Home based businesses are hot right now. Unless you've been living underneath a rock, you've probably encountered a plethora of home based business options, promising big rewards with little effort. I'm skeptical, and have the feeling that the majority of those touting such ventures are the only ones making money. They do it by selling their idea, not by implementing it. And, more often than not, it's an idea that most likely has more than enough participants. Little effort reaping a big payoff makes no sense.

However, there IS one exception to this generality, and that's the business of property management. Property management, in my opinion, is one of the best home based ventures around. Everyone needs a place to live, so you are providing something that will always be marketable, despite various turns, positive or negative, in the economy. And, even if your rent cash flow is negative, the tax benefits will compensate. Finally, in paying your mortgage and building equity, you are "forcing" yourself to save, insuring you will have money for the future. If property management is something that interests you, here are some tips from a "veteran":

PURCHASE HIGHER END DWELLINGS

The problem with purchasing, then leasing low dollar units is that the "lower" the rent on your properties, the more likely you will, at some point, lease to a renter who really doesn't care about keeping things up. I've found through the years that I make more on my higher end homes, even though the initial investment is higher. Also, the fewer properties you have, the fewer the hassles. And, there's less potential for things to go "wrong" with a well built structure.

TAKE YOUR TIME

Now, there's a caveat to this: you have to put some thought into your purchases. And, you may have to look for awhile to find something that you can turn a profit on (either with a positive cash flow, or with tax savings). Hurried sellers are your best bet when it comes to finding a good deal. Distress situations, such as divorce settlements, estate sales, relocation sales all of these circumstances can benefit the patient buyer.

TWO SURE MONEY MAKERS: FORECLOSURES AND REPOS

Two additional profit makers are foreclosures and repossessed homes. These properties, for the most part, sell below loan value at auctions. Most banks merely want to get their money back, they're not in the business of making a profit through selling real estate. It's well worth the effort to keep an eye on these properties. Again, patience is a virtue when choosing your investment.

REPAIRS

Another important point to remember is to put a "minimum" dollar amount on what you, as the home owner, will pay for as far as repairs go. On my leases, I have put down $50-$75. This will insure that you won't get called if Johnny flushes a Lego down the toilet.

If you do your homework and acquire "low maintenance" property, there's very little you need to do on an ongoing basis. The lease takes care of your cash flow for a year, and your bookkeeping will require very little in the way of time, as you're only recording rent income, repair and interest expenses, and the monthly reduction of capital on your mortgage. Basically, you're TRULY making money with very little hands on

Learn more about this author, Rachel Stockton.
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