Advice for New Real Estate Investors Working from Home
Getting into real estate is a dream come true for those who want a reliable source of income. Ultimately, real estate is a wealth building strategy, so if you’re new to the industry, here’s some advice to make it through the long haul.
- Get licensed
Get your real estate license as soon as possible. It’s easier than you might think. For instance, you can get your real estate license online in Georgia for under $200 by taking a 75-hour course and passing the final exam.
It’s entirely possible to run a real estate business without getting your real estate license. However, you’ll be forever limited without a license. Without a license, you can’t:
- Represent a buyer
- Represent a seller
- Engage in negotiations
- Conduct a transaction on someone else’s behalf
- Collect agent commissions on your own behalf
- Have unrestricted access to the MLS
The penalties for breaking the law are steep. You can do time in prison, get fined thousands of dollars, get put on probation, and be required to pay restitution.
It’s cheap and easy to get licensed, so don’t skip this important step.
- Focus on long-term wealth
When building your portfolio, keep your long-term wealth goals in mind. There will always be opportunities to buy cheap property, but it isn’t always wise to take out a loan on properties that will generate a low level of income.
For example, if you have the opportunity to get a $250,000 mortgage in a bad area of town or a good area of town, choose the good area. The rents will be higher, you’re less likely to have property damage, and you’ll attract better tenants.
- Avoid unnecessary renovations
When you acquire property that needs some fixing up, it’s tempting to deck it out and make it look like something out of a magazine. The idea is that a great-looking home will rent faster. However, you don’t need to go to extremes.
If you’re rehabbing a high-end home, you’ll need to install top-of-the-line countertops, fixtures, and cabinets. However, if you own a low-end home, it only needs to look good. “Good” is subjective, but essentially you want decent fixtures that don’t look like they belong in a mansion.
When performing renovations, remember that some projects aren’t going to increase the value of your property. Do you really need to replace the kitchen cabinets? Consider a paint job before a renovation.
- Diversify
You’ve heard people say, “diversify your portfolio!” This is solid advice. Try to get some different types of property into your portfolio, like commercial or industrial property.
If you’re just starting out, you’ll probably need more time to acquire commercial property, but keep it in the back of your mind because it’s a great source of income.
- Tackle maintenance and repairs fast
Owning rental property makes you a landlord. Being a landlord makes you accountable to your tenants for repairs and maintenance. Make sure you handle your tenants’ requests promptly.
Each state has laws that govern the time frame landlords have to fix certain problems. For instance, a leaky roof and no running water are usually required to be handled within 24 hours. Other situations, like a broken closet door or a hole in the wall, get about ten days.
Your state laws will govern how quickly you need to respond to your tenants, but in general, respond as quickly as possible to avoid any problems.
- Hire a property manager
There’s nothing more frustrating than having your phone ring at 2 am because a tenant has locked themselves out of their home and they need a spare key. There will always be situations where your tenants will need you at random times, including while you’re sleeping.
Hiring a property manager is the only way to ensure you get to live your life without having to cater to tenants around the clock. With a property manager, you’ll still be the landlord – you just won’t have to perform any landlord duties.
A property manager is ideal if you don’t like the idea of being a full-time landlord sifting through applications, meeting potential tenants, conducting showings, marketing your vacancies, collecting rent, chasing late payments, and dealing with evictions.
Owning investment properties is hard work
Real estate investments require time, money, and hard work to pay off. However, it’s a worthwhile investment. Owning rental properties is a commitment that will bring you income for many years to come.