Investment Properties with Juan & Sam
On this episode of Financially Naked: Stories from The Financial Gym, our hosts are Juan and Sam, two Certified Financial Trainers at The Financial Gym. This episode is all about investment properties. It’s a goal that many clients have at The Financial Gym, so today we’re delving into the basics of just getting started and hearing firsthand from Sam as she shares her personal experience with investment properties.
Podcast Notes
What is an investment property?
An investment property is a property purchased with the intention to produce income or appreciate in value over time, rather than used as a primary residence.
Real estate is one example of diversifying your investment portfolio beyond stocks and bonds. It’s usually considered a long-term investment.
You can't take out a loan for retirement, but you can leverage financing to build your investment property portfolio.
Investment properties can include rental properties, vacation properties, fix-and-flip properties, or a hybrid model, which all have their pros and cons.
Sam has a ‘hybrid property,’ which means she rents out part of the home she lives in.
Rental income from real estate properties can provide a consistent source of cash flow, but it takes time and work to get to that level.
Are investment properties passive income?
There is quite a bit of work that goes into it, especially when you first start. It shouldn’t be a decision made lightly.
If you’re interested in getting started, it’s important to know the rules and regulations for your specific state and city. Make sure you take the time to research; it's essential to research the local laws.
Property expenses can add up quickly. It’s the mortgage (including principal and interest), taxes, and property insurance, as well as additional costs such as maintenance, utilities, water, sewer, pest control, and garbage.
If your property is located far from where you currently live, hiring a property manager is an option but comes at a cost. It takes time to find a solid property manager you can trust and it cuts into the revenue from your property.
Tenant selection is another important and possibly challenging aspect of property ownership. We'll explore the pros and cons of hiring a realtor versus managing tenants yourself, especially for short-term rentals.
How can I learn more about investment properties?
If you want to dig in, start researching and learn one term at a time.
What you estimate to make every month can vary so it looks more like a stock, up and down. Sam’s in the negative some months, way positive in the others.
Treat it like a business with a separate account and savings for unexpected expenses.
Sam likes to think about it in terms of education. The first property is about learning the process. The first two years are always tough. Once you know how things work, you can make a more accurate plan.
If you want to work with a Certified Financial Trainer to see if an investment property is a goal for you, schedule a free warm-up call today! If you have any ideas or questions for the show, send an email to trainerpodcast@fingyms.com.
Resources
Meet The Trainers
Sam Cash, Level 2 Certified Financial Trainer
Juan Valeriano, Level 2 Certified Financial Trainer