Want to become the next Barbara Corcoran? Rachel Richards of Money Honey Rachel shares the deets on how you can launch your real estate investing journey. No Shark Tank pitch required.
What is passive real estate investing?
It’s income earned from real estate investments with little ongoing effort. Examples include REITs (real estate investment trusts), rental properties, and renting out a spare bedroom or house on Airbnb. Make no mistake, it's rare to have a 100% passive income stream. Most of these will require a couple of hours a week or a few hours per month to maintain. But that's a lot more passive than a 9-to-5 job.
What’s the biggest mistake people make when investing in real estate?
Underestimating their expenses. A lot of new investors think it's as simple as rent minus mortgage equals profit, but it's not quite that easy. There’s property management, HOA fees, maintenance, capital expenditures, utilities, pest control, lawn care, and more. Missing any one of these items can take a profitable property to a property you’re losing money on.
What are your top tips for someone buying their first investment property?
1. Focus on location first. Look for an affordable, landlord-friendly, and growing city. While it might seem obvious to invest where you live, that doesn't always make sense. Don't be afraid to invest elsewhere.
2. Build your team. Find a smart, knowledgeable, and communicative investor-friendly real estate agent first and foremost. Also, look for a small, local lender and a trustworthy contractor.
3. Run the numbers. Be conservative. Just because your realtor tells you it will rent for X amount, doesn't necessarily mean that's true. Come up with your own estimate. There are plenty of online calculators, books, podcasts, and other resources out there.
“I saved up the remaining amount required to pay off my master's degree! It’s a huge milestone for me as a first-generation student since my refugee parents never received an education past fifth grade. These past two years have been very financially and mentally stressful, but I'm glad to be able to look forward to 2023 with less financial stress.”
— Visakha P (CT). We love a debt-free degree holder. Congrats on tackling grad school sans loans.
For the Group Chat
The secret to becoming a recession millionaire?
Buying the dip, according to some TikTok financial influencers.
If you get free meals and coffee at work…
Enjoy it while it lasts. A “perkcession” is upon us.
Can money really buy happiness?
What’s cheaper than paying rent in NYC?
Living on a cruise ship.
You work hard for your money, and we’re here to help you spend it wisely. Ahead, Karen Perez, founder and CEO of accessories company Second Wind, tells us about a splurge-worthy accessory that’ll never go out of style.
Tell us about a purchase that felt like an investment.
A pair of Valentino black patent leather pumps. What makes these special are the ankle straps with a signature buckle that gives them a modern touch while still keeping them very classic.
How much did you spend on them?
$920, plus tax.
Why do you consider them a worthy investment?
I knew I could wear them dressed up with a cocktail dress and dressed down with jeans, a T-shirt, and a blazer. My best tip when purchasing an investment piece is to always make sure you have at least five looks you can wear with it.
Answers have been edited and condensed for clarity.
Subscribe to Skimm Money
Your source for the biggest financial headlines and trends, and how they affect your wallet.