Recently, I have been mentoring a couple fantastic women in the realm of real estate investment. I would like to help more ladies invest successfully, but am having trouble finding them!
I know several women real estate agents, who are highly successful and got into the industry mainly to further their investment aspirations. Residential Real Estate sales is often thought of as a woman dominated field, while Commercial Real Estate is often viewed as a boys'club. Having dipped my toes a bit in commercial end of things, and having sold residential real estate for years I can attest that the perception is very much real. However, there is a gray area of real estate that can be both commercial and residential. This arena would be what I would call "Investment Real Estate", and their are many women sales agents that are freakishly awesome at guiding investors (future moguls) towards their goals. I have lots of investment clients, but up until recently not any female investor clients. Where are my girls at?
Now, before everyone gets their panties in a twist, this blog post is not about precluding ANYONE from being involved in any facet of real estate based on their gender (or any other protected class). The above statements about gender are just common perceptions, and are often preconceived notions that I have to overcome as a female when assisting people in real estate investment transactions. They are also the same common perceptions that often prevent women from getting involved in property investment outside of their primary residences.
Below I have answered a couple FAQ's as a guide to all that may be interested in real estate investment.
1. What makes a "good investment"?
Well, I think that all depends on your goals. Would you like to buy low, hold (usually fix to rent) and then flip? Are you interested in monthly cash flow? Is this a long term or short term investment? Are bricks and mortar buildings part of your retirement plan? How much do you need a month coming in? How far would you like to drive to keep an eye on your investments?
2. I have never owned my own home, or an investment and I would like to take advantage of this market. Where is a good place to start?
That is easy...The answer you seek is a 2 or 4 family! 2 families are a great for people looking to shift out of the rental world and straight into investment. Generally, 2 families offer larger units comfortable for owner occupants and the tenant of the other unit can help you pay a large portion (if not all of the mortgage). In rare cases, if you bought smartly you can have a bit of cash flow. There are less tenants, units and systems to maintain on a two family and you don't have to go far to keep an eye on your investment. 4 families are also good for a first time owner occupant/investor with the right mindset. While you may not be living in a unit much bigger than the average apartment, it is possible to live for free utilizing the other rents to pay the note!
3. I want to buy a property for me to live in, but I am not sure how long I am wanting to live there. I might get a job transfer, meet the person of my dreams, sail around the world or just move on. I am scared of getting caught in a down market when the time comes to sell. What should I do?
The answer here is again a 2-4 family! You can live in one, rent out the other(s)and when the time comes to leave rent your unit and take off! Hopefully, the rents will cover the mortgage and you should be able to free yourself to go get another loan and buy your next property. In the meantime, someone else is paying off your awesome investment property!
4. I am not that handy, but my friend is and they will take care of it. Is that OK?
I am not going to tell you no BUT, it is not my best advice to ever depend on the fact that a friend, family member, partner, child or the like is the "handy one". This is your investment, and it is best to have a firm hold on it. I always suggest investing in becoming a little handy, it is smart to understand a bit about the basics of home repair. Really, the guts of the house are not that complicated and you might surprise yourself. At the very least, having basic knowledge help you to hire the right person for the job!
5. How much do I have to have for a down payment?
Well, that depends...I am not a lender/mortgage expert and the rules are changing every day. For owner occupants that are qualified, you can pay as little as 3.5% down. Investors not living on site, be prepared for at least 20%. Remember, these rules are all subject to change and the first step towards investment is talking to a lender.
6. I found a list of foreclosures online, and they want me to pay 50-100 dollars for it. Do you recommend that?
No, I do not. I had many a client pay for an outdated list, and there are many ways to find deals that don't involve a top secret list. Most foreclosures are required to be listed with an agent for the open market, on the MLS. With all the trouble the big banks have been in, it keeps a level of transparency necessary to improve public opinion and maybe even to be compliant with government regulations. Your real estate agent often knows the best deals in town, and a good investment agent will have relationships with the listing agents.
7. I watch HGTV, and they make flipping and investment look simple. Just a bit of paint, some cheap carpet and new windows right?
I wish, if this was easy everyone would do it. Time lapse photography/video is a wonderful tool. It takes time more than anything to be a good investor. You need time with a good agent who should act as a consultant. You need time talking with other investors, find a mentor. Time talking to your lender, accountant and a real estate attorney (eventually). No one person should be your everything in the investment game, you will need specialists. The more people you know, the more you grow.
8. Where is the best place to buy my first investment?
That is an ever changing answer. Different areas are primed for deals at different times. In general, I would say buy something close to where you live. You are headed into an unfamiliar money venture, so make it as easy as possible by buying in a familiar place or somewhere you would like to live.
9. I heard foreclosures are nasty, dirty and dangerous. What do you say?
They can be all of the above. That is why it is important to go out looking with a real estate agent who knows what they are looking at. Wear thick soled shoes, jeans/pants if possible and bring a flashlight. If it is mosquito season, put on some bug spray before heading out. Most houses are cleaned out, but some are not and it is better to be comfortable and be able to focus on the task at hand instead of your clothes. I used to be on the construction sites of full gut rehabs often, and it only took one nail going through my flip flop to change my ways. You probably won't be involved in anything that extreme right away, if ever. I keep my tetanus shot up to date just for real estate. It makes me feel like a bad-ass. :)
10. I live out of state, and I saw a ton of deals on my visit here. Should I buy an apartment building and and manage it from afar?
That all depends. I know that a lot of my local investors have struck good deals buying from out of state investors that are burned out trying to keep their apartments maintained, rents collected and units filled from far far away. You know what they say, "While the cat is away, the mice will play". Unless you plan to hire a professional management company that has a good reputation, and are prepared to pay a good chunk of your monthly rents to make that happen, this type of investment may not be right for you. Personally, I think that long distance investment is geared more towards a seasoned investor with a good amount of (units) that must be maintained.
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