The following is a guest post by Julie Pedersen, Public Relations Specialist, Coldwell Banker Real Estate LLC
Women have been outpacing men in single homeownership since 1980, according to annual buyer profiles compiled by the National Association of REALTORS®. Therefore, it should come as no surprise that in a dominantly female profession, many Coldwell Banker-affiliated agents are also investors of real estate and have shared their experiences with buyers.
Here are seven tips and sage advice we’ve gleaned from conversations with four women affiliated with Coldwell Banker in New Mexico, Pennsylvania, Texas and Washington, D.C.:
- Determine the type of property – Francesca Conway, who is affiliated with the Coldwell Banker Champions office in Spring, Texas, bought her first property at 23 and then rented it because of work travel. After that, she caught the real estate investment “bug” and switched over to a career in real estate sales. As the top producing leasing agent in her office, she primarily helps clients find rental properties or houses to flip to build their wealth. However, she suggests that in some areas, you might consider purchasing a vacation home or a property that you can also use as an Airbnb. “For example, condos that are located near a cancer center in Houston are often rented as an Airbnb to families who need a rental for a month or more while a family member is undergoing treatments,” she notes.
- Location, location, location – Conway also stresses the importance of location, which she says is the most important factor in determining your return on investment. “As with any home purchase, do your homework to find the area that will best fit your needs and situation. If you want to use your property as a vacation rental or an Airbnb during part of the year, look for properties with low monthly fees, close to transportation or near facilities and cities that draw visitors on a regular basis,” advises Conway. Ultimately, the goal is to invest in properties that will most likely increase in value or provide more income over time.
- Evaluate the full cost up front – Ericka S. Black, affiliated with the Dupont / Logan Circle office in the Mid-Atlantic metro, stated that she was inspired by several investors and real estate investment books. She started aggressively saving money in college. By the time she had finished her undergraduate and graduate studies, she had amassed two initial investment properties. From there, she has continued to build her portfolio and advises her clients to evaluate and analyze the full cost of the rental property, including the cash flow. As a rule of thumb, she notes that the property should fully sustain itself and not negatively impact your personal household budget. “In the long run, you want each investment to add to your household’s discretionary fund and savings account,” says Black.
- Understand down payments – Christina Diehl, affiliated with the Lancaster office in the Central Pennsylvania metro, learned about investing from her dad, who manages investment properties, and began saving for her first home when she was 10. She notes that if you are looking to purchase a property specifically as an investment (and not residing in it), then you need to make a down payment of at least 25% on the home. “A first-time investor might consider putting down less and purchasing a two-unit home in which you can rent one portion and live in the other portion. This is a good way to get started in homeownership and real estate investing – your tenants help cover the mortgage cost and you can continue to set aside capital to seek another investment while getting a tax write-off on a property that you live in,” she notes.
- Have a contingency fund – Black advises her clients to have an emergency fund or reserve for each investment property in their portfolio. “There will always be repairs and on-going maintenance for the investment property and it’s best to prepare in advance for those items,” states Black. Make sure to account for things such as basic upkeep, potential upgrades over time, utilities, insurance and taxes.
- Consider property management – It’s important to have a list of contacts at the ready to reach out to for maintenance, such as plumbing, electrical, contractors and handymen. Diehl notes that some people are hesitant about owning rental properties because they don’t want to potentially deal with tenant issues, but she advises that a professional property manager can oversee the unit(s) and the money spent is well worth the cost. If you decide to hire a professional, make sure the cost is factored into your budget.
- Be selective – Meghan Tate, affiliated with the Albuquerque, New Mexico office of Coldwell Banker, always wanted to own properties, but was hesitant to get started. In the past five years, she has acquired four properties as a single investor and has not looked back. Tate invests in rentals that are near her home so she is close to the tenants and can help them out at a moment’s notice, if necessary. “I buy properties that I personally like and would be willing to live in. The bottom line is that you are helping people and I like to maintain a good relationship with my tenants – they may become a future client who wants to purchase a home.”
“Real estate investing is a great way to retire early or simply create extra income. Everyone is not cut out to be an investor. It is not an easy undertaking and challenges are inevitable. To be a successful real estate investor, it takes patience, determination and resiliency,” notes Black.
