Investing Has Costs
The first thing to know about investing in real estate is that it costs money. It costs money to buy. It costs money to sell. It costs money to repair and maintain. It costs money to insure, to advertise, to do taxes… The list goes on. Don’t let the dollar signs scare you, upset you, or cause you to treat another unethically. What makes the property a wholesome investment is its ability to pay for all of those operating costs, provide you a stream of income and others a safe place to live, and do it in an honest and ethical way.
The second thing investing in real estate costs you is time. If you plan on managing the property yourself, you will gain an education dealing with Toilets, Tenants and Trash. Doing this as your side gig as you work full time can be challenging. Although I do recommend managing your first property for a year so you can better deal with property managers in the future.
The most important thing you can understand is the concept of leverage to give you access to more money and time. Time and Money are not actually real and can therefore be manipulated to work for us. This is a post by itself so for now I will just say, banks are a common source of money and employees/contractors will sell you their time.
Get Ready to Start Learning
If you are considering buying your first investment property, know that you are going to make mistakes. It’s like I tell my kids about all things. “If you want to get good at anything, you must first accept that you are going to suck at it.” Like most things, it takes practice and mistakes and determination to get good at investing in real estate. Still, we can mitigate expensive mistakes with research.
The first thing to research about anything you want to do is the law that governs it. In Alaska, we have the Alaska Landlord-Tenant Act that governs how things must be handled in a rental situation. It also is a good source of sample forms for landlords. When there is no law or it’s vague in the lease, I always stick with the fairest solution to any given situation.
The last thing we will talk about is tenant screening. Proper tenant screening will solve 90% of your problems before they happen. Don’t be lazy here. Find a service or a website that does credit and background checks. Call references and charge an application fee. This will pay for the reports and ensure your applicants are serious. Better yet, buy an asset that can afford to pay for us to manage it for you! We offer an array of services for landlords.
In conclusion, this is a huge topic so we invite you to schedule a time to come into the office and discuss real estate investing strategies and management. Give us a call at 746-HOME. We’ll get you started.
