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In your experience, when is the best time in your life to start managing rental properties? And how many properties would you say investors should start with?

The earlier, the better. The more time investments have to compound their returns, the better, similar to investing in a stock and then owning it for many years before you sell it and have to pay income taxes. It depends on the investors' financial resources, but two or four units to get a flavor is a good place to start. However, long term, if you spend the time and effort in this realm, you may need many more units to be efficient and truly benefit financially.

Are there factors and circumstances investors should be aware of? If so, how would they overcome those factors? What advice can you give beginner investors to be successful?

I think there are several decisions that investors and managers have to consider:

  • Make sure to consider the value of your time if you are going to do management or maintenance yourself.
  • The lesser the cash flow initially, often times the better the investment and the newer or better-located property is in the long run.

One must evaluate whether they are willing to take on maintenance or management-intensive projects to have better cash flows. Another obvious difference between real estate and stocks and bonds is that real estate is illiquid and can take considerable time to sell, especially in down markets. In contrast, with stocks and bonds, you hit a button when you want to sell them.

Investing in real estate is a "hands-on" experience for most people, meaning you have to be willing to accept tenant calls at night or on weekends when unexpected things happen, compared to other investments that would not require that level of involvement or engagement.

Additional Resources for Rental Property Investing

There are many resources which can help potential investors conduct research and remain prudent.

  • The Collegian: Resources for fresh college graduates can be a great way to learn about real estate and get started as an investor.
  • The Collegian provides tips and more. U.S. Securities and Exchange Commission: Resources offered by the SEC can help explain real estate terms, such as trusts, benefits and more. For those wondering how to finance their investment, you can also learn about the basics of mortgages.
  • USAGov: The U.S. government provides a wealth of information on how you can obtain mortgage refinancing and relief.
  • U.S. Department of Housing and Urban Development: The U.S. Department of Housing and Urban Development outlines what FHA loans are, how they work for seniors and more.
  • Federal Trade Commission: This guide by the Federal Trade Commission explains what reverse mortgages are, what types exist and how they work. It also answers a few frequently asked questions.
  • Federal Reserve Board: The Federal Reserve Board provides this guide to discuss how mortgage refinancing works and what you need to do to get it. It also shares tips on how to lower your interest rate.
  • U.S. Securities and Exchange Commission: This resource can help you learn about the fundamental principles of investing, including asset allocation, risk tolerance and more.
  • Harvard Business School Online: HBS outlines alternative investments aside from real estate that you can consider, such as private equity, hedge funds and more. 

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Pat Lawton
SVP Commercial Real Estate Regional Manager

Pat Lawton

Our team is dedicated to your industry and ready to deliver efficient, economical and effective solutions. Using our knowledge and industry expertise, we will help you grow and manage your business while minimizing risk.

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