a 20% down payment.

    The Amount of Money You Pay Up Front is Impacted by the Following:

    • How your loan application is viewed by lenders
    • Your interest rate
    • If you will need to pay for private mortgage insurance (PMI)
    • The Type of loan you qualify for

    Fortunately, the 20% “rule” is considered a myth today. In fact, according to U.S. News & World Report, many lenders will still finance a home sale with less than 20% down. Keep in mind that even if you put down a 20% payment on a house that offers potential benefits, it is not a necessity. There are many loan programs that exist primarily for home buyers that are not able to set aside tens of thousands of dollars. A growing number of home buyers simply do not put 20% down.

    Here are some pros and cons of paying a 20% down payment:

    Why a 20% Down Payment is Important:

    • Higher down payments equal lower monthly payments for you.By paying more up front, you will have smaller monthly payments. Not owing as much money enables your debt-to-income ratio (the total amount paid toward debt every month as compared to your monthly income) to become even lower. Lenders consider your debt-to-income ratio when determining whether you qualify for a loan.
    • A larger down payment can get you a lower interest rate on your loan. That means that you will pay less overall for the life of the loan. That equates to more money in your savings.
    • Putting 20% down allows you to avoid private mortgage insurance (PMI). Making a 20% down payment means you will not be required to purchase private mortgage insurance. PMI is usually a requirement if your down payment is less than 20%. PMI premiums, added to your mortgage, require more money from you.

    The Benefits of Not Paying a 20% Down Payment:

    • You can become a homeownerSaving the money required for a 20% down payment requires years. Working with a lender that accepts lower down payments will help you purchase your home in less time.
    • Waiting may cause you to spend more. Interest rates tend to fluctuate causing prices generally, to rise over time. The money saved today will likely buy you less house in a few years. Consider the following:

    If you pay $10,000 down today at a 4% interest rate or wait several years when you can afford to pay more, such as a down payment of $60,000, but with an interest rate that has risen to 7% – you will end up paying more overall just in interest.

    • A homeowner builds equity as a result of owning their home. Waiting years to become a homeowner while saving money may result in the loss of time and thus the loss of equity.
    • Purchasing a home is for everyone. Whether you can afford 20% down or something less, buying a home is within reach for everyone. Lenders are a great source to learn about the many options available and to find the program that is right for you and your unique needs.

  • Determining How Much House You Can Afford

    Affordability of a new home depends on funds available for a down payment and your current debt ratios. Start the process by evaluating your total income, debts and other expenses before developing a budget plan. Try using a mortgage calculator to determine your monthly payments, based on interest rates and the loan amount. Once you have determined how much house you can afford, you will be able to pre-qualify for a loan and buy your dream home.

    The Budget  

    The exciting process of buying a new home starts with the critical step of identifying your budget. A personal budget depends on several factors, including your current debts and your salary. Personal spending and expenses associated with owning a home must be evaluated before purchasing a new property. By evaluating the factors that contribute to the affordability of a home, you will be able to identify your maximum budget and meet the requirements to pre-qualify for a loan.

    The Salary

    Your salary provides the foundation for your total income and the amount of funds available for a mortgage payment. Begin by evaluating your current salary and monthly income to determine your budget. As a general rule, a loan should never exceed 36 percent of your total monthly salary and income. An easy calculation that determines the affordability of property is determined by the following:

    Take into account about 1/3 of your monthly income. If you make $3,000 per month, then you can assess that you will want to handle a mortgage payment of $1,000 per month or less.

    Current Debts

    The cost of your mortgage will vary based on your debt-to-income ratio. A high-debt ratio determines that you will qualify for a smaller mortgage amount. You want to limit your total debt-to-income ratio to less than 40 percent of your total income. Debts such as credit cards, car payments or other loans impact how many homes you can afford by reducing the amount of funds available to you for the property.
    Types of Mortgages

    The type of mortgage you secure impacts the overall cost of your home loan. Mortgages are affected by fluctuating interest rates set by the Federal Reserve. Below are the types of mortgages available:

    • A traditional fixed-rate mortgage provides a stable payment plan that you pay off over a set period. You repay a traditional loan over a 30-year period by making monthly payments of a stated amount.
    • Adjustable-rate mortgages offer the lowest current interest rate but the interest increases and decreases with the current rates. As a result, the monthly payments change over time when the interest rates move up or down.
    • A short-term loan, such as a 15-year mortgage, impacts the affordability of property as it impacts monthly payments. A loan with a shorter repayment period usually costs more on a monthly basis, so the affordability of a home depends on the duration of your loan.

    The Down Payment

    A down payment depends on your financial situation and the funds available for the initial payments. In most cases, you will want to provide a down payment that is roughly 20 percent of a home’s value. There are options to provide larger or smaller down payments before buying a home that you may negotiate with your realtor or seller.

  • Investing in Rental Properties

    Real estate has always been considered a profitable long-term investment. Although the market will fluctuate wildly at times, compared to many other types of investments, real estate is more likely to eventually appreciate in value, making it a sound long-term investment. If you are considering the purchase of an investment property, you might be drawn towards the idea of earning additional income in the short-term  with a rental property. Some of the important considerations when purchasing investment property include:

    • Location, location, location – you have likely heard the expression many times “location, location, location.” When it comes to selecting rental properties location really is everything. When you bought your own personal residence, you likely thought about location in terms of appreciation and possibly school districts or other personal considerations. When it comes to picking an investment property, appreciation is still a consideration; however, so are the tenants you will attract. If you want to secure potential tenants with little chance of a vacancy, look for a property in a location with a long history of a healthy real estate market or an area with few foreclosures. Real estate that is within or nearby a prominent college or university, for instance, might be a good place to invest. If you want high income tenants, on the other hand, you will need to purchase a property in a higher price range. Study the area and consider who would want to rent there before you select a location.
    • Financing – financing for rental properties is harder to secure than financing for an owner-occupied property. Be sure to check with a lender prior to starting your search to ensure that you will qualify for a loan if one is needed. Additionally, mortgage insurance is typically not available for investment properties. For this reason, investment property loans will likely require you to pay a larger down payment and higher interest rates.
    • Ongoing costs – when you own rental properties, you are responsible for the costs of fixing anything that goes wrong in most cases. If the air conditioning stops working, you must have it fixed and in a timely manner. Be sure to factor not just the actual costs of repairs and maintenance into your calculations but also the time commitment. Hiring a property management company to handle emergencies and day to day management of the property is one option that solves the time problem; however, that is an additional cost as well.
    • Taxes – remember that not only must you pay property taxes on an investment property, but you must also declare all of the rental income on your personal income tax return. However, there are ways in which a landlord can reduce some of the costs of taxes (e.g. deduct mortgage interest payments, deduct the cost of repairs, etc.)
    • Long range plans – most real estate investments do not break even for at least three to five years after the costs involved in purchasing the property are taken into account. Be sure that you plan to keep the property for the long run. If you are unsure of your long term plans or how much spare time you will have in the future to manage your rental property, you can look into a property management company that you are confident in before you decide to purchase rental properties.

    Rental properties can be an excellent addition to an investment portfolio because they provide short-term income and the potential for a substantial long-term payoff. Just make sure that you consider all of the factors mentioned above before you commit to entering the landlord business.