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Becoming an investor is not a new concept. Many individuals are interested in it because they want to have a secondary income in order to build wealth. Every first time investor needs to start somewhere. It is our hope that after reading the following interview and perspective that you will take away information that will help you on your journey of becoming an investor.

For the purpose of this article, Greg Smith, a local investor, was interviewed.

1)    How long have you invested in real estate?

I have been an investor for 4 years and began my investing in 2016.

2)    How did you start investing?

I bought a new primary residence and kept the prior one as a rental. 

3)    What do you know today that you would have liked to have known back when you started investing?

a) When marketing properties for rent, don’t hire someone to do your marketing for you. Do your own marketing on Zillow.

b) I wish I would have started to buy rental properties years sooner than I did.

c) Before buying a property in a community with an HOA, make sure to check to see that the community has enough reserves.

4)  What advice would you give to someone who is looking to invest in real estate?

a) My strategy is to buy properties that are a little higher end, so that I can get higher quality tenants.

b) I decided to invest in condominiums and townhomes, not single-family residences because the prices are typically lower.

c) I prefer buying in a community that has an HOA that takes care of exterior maintenance, lawn care and the roof. It does cut into cash flow, but it takes some of the risk out of owning a property.

d) Rental properties need to flow cash. My rule of thumb is the rental properties need to flow cash at no less than $500 a month.

e) In general, I believe that you should put 10% of every paycheck into savings, build up an emergency fund of 6 months, then keep saving for other things, such as rental properties.

f) Manipulate your down payment to get the monthly payment and cash flow to be the amount you want.

g) If you are able to do so, I would suggest buying a house, living in it for 12 months, then repeating that pattern for 5 or more years to build up your portfolio of properties, each time making the new house a primary residence and the past home a rental. Buying each new home as a primary residence gets you loans with lower interest rates and down payments.

      5) Do you still own your rental properties?

            Yes

To summarize the important information from the interview above, look at how you can invest now, and if you can’t invest at this moment, make a step by step plan on how you can reach your goal of starting to invest in properties. Remember that you need your monthly income to flow positively. You can use a mortgage calculator or talk to your lender to figure out what your monthly payment will be. Don’t forget to include taxes, insurance and HOA, if there is one. Once you know what your monthly payment will be, then you can figure out what you would like to charge a renter to get the monthly return you are looking for (Zillow can be a great resource to help determine what a realistic rental rate would be for any property). Lastly, you need to decide what your investment strategy is going to be. What type of properties will you be investing in? Do you want these properties to have an HOA, do you want the properties to be newer, etc. It is important to have a direction and a vision before starting the investment process.

If you’re not sure where to start, let's connect and talk about your goals and current buying position. The best way to get started with real estate investing is to take action. Let us help you become a real estate investor!

Investing in rental properties is a great way to get a secondary income and help plan for retirement. Don’t wait to invest! Start setting goals and looking at possibilities today!

~ Written by TK Homes REALTOR® Mary Smith