My husband and I are in our late 30s, beyond the 40-percent tax bracket, own our home and earn more than $40,000 annually. We have numerous investments. We have considered rental property in our small community and believe it would be unprofitable. Would it be feasible to buy a house to rent in a larger city and have a real estate company manage it? What about high interest rates? E.F.
Buying rental property does more than yield income, as the depreciation shelters a portion of your income. Buying income- producing property can be feasible even during these times of high interest rates, but more important is the property itself -- price, condition, rental-income prospects and your management.
I'd suggest looking again at the prospects of buying in your community. A less profitable potential could still mean more income compared with a big city rental managed by someone else. Remember -- if the management talent you might contract for was effective, they would be managing their own properties. If I were you, I would prefer to manage my own local property.