I'm already a land baroness.
December 9, 2012 6:38 PM Subscribe
Do I want to become a landlady? I have reached the point I've been working toward since I bought my house. I want to build a garage in my big back yard, and/or build a rental unit.
I refinanced my house nearly a year ago. My credit rating is excellent. My mortgage payment is low, my home equity is high. My job is secure - I've been there a year and a half, the company is stable, the industry is growing, and I'm good at what I do. Thanks to a recent court settlement, I now have enough in savings to pay for what I want to do in cash, if I wanted to (I don't).
I am in a good position (I think) to go ahead and build that garage for one or two cars and/or build a small apartment on top, or by itself, to rent out. I'm thinking I could take out a home equity loan and pay it off with the rental income (which would be about twice my current monthly mortgage payment). My house is in a nice old mostly gentrified neighborhood, close to downtown and public transportation, that would be very attractive to older students and young professionals. Rentals in my area are expensive, scarce, and getting more expensive and scarcer.
I have been a single homeowner of an old house for nearly ten years, and I am pretty handy. I have a trusted contractor in mind. I have an honest and skilled handyman/property manager available for the things I can't do. I plan to do a lot of the finish work on my potential apartment myself (painting, tile, finding fixtures at the local Habitat for Humanity thrift store).
Talk me out of it. Alternatively, tell me why this is an excellent investment plan. Alternatively, tell me why I should or why I should not build just the garage.
Just for the sake of argument, assume that I already know I can't count on constant rental income and ideal tenants with whom to share my large double corner lot. If it matters, I am a single 58-year-old woman who is very responsible and good with money.