Money Geek features ACC Real Estate and Finance Professor Job Hammond

Expert Insight for Beginner Rental Property Investors: ACC Real Estate and Finance Professor Job Hammond is featured as the expert on Money Geek.

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Excerpt from article, written by Job Hammond


Expert Insight for Beginner Rental Property Investors

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?

Real estate is a powerful financial tool that can bring opportunity and wealth to those who use it correctly. Residential investment properties offer some of the best hedges against inflation, as most fixed costs remain relatively constant in a market where rental amounts are on the rise. The sooner you can start purchasing and managing rental properties, the better.

As a real estate and finance professor at Austin Community College District in Austin, TX, I have clients who have successfully managed properties from the time they were just 18 years old. One student, in particular, got started in partnership with his parents. They purchased the house, and his job was to manage vendors and handle any tenant issues. If you’re considering getting started in this business, I suggest that you start with a single rental property to understand the process and allow room for inevitable mistakes. Mistakes will help you do things better in the future. With experience, you’ll be able to take on even more. Many of my clients can manage up to three properties and hold down a full-time job. Tools such as rental property management software, automatic billing and good relationships with vendors will help ensure things do not go wrong.

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?

While investment properties can be lucrative and exciting, there are some things that investors should know:

  • Consider Buying Newer Houses: You may find fewer repairs if the house is newer.
  • Reduce Vacancy: Do your best to reduce the time it takes to get a good tenant, as each day the house is vacant will hurt your cash flow.
  • Have Contingency Funds: Expenses such as property taxes, HOA fees and others can and do rise for houses.

Investors who are just beginning can benefit from finding a licensed and experienced realtor to acquire the house. These individuals are familiar with the neighborhoods, appreciation trends and other places recently rented in the community. Consider meeting with a local lender who can provide financial advice and determine your qualification levels. To locate upcoming areas, review economic trends such as population growth, employment increases, building permits and commercial development. Do not procrastinate; instead, start now. Be prepared to treat this like a business. Build good relationships with your tenants. Tenants are people too, and they will treat your house better if they know you care about them. Purchasing an investment property and managing it will take some effort. Your work will lead to the rewards of cash flow, equity and financial success in the long term.