Nowadays, having a side hustle is the norm amongst young professionals. With busy schedules and a hunger for wealth, many look to real estate for a long-term investment and a consistent income throughout the year. After all, it’s hard to pass up tempting benefits like appreciation, increased cash flow, diversification and tax deductions. If you’re looking to learn the ropes for real estate investments in Georgia, we’ve got a few pointers to help you get started.
Pay Down Your Debt
The first step toward becoming an empowered investor is to be financially stable enough to do it. Debt, including student loans, medical bills or personal loans, should be taken into consideration before purchasing a rental property. While the extra money sounds tempting and could be seen as a way to pay off debt, it could work against you if your return from real estate is less than the cost of debt. Look into consolidating your debt and lower your interest and monthly payments before you get started. It’s always best to avoid putting yourself in a position where you're dipping into your debt rather than getting out of it.
Once you feel you’re in a healthy financial standing to start investing in Georgia real estate, it’s key to start small. Test out the waters and see if real estate investment is right for you. A few questions you should ask yourself is, does my time allow for it? Are the returns worth it? Do I feel ready to manage property?
The only way to find out is to give it a trial run. This could mean putting up a room for rent in your house through a third-party service like Airbnb to see if you have what it takes to host guests, keep up with maintenance and manage the finances that come with it. This can be as temporary or as long-term as you wish. It’s about finding your rhythm and getting yourself comfortable enough to fill the role of a full-time real estate investor. A trial run can ultimately help you answer some questions like how much time you have to handle tenants and whether you prefer to handle household issues firsthand or hire someone else to do it.
Own Rental Properties
Once you’re ready to move on to bigger responsibilities, it might be time to look into owning a rental property of your own. With the right location and proper maintenance, owning property can wheel in thousands of dollars to your income yearly. What’s even better is that you could earn a generous profit if you ever decide to sell it, too. But there are a couple things to consider before you make the plunge: finding the right market and knowing your numbers.
Find the right market
The right market isn’t necessarily the closest market. Depending on your property investment, it’s important to find a market that supports it. Every city and state has different demands, and you’ll need to find an area within your budget. For example, while property in New York City has a median listing price of $875,000, you can buy a house in Dallas, Georgia for nearly a fourth of that price. This, on top of local economy factors like population growth and average incomes are signs to consider when looking into a location.
Know your numbers
Alongside reviewing your marketplace, you should also know your numbers. This means averaging out your potential income from your investment properties, as well as expenses and return on investment. With an emergency saving fund in place, you can also account for vacancy rates and the occasional repairs. It’s best to be prepared by having three to five months of expenses saved for any economic downturn or unexpected events. So, before you start pocketing your newly found income, start out by saving or putting it toward your mortgage--that way you decrease your interest over time and increase your cash flow sooner.
Find a Niche and Be Prepared
Above all, find what makes your property unique. Are you near a college campus and convenient for students looking to bike to campus? Do you own a property that’s an ideal vacation rental for a retired audience? Find your niche and use that as an edge to get the type of tenants you want.
That being said, the responsibility of being a landlord for any audience can be demanding at times. While some tenants and properties are low maintenance, others can be just the opposite. If there’s one thing to learn from being a landlord, it’s this: expect the unexpected.
Some challenges you could face are unreliable tenants who fail to pay rent, leaks in the property that require immediate attention or broken appliances that need replacing. Investing in properties has its perks, but it also has its headaches. Understand your risks and rewards and dedicate time to becoming an expert in your niche. The more you improve your property management skills, the more you’re able to build your portfolio and expand your horizon.