Is Real Estate Investing Right for You ?

by Sally Hechter 09/29/2021


 Photo by Steve Buissinne via Pixabay

While real estate has ups and downs, it has generally been a good long-term investment. Owning a home is one way of investing, but to really take advantage, you can buy property that you won’t necessarily occupy but will make you some money.

How Real Estate Makes Money

There are two basic ways. You can rent out your property, or you can sell it for more than you paid. The latter usually involves improving the property and then “flipping” it.

Before you start making offers on potential rental or flippable property, think about what you hope to accomplish. Are you going to be a landlord or a flipper? The two require different attitudes and skills. While it’s certainly possible to combine the two – to buy a building to fix up and rent, or to rent something you will eventually sell – most people focus on one or the other.

Getting Started

In either case, it’s wise to start small. You may aspire to own an entire apartment complex and rent to a building full of tenants, but it’s better to start out with a single unit and learn to meet the challenges of being a landlord. One hands-on way is to buy a duplex, live in one half and rent the other. If you’re a flipper, you might want to eventually manage a renovation team restoring houses all over town, but you’re better off to cut your teeth on just one.

If you’re a novice, you’ll want to buy locally, and you’ll need to understand real estate trends in your community. Which neighborhoods are changing for better or for worse? How are prices moving? Does the market favor buyers or sellers? Remember, locals trends can be different from national ones. What percentage of available rentals markets are occupied? If occupation rates are high, it’s easier to find and keep tenants.

You can scour local listings yourself, but you’ll do well to consult a real estate agent who understands the market and local rentals. It’s best to work with a banker and have financing in place before you start.

Be realistic about projecting your revenue and expenses. Renovations often cost more than you’d predict. Rental upkeep can be expensive. Eventually you’ll need to upgrade appliances and replace the roof.

If you’re going to be a landlord, decide how hands-on you can be. Can you make repairs yourself? Are you willing to locate tenants and deal with them on an ongoing basis? If not, hire a property management company to take care of day-to-day management.

Investing at a Distance

You don’t have to buy a property and take on the associated headaches to profit from real estate. A vehicle such as real estate investment trust (REIT) or crowdfunded real estate makes you a part-owner of a large real estate investment. Someone else selects and manages the properties. It’s similar to buying stock. You (and others) provide the money, accept the risk and potentially enjoy the profits.

About the Author
Author

Sally Hechter

Sally Hechter is a realtor with Cummings & Co. Realtors, specializing in Harford, Baltimore, and Cecil Counties, as well as Baltimore City. Attributinginvaluable traits like patience, integrity, and a diligent work ethic to her accomplished real estate career, Sally prides herself on the personalized service she provides her clients from start to finish. Known as a connector, Sally believes that real estate is all about the relationship, not the transaction. In 1995, Sally developed an interest for real estate while managing properties in which she personally invested. In 2006, she turned her personal hobby into a career by becoming a licensed real estate agent in Maryland. Since then, she has been an independent realtor and also worked for RE/MAX American Dream. Sally joined Cummings & Co. Realtors in 2017. With a background in education, Sally believes in the value of learning current market trends, evolving with the business and consistently polishing her real estate expertise. Her designations and certifications include: •ABR, Accredited Buyer Representative •SRS, Seller Representative Specialist •Executive Club, RE/MAX American Dream, 2014, 2015 •100% Club, RE/MAX American Dream, 2016 •Peak Producer, Buffini & Company, 2013 •CDPE, Certified Distressed Property Education, 2009 – present •Harford County Association of Realtors, 2006 – present •National Association of Realtors, 2006 – present As a passionate community leader, Sally is on the alumnae executive board atMercy High School. She is also a founding member of the core development team of the Spark Family Ministry, that creates opportunities for families to be involved in the Church of St. Mark in Fallston, MD. Sally is a graduate of Towson University with a Bachelor of Science in mass communications. Born and raised in Maryland, she has lived in Baltimore City, Baltimore County, and currently resides in Harford County with her family. Sally enjoys doing anything outside, including kayaking, sailing, walking, and gardening.