Q. I have 10 years before I retire and I’m thinking about buying a property that I’d rent out until I’m ready to retire there. I’d need a mortgage but rates are low and I think I can afford the payments even without rental income. What should I consider?
— Planning ahead

A. What you’re suggesting can make sense, but use caution and make the move with your eyes wide open.

There are lots of issues to consider, including bad tenants, repairs and maintenance, vacancies, and rental property tax rules, said Michael Maye, a a certified financial planner and certified public accountant with MJM Financial in Gillette.

He said you need to remember that whether the property is a rental or not, you need to take into account all the carrying costs, and it’s not just mortgage payments. You’ll have to pay forinsurance, utilities, property taxes and repairs.

“My suggestion is to run the numbers so you have a full understanding of the economics ofowning a second property,” Maye said. “I would also recommend finding a good CPA to discuss tax implications of owning a rental property which include passive activity rules,mixed use property (rental/personal use), and conversion from a rental property to a personal home in 10 years.”

Bottom line? Do your due diligence, understand the implications and then move forward, Maye said.

Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.

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