Dear Sue,
The recent fluctuations in the stock market have made me nervous about keeping all of my money in stocks.
I have read your column over the years and know that you are a big proponent of residential income property.
Do you think that this is a good time to diversify my portfolio and include real estate?
~ Questioning Quinton
Dear Quinton,
I am a proponent of residential income property because real estate is what I know.
I have lost a bundle in the stock market. I never had a handle on when to buy or when to sell. My timing has always been off.
Not so with my real estate investments. The real estate values have fluctuated over the years, but the income stream has remained relatively steady.
Providing shelter for people, I believe, is a good business to be in. It has been personally rewarding for me.
Owning investment property is financially rewarding as well.
If one is not overly leveraged and the properties are managed properly, the rents can cover the mortgages, taxes and other expenses.
The tax deductions are fantastic. One can write off repairs and interest on the mortgage.
Uncle Sam even allows depreciation. The income from residential investments can finance one’s retirement.
If one decides to sell and buy a bigger property or move out of the area, taxes on capital gains can be avoided by doing a 1031 Tax Deferred Exchange. Sweet isn’t it?
Before getting into the landlord business I would suggest that you put a good team of professionals together. I don’t make a move without first consulting my tax attorney.
Residential income property values have come down recently. Very good buys can be made today.
I suggest that you consult a Realtor experienced in evaluating income property. Be sure that the numbers are right.
Diversifying into income property with professional guidance can be a matter of good Home $$$s and Sense.
Sue Thompson is owner and sales manager of HomeTown Realtors in Auburn. She can be reached at seesue@seehometown.com, or on the web at homedollarsandsense.com.
