Anyone here own rental property to supplement your income?

Would not recommend it for a variety of reasons for a pastor --

 

Owning rental property is a pain in the butt. Trust me.

 

Aptly put.

There are many issues involved - especially for a pastor. Here are a few --

1 - To whom do you rent? Legal, ethical and moral issues. What happens if a church member wants to rent?
2 - What happens when (not if) rent is delayed and/or is not paid? Are you able to evict someone? What is the impact on the church and its ministry if you do?
3 - Do you have the time/resources needed to maintain the rental?

 

We have rental property. About all we do is to interview renters. Everything else, we have a guy on retainer to take care of.

 

Pastors can own rental property, but the key is to let a management company do all the work for you and keep you out of the middle of it. People don't even have to know it is your property, if they don't ask.

Management company fees are relatively inexpensive, usually 10-15% of the total rent. Look at it as paying them one month of the rent you receive for the property out of a twelve month lease. It isn't that expensive, and it will save the pastor who wants a bit of side income a great deal of headache.

 

My parents own rental property, and it does add up to our monthly income which is totally a good thing. We're definitely blessed because our tenant never fails to pay the rent on time.

 

We have an agency as a go between, that pretty much takes care of everything. The cost is reasonable, 10% of the rent plus 50% of the first month (for taking care of finding the tenant, background checks, etc.)

So it is not a headache in anyway that requires much work. The real question though is if it can be profitable. If the rent is just covering the mortgage and taxes, then you only breaking even and really just hoping for appreciation, which is not as guaranteed as it used to be.

Even if you are making a small profit, you have to consider you are also paying interest on your loan, so you could just be breaking even in that sense too. Like you could just be making pure profit if you instead invested your money in a cd.

You either really need to have a LOT of money into the house or charge a very high rent (as compared to the mortgage) for you to see any real profit that makes the whole investment worthwhile.

 

A bi vocational pastor could do this, but as others said, residential rental real estate is pretty management intensive. If you can find a commercial property you can afford and secure a decent tenant, you may be able to get a longer term lease on a triple, or double net basis. This means that the tenant pays the rent and expenses (taxes, insurance, maintenance). It's less management intensive as well. Depending on the size of your investment and your own net worth, you may qualify for investments that are professionally managed or be able to buy something like a dollar store or auto part retail store. These are nice for their long-term lease and credit quality of the tenant.