NOTE FROM ALEX: This is a guest post from Sonia Amin, PharmD. Sonia was a part of my class Side Hustle Fast Track for Pharmacists and shared with our class how she started her side income of renting and real estate. I'm a sucker for learning more about investment strategies, so I asked her to share her story here! Enjoy!
The term real estate investing can either give the sentiment of a road to great wealth or it could bring feelings of apprehension and uncertainty. For me, it was quite the latter. However, after eight years of my husband and I, being landlords, I can say, although it has been quite stressful at times, there is money to be made and the long-term goal of having passive income is a reality that can be accomplished by anyone willing to put the work in!
How It All Began
My journey into real estate investing was one initially, not by choice. Funny enough, one of our first rental properties, was actually the home my husband lived in prior to us getting married. The home was purchased towards the end of the market peaking and we would have taken a severe loss had we sold it when we were looking to relocate.
It was quite devastating to watch the value of that home go from $200,000 to $250,000 all the way down to $60,000 at one point.
Talk about a great time to buy an investment property!
Why do I bother to mention this unfortunate situation? It's the reality we all can face when it comes to the uncertainty of the real estate market, the stock market, or anything in life, for that matter. We cannot control things that are out of our power. But we can control how we decide to approach and deal with things like this.
Looking At the Whole Picture
With real estate investing, being pragmatic in how a property is evaluated and planning for the ups and downs of the market are essential. And I won't pretend that's all I do.
I mean, I pray a lot.
I mean, A LOT!
That property was obviously not purchased with the intent of renting it out. However, from that time on, I have learned so much of what to look for in a property and evaluating it based on the current market along with looking at it for what it could be in case the market fluctuates, whether up or down.
The Current Approach
Since then, we have added a couple more rental properties to our portfolio. Now, when I look at potential investments, I evaluate them quite differently. I will do a return on investment (ROI) calculation looking at the potential of it being a flip (this can be more difficult to find and being a conservative investor, I'm not as willing to take larger risks) or a rental property.
The main difference between a possible flip and a potential rental is that more money and time may be needed to update a property to be flip-worthy, versus, typically minor renovations can be done to have the home rented out quickly. This would also just depend on your area and what typical buyers and renters are looking for.
In the area we normally do our investment search in, homes that sell quickly are move-in ready with granite counters, updated fixtures, stainless steel appliances, and have nice curb appeal. However, when getting a property ready to be rented, those things are all great if they are already in place, but putting money into granite counters, high-end appliances, or things of that sort is typically unnecessary - at least in the area we choose to purchase in.
I add that disclaimer because every market is different and the more time you spend looking at houses and seeing which ones sell/rent and for what price, you'll be able to come up with your own evaluations.
Of course, renters would also like nice fixtures and upgraded appliances, but they are many times more willing to forego those perks for their temporary residence. They may be more focused on the layout of the home, how spacious it feels, whether the backyard will work for their children, etc. Basically, is it a nice, clean home, in a good location that meets their needs?
Managing the Day to Day
More recently, I have taken a step back from looking into additional real estate as much. I am a mom with two little ones and they are my heart and focus these days. I still manage our rental properties in that I handle the day to day issues such as maintenance requests, showing the property to get it rented, meeting with contractors, or even working on minor maintenance issues myself.
Typically, a handyman is hired for most jobs but there are times that I know it's something simple that I can take care of myself. For example, we received a letter last week from the HOA of a home we own regarding the appearance of the garage. Admittedly, it was looking a bit rusty.
Luckily, this home is only about 5 minutes from where I live so it's convenient enough for me to go and fix it myself. I sanded down all the areas that had rusted and sprayed a new coat of paint on.
Good as new!
Something I would encourage those who think of themselves as not the "handy" type, is that there is so much information on the internet to help you. It's quite possible to learn how to do things that normally would require a professional. Specifically, my favorite thing to use is YouTube. It's one thing to read about how to fix a garbage disposal that's jammed, but another to see someone do it in a quick video! Then, you can decide if it's something you want to/can do yourself or if it's something you rather have a professional do.
There are several factors that could play a role in whether you hire a professional. The work could be dangerous, too difficult to do, or you simply don't have the time to get it done.
Another reason I like to do my own research is that I like to have a baseline knowledge of the issue when speaking to the contractor. This way they know that they aren't talking to someone who is completely clueless.
For example, if an air conditioner is running but the air blowing is not actually cool air; there could be a variety of reasons this happens. Doing my own research and having that knowledge beforehand is a good way to make sure whoever you are speaking with has narrowed down the issue to the few things you found as well. Of course, they are the professional, and they may just as well find something completely different, but it doesn't hurt to do your own research.
Want to Learn More?
If you happen to be interested in dabbling in the real estate market, there are a plethora of books available that help the beginner investor. One such book is The Million Dollar Real Estate Investor by Gary Keller. This book gives clear steps as well as checklists and charts that can be easily used and implemented.
In addition, a great resource I highly recommend is www.biggerpockets.com. There, you will find an entire community of people willing to help answer questions and a wealth of information for any stage you are at. If you have a question, it's more than likely been asked and answered on their forum.
It's a Long-Term Goal
Now having gone through the ups and downs of being a landlord, I still would like to purchase a few more investments at the right time. As I mentioned, the long-term potential to have passive income is phenomenal.
It does take time, patience, and perseverance just like anything worthwhile. And there can be quite a bit of competition depending on your region of the country. You may also find a decrease in the number of homes available now compared to months/years past. However, I am always keeping my eyes and ears open for the next gem to pop up. You just never know when the right rental property might present itself.
GUEST AUTHOR: SONIA AMIN, PHARMD
Sonia Amin, PharmD, received her B.S. degree in Food Science and Human Nutrition and PharmD from the University of Florida. She then completed an ambulatory care residency and received her teaching certification. Dr. Amin has worked in academia, ambulatory care pharmacy, and community pharmacy. She currently works as a MTM Pharmacist and is dedicated to helping people live healthy lives.
Alex is the Founder of The Happy PharmD. He loves anime, his family, and video games, but not in that order.