Real Estate Investment takes many forms. It's been a popular way to gain income for awhile. Online websites like BiggerPockets, Landlordology, and popular YouTube videos have reasonable sounding people standing on camera talking about how they built their real estate "empire" and ended the 9-5 grind. The reality, as any RHAWA member will tell you, is quite a bit different. However, if you're looking at real estate investing, it is definitely a journey. Let's talk about that rental housing journey.
Changing Your Life
Getting ready to invest in real estate takes capital, not alot but some. You can use things like hard money, creative financing, partnerships, credit cards and mortgages in order to begin your real estate portfolio. However, you will need at least a reserve of cash for repairs and getting a property ready, as well as funds for paying your realtor and any attorneys. This means that you have to go through the initial process of any business: forming capital! Saving up quite a bit of money might seem daunting but with a little bit of budgeting (an important skill) you can trim your expenses and start to save money. There are online savings accounts offered through a variety of banks like Ally and Goldman Sachs where you can earn interest on your savings while you accrue your capital to begin your own rental housing journey. Cutting down on small expenses can add up to big savings. Review all those subscriptions, start making coffee at home, and look into a good used car. Most RHAWA members don't drive new cars or wear flashy clothes. They are building their income and their wealth. The time for taking advantage of your sacrifices will come soon enough.
It's a Marathon Not a Sprint
We have many members here at RHAWA who have been in this organization for decades. We have people who bought rental property young and then hung on to it. They rented out their house or their apartment and self-managed. Nancy McKinnon, a RHAWA board member, talked about her own rental housing journey in a recent episode of Under One Roof. Her story is typical: she bought a triplex and self-manages, which includes making her own repairs and using great vendors found from RHAWA! Hopefully, if all goes well, your rental housing journey will last just as long. RHAWA aims to help you. From buying or inheriting your first property, to when you need to do a 1031 exchange or sale to exit your business, we're here to help you along the way with forms, vendors, and classes. In order to have success in this industry, it's important to take a long view. The value of rental housing is not in the short-term appreciation or even the long-term appreciation, but in the income generated in the mean time. Income properties are assets that generate income and can be sold in the future. To get the maximum value for your investment, you have to be ready to endure the long-haul. That's what RHAWA is here to help you do!
You're Starting a Business
Many people who get into rental housing have a certain amount of attachment to their rental property. This is especially true if housing provider used to live in the house or inherited the house. It's easy to get sentimental about a house. We create wonderful memories in them. However, when you decide to rent out that home, it is no longer a memorable place, it is a business asset that is being used for a rental housing business. Here at RHAWA, we repeat it in classes, resources, and on the phone with members: rental housing is a business. If there is one tip that every housing provider needs to remember, it's that this is a business. This means that the numbers for the rental need to make sense and sometimes hard decisions have to be made. Rather than thinking of your rental as "Oh, this is just a house I rent." Instead, think about yourself as a housing provider who is providing housing. Your rental is your product and your tenants are your customers. Happy tenants will stay and continue to pay rent. This allows cash-flow to continue without the additional expense of finding new tenants at the end of every lease!
Getting Your Team Together
Businesses rely on vendors to provide services to them that they don't want to hire in-house. As a business-owner and housing provider, you're going to need a reliable team to work you with on your business. When your plumbing goes out or you need a locksmith, that moment is not the time to open up Google and start searching. If you want your tenant to call on those maintenance matters, you need a reliable vendor who they can call and you can trust to make a quality repair. You can keep this information in a "landlord book" or keep a digital file. However you retain this information, you want to have a team of people around you who can help you run your business and do so effectively. This is especially true on the business side of things. you don't want to be looking for a tax person during tax season or an attorney when you have a legal dispute. Get, and keep your team!
The last thing you can do to get ready to embark on your rental housing journey is to call a guide. Fortunately, if you're buying rental property in Washington state, the Rental Housing Association of Washington is here to help you through your rental housing journey. From the first tenant to your final 1031 exchange, we have resources, forms, and events to help you run your income property business effectively and be a great housing provider. If you want to learn more about RHAWA explore our Membership page and feel free to leave us a note on Livechat.