What is Real Estate Investing?
To put it simply, real estate investing is the process of taking space (real estate) and making a profit from it. There are many ways to do this. You can be investing in real estate just by renting out a room in your apartment or house. Managing rental properties is one of the most common types of investing. Another common type of real estate investing is flipping houses. (Think HGTV) We asked our agents what advice they would give to others about real estate investing and here are their valuable insights.
Are You Ready to Invest in Real Estate?
There are many advantages to investing in real estate, some include making extra money on the side and expanding your investment portfolio. Before going out and buying a property, it is important to check if you’re ready for this venture.
Broker Summer Davy has some questions she asks clients when they have this business venture in mind:
- Have you considered the additional costs of purchasing an investment property including repairs, taxes, management fees, and carrying costs until you have a paying tenant?
- Are you aware of the neighborhood conditions and the landlord-tenant laws?
- If you are buying a flip to rent, are you prepared to do the repairs/upgrades yourself or do you have a contractor or crew at the ready to begin working as soon as you purchase?
- How quickly can you get the property ready for tenants?
- Are you willing to manage the property yourself or do you have a trusted property manager ready to help you?
As you can see, real estate investing can be a lot of work and may not fit into everyone’s lifestyle. It’s essential that you are aware of the potential costs, time commitments, laws, and expectations associated with this type of project.
If you’ve ever rented a place from someone, then you’ve participated in their real estate investment. With some strategic planning and foresight, you could soon benefit from your own rental property.
Joe Stevick, Broker, first advises that you, “Make sure to calculate rental income and appreciation when evaluating properties.”
What is most important in managing rental properties is making sure you have enough capital to do so. You’ll want to calculate the costs of maintaining and paying for the property and how much you’ll approximately gain from rent. For more information, read Windermere’s in-depth article, “Investing In Real Estate Rentals”.
From “Property Brothers” to “Fixer Upper“, mainstream media has popularized flipping houses. Sure, it can be a lot of fun and quite rewarding. However, it doesn’t come without work and risks. If flipping houses is something you’re interested in, Broker Melisa Wight has some advice for you:
- Setting realistic expectations with real estate investing is key. It’s not as easy as it looks on HGTV!
- Putting together a budget is just one piece of the puzzle: accounting for closing costs, holding fees, and unforeseen expenses is how you make or break it in this business.
- Building relationships with trustworthy contractors is essential to running a flip smoothly. They’ll have your back if you have theirs.
Flipping houses require a lot of time and great connections with contractors in order to do it successfully. If you are looking for this type of project and have the skills and means to do so, it can be a great investment option. But before you are quick to snag the first fixer-upper you see, read our article “Buying A Fixer Upper” to learn more.
Commercial Real Estate Investing
If you’re eyeing a commercial space that you’d like to lease or buy, Managing Broker Julie Wurden Jablonski has some advice for you. “Create a business plan prior to buying or leasing commercial space. Mentoring and business resources are available for new and existing entrepreneurs through Kitsap SCORE, the Small Business Administration, Kitsap Economic Development Association, and Washington State University at Olympic College.”