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The potentially perfect moment has arrived to invest in rentals. Across the country rental demand is strong in many cities, and the costs associated with buying multi-family properties are lower than in recent memory.

Generally speaking, the goal of investing in rental properties is making money. Toward that end, and especially if you’re new to property management, a four-flat or smaller is probably the best way to go. Smaller buildings allow you the option of living comfortably in the building and managing it yourself, or living nearby but still self-managing. While careful management is essential for maintaining a building that benefits both owner and tenants, paying a manager to oversee the units will significantly affect your ability to profit.

Another important component of building management is people skills. Do you enjoy working with people and do so readily? If not, your investment may come to feel like more trouble than it’s worth.

Along the same lines, realistically assess your handiness around the house. Are you able to tackle at least minor building systems or other maintenance and repairs? If not, investing in buildings may not be for you. Or minimally, be sure you have a network of reliable handymen to call upon for service in short-order.

Beyond these concrete considerations, there are also a variety of liability and financial issues you’ll have to have eyes wide-open about before you invest. Major areas of potential complications include:

• Lease agreements – be sure you have all details specified and in writing.
• Handling security deposits – be sure you’re depositing money in an appropriate trust account that’s in accord with your state law.
• Disagreements about property condition – be sure you have tenants sign move-in and move-out forms about the condition of the unit and any damage.
• Ethical and legal considerations regarding renting – be sure you’re up to speed on Fair Housing and related law.

It’s a good idea for all new or potential landlords to enroll in a basic property management course – nothing fancy — through your local municipality, REALTOR® association, community college or other learning institution. You’ll get the low-down on essential information on day-to-day operations you’ll need to know, like showing properties, handling leases, collecting rents and managing finances.

If you’ve read this far and still stand ready to dive in, it’s an excellent market in which to do so, with a variety of different styles and sizes of building available at attractive prices. Keep in mind, as well, that if you are eligible for a FHA or VA loan when buying property, their minimum down payment requirement can help you regulate your cash flow until rental income is coming in.

Bob Floss, Bob Floss & Son Realty, is the 2011-2012 President of the Chicago Association of REALTORS®.