In this session of The Engineering Career Coach (TECC) Podcast, I am going to share with you my experiences on real estate investing along with my guest Vittorio Anepete, who is an engineer and a member of our Engineering Career Community.
Vittorio is a licensed professional engineer experienced in scoping and design of numerous roadway projects including geometric design, roadside design, storm-water management, utility exploration and engineering, right-of-way engineering, traffic control, highway access design, and construction inspection. He is currently a senior project engineer for McCormick Taylor. He has worked with NJDOT, NJ Turnpike Authority, and several county transportation departments. Vittorio is proficient with industry leading design and modeling software.
Listen to this session and learn how to start investing in real estate:
Reasons why real estate is a most “able” investment (From Gary Keller’s Book “Millionaire Real Estate Investor”):
- Accessible – Anyone can buy it
- Appreciable – Increases in value over time
- Leveragable – Buy on margin & borrow against equity
- Rentable – Cash Flow!
- Improvable – Sweat equity
- Deductible/Depreciable/Deferrable – Great tax benefits
- Stable – Slow to rise & slow to fall
- Livable – Shelter in more ways than one
Real Estate Investment Strategies:
- Wholesaling – Fund the deal and sell it to another investor for a fee
- Rehab/Flip/Buy-Fix-Sell – Buy a property at a significant discount that needs work, hire contractor to fix the property, and sell it at a higher price
- Lease Option – Offer to lease and an option to own it (rent-to-own)
- Buy and Hold (Rentals) – Buy a property and renting it out to cover the mortgage
Tips on Rental Properties:
- Ensure you have enough capital before you even start (e.g. money to pay your down payment, repairs, insurance, utilities, cash reserves for unexpected vacancy or repairs)
- Know your numbers like your Maximum Allowable Offer (MAO) – what will your payment be with insurance and taxes and what rent can you get (be conservative)
- Location, Location, Location.
- Rental desirability
- Close to major city/employment
- Proximity to public transportation
- Proximity to colleges
- Try to keep the property as close as possible to your primary residence.
- Consider multi-units to minimize risk if one tenant leaves, but keep in mind the exit strategy.
- Be prepared to deal with tenants. Be fair, firm and responsive.
- Have a good lease and set criteria and processes.
- Set your screening criteria
- Know the laws in you state (security deposit law)
- Hire a professional
- Find a landlord/tenant attorney in your county
- Keep good records. Document all correspondence with town/municipality, and tenants. Save all receipts for expenses.
- Inspect property often.
- Don’t try to do it all yourself. Have a list of go-to people (attorneys, accountants, realtors, handymen, etc.)
Have you thought about investing in real estate?
Anthony Fasano, PE, author of Engineer Your Own Success, found success as an engineer at a very early age and now writes and podcasts to help other engineers do the same. Visit Anthony’s website at EngineeringCareerCoach.com to access all of the free engineering career resources he has created to help engineers succeed.