Should I invest in rental property?

1. The expenses are constant. Whether you buy the property in cash or take on a mortgage, you're still going to be shelling out money. Repairs, upgrades, taxes, insurance — it's all the same stuff regular homeowners deal with, but as a landlord you don't get to put things off the way you might with your own home upkeep. Before you start getting excited about the inflow of money, make sure you budget enough for monthly outflow.

2. Not all tenants are created equal. I'm a huge advocate of rental properties, but I know this investment isn't for everyone. You can end up with a renter who never pays on time, who has nine cats even though you put "no pets" in the agreement, who tries to nickel and dime you over every little thing. I feel like the majority of Judge Judy's cases feature landlords and their delinquent tenants. Most renters are good, honest people, but you can't expect that without at least preparing to get someone who ends up being a bit of a headache. You also need to be covered with liability insurance, otherwise you might be dealing with a costly lawsuit over something as trivial as a leaky faucet.

3. Education is required. You don't have to go back to school and get a degree, but if you want to really succeed in this endeavor, you need to have a good grasp of tax codes, local renting laws, and everything in between. You'll definitely learn by doing, but the more information you can absorb before buying the property, the better off you'll be. Read some books, listen to some podcasts, write letters to your favorite financial advisors ;). All that prep work will make you feel much more confident when you actually start in on the process.