By Holly Roberson, Guest Contributor
We’ve all heard the late night infomercials on getting rich in real estate. Lots of gurus promise lazy “get rich quick ” money, but the truth is that developing a portfolio of rental properties in Charleston SC takes work, time, and money. From beginning with your long-term plan, to extensive research, strategy and management, buying rental properties in Charleston SC, and making it a lucrative investment, takes experience. So, when starting down the path towards investing, here are six steps to learning the ropes and seizing the market.
What’s your long-term financial plan?
Before you even start looking at properties, what’s your long term financial plan? Is it a cash flow play or an equity play?
A fresh college graduate who wants to start buying into real estate may have very different goals. The first rental may be a duplex where he/she can live in part of it and rent the other part, thus covering his/her own living expenses. Soon to be parents might decide to invest aggressively in rental properties so that the rent covers the college education of that perfect bundle of joy. A 45 year-old who has just got a major promotion and raise may want to invest money into retirement in the form of real estate or even use the rental for personal retirement in 20 years when it’s paid for. A parent of a college child, may just want to cover the costs of residence for their child. Whatever your goals, it’s not a bad idea to sit down with a professional to get all the advice you can.
Have you read everything you can about investing in real estate in your market?
Buying any piece of property takes research, so read every investor book and blog you can. Surround yourself with other investors to learn by osmosis. And, sometimes, it’s just as prudent to find someone who IS an expert in your local market. Take Charleston, for example, a real estate investor may limit purchases to the neighborhoods he/she knows or find an expert broker who knows that area well and can advise. Investing on the Charleston peninsula is different than investing in Mount Pleasant or even Summerville. Study your market!
What’s your exit strategy?
How will you unload this property? Is it a long-term rental for income that will go into your personal budget? If so, calculate the costs of upkeep and add them into the annual budget. Delayed maintenance can create an expensive hardship if say, you’ve lost your job and are living off the rents instead of re-investing them. Will you want to convert it to personal use later, or perhaps sell it for a profit and buy bigger? Think about 1031 Exchanges and add that financial planner and CPA to your team.
Do you have financing ready?
Before you even start looking, have your financing ready. It makes your offer as good as cash to a seller and puts you in a position of collecting those rents even quicker.
Will you manage the property yourself?
Some people prefer to manage a rental property themselves, but for those of use who are not that handy or maybe only want a couple of properties, it’s good to know a property management team. Hiring the right property management company gives you assurance that even if the toilet gets clogged on July 4th weekend when you are out of town, it will be taken care of. It’s a great way to leverage relationships, too. After all, they usually have a rolodex of the best plumbers, electricians, handymen, and painters on call. Luxury Simplified Retreats does this and more! They advertise your property for you, screen the applicants, handle repairs and preparations, and collect the rent.
Do you have a team of trusted professionals to walk the path with you?
Expert real estate investors agree that every investor needs a CPA, a contractor, a funding expert, and a real estate broker on their team. Working with the same team for all the investments can streamline the process. With roughly $25M in our own LS portfolio we know a thing or two about rental investments. I have clients that tell me what type of investments they are looking for and when I hear of one, I scout and vet it for them. Likewise, our own LS Construction team is available to look over the property and give an estimate for any updates or restoration.
NOTE: If you are interested in investing in the downtown Charleston market, I can help. Our team includes investment professionals who have successfully built portfolios that are made of both long and short term rental properties. You might also be interested in these articles: 8 Rules for Making Money in The Housing Market , Investment on the Charleston Peninsula : An Investor’s View