What’s the goal of your rental property investment? Whether it’s generating income, capitalizing on market trends, or having a vacation home that doubles as a rental, understanding your why is key. Watch Paul Sydlansky, CFP® in this episode of his new series, Unlocking Hidden Value, to learn more!

Topics Discussed:

• Defining your goals
• Calculating your ROI
• Financing your investment

Transcript:

Hi everybody. I’m Paul Sydlansky, the founder of Lake Road Advisors. Welcome to Unlocking Hidden Value. This is our series where we’re going to focus on providing you valuable insights on how we can help in a wide range of financial planning topics, many topics that you may not even consider that a financial planner could help you with.

We’re going to kick off our first video with something we see all the time and it’s desire for our clients to own rental properties. And there’s three things that we take every client through to help them make this decision. The first thing is, why do you want to own a rental property? And it sounds silly, but you really need to establish the goal for this property. Is it purely income creation? Are you trying to get a long-term play in an area you think might be up and coming? Or are you trying to own a place that you could maybe stay in a couple times a year in a vacation area and then use the rest of the year to rent it and pay off some of your costs? So number one, why are you doing it? It’s really important.

Number two, if you are looking to purchase it as an investment, understand what your ROI is. There’s so many costs that go into renting-all the same that go into owning a home. But even more really need to understand what’s your breakeven point? What do you have to charge in rent just to get back to making or just get back to covering your costs?

And the third is, how are you going to pay for this? Are you going to put down a large down payment? Are you going to pay all in cash? Are you going to pay maybe only 10, 15, 20% down? Financing can be much more difficult when it comes to a rental property versus a primary home. And a lot of banks won’t lend on a secondary property, and if they do, they’re going to charge you a much higher rate.

So again, taking a step back, if you’re thinking about purchasing a rental property first, understand why you’re doing it, then understand what your ROI is, what do you need to charge in order to be able to break even? And then the third. The third is how are you going to pay for this? Where’s the funding going to come from? These three things will give you a great foundation and a headstart to be able to understand is a rental property right for you.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network. They can be reached by phone at the Corning, NY office at (607) 438-2914, Ithaca, NY office at (607) 463-8400, or Portland, OR office at (607) 292-2172 or at the firm’s website at https://lakeroadadvisors.com/