Are you curious about how to start investing in rental properties, especially if you’re a beginner? Today, we’re talking with Paula Pant, who, in her 30s, already owns seven rental homes. You might remember Paula from an earlier interview where we discussed how she managed to own seven rental properties by age 34. This time, she’s back to answer more questions and update us on the current property investing landscape.
Paula has been featured in numerous prestigious publications like Oprah, MONEY, CNBC, Forbes, and many others. She has over a decade of experience in real estate and has been an out-of-state investor for five years. Currently, she owns seven rental properties and recently bought a duplex in March 2021.
In this interview, you’ll learn:
– Is owning rental property profitable?
– How to determine if a rental property is a good investment?
– How much profit should you aim for from a rental property?
– How to manage rentals from afar, handle repairs, and deal with tenant turnover?
– How to handle bad renters?
– Insights on the current real estate market.
– Tips for beginners on getting started with real estate investing.
Here’s how to start investing in rental property for beginners:
1. **Introduction to Paula Pant**:
Paula is the host of the Afford Anything podcast and the founder of the Afford Anything platform, which is centered around the idea that you can afford anything, but not everything. This philosophy encourages people to make thoughtful tradeoffs. Afford Anything is known for its podcast, which has 18 million downloads, a website with a decade’s worth of articles, a newsletter with 70,000 subscribers, and a YouTube channel. Paula’s flagship course, Your First Rental Property, is designed to help people intelligently invest in rental real estate.
2. **Why Paula Loves Real Estate Investing**:
Paula enjoys real estate because it combines running a business with owning an investment. Unlike stocks and bonds, where you’re at the mercy of the market, real estate allows you to have more control over the profitability of your investments. Rental properties provide a stream of passive income, which means you do the hard work upfront and then enjoy residual income for years.
3. **How Paula Got Started**:
Paula’s first property was a triplex, which she bought with her former spouse. They lived in one unit and rented out the other two, covering their housing costs and accelerating their savings. She owned seven rental units before buying a personal home for herself.
4. **Profitability of Rental Properties**:
Just like with stocks, the profitability of rental properties depends on how well you manage them. Successful investors treat their properties like a business, with systems, procedures, and contingency plans in place.
5. **Determining a Good Rental Property**:
It’s all about compatibility with your investment goals. Some properties are lower-effort and more hands-off, while others have higher profit potential. The key is to find a property that aligns with your goals as an investor.
6. **Expected Profit from Rental Properties**:
The returns should reflect the risk. Lower-risk properties in upscale neighborhoods will have lower returns, while higher-risk properties in less desirable areas should offer higher returns. The specific numbers will vary depending on the location.
7. **Managing Rentals from Afar**:
Treat your rental properties like a business. Hire a team to handle day-to-day operations and manage the properties at a high level. This approach allows you to efficiently manage properties even from a distance.
8. **Dealing with Bad Renters**:
Prevention is key. Paula has strong screening criteria for tenants, including background checks, credit checks, and income verification. She shares her tenant screening processes in her course. When issues arise, handle them professionally with systems, procedures, and documentation.
9. **Current Real Estate Market**:
It’s a great time to invest. The market fundamentals are different from the 2006 housing bubble. Today, there’s a shortage of homes and stricter lending criteria, making it a more stable environment for investing.
10. **Sacrifices Made for Real Estate Investing**:
Paula admits she sacrificed more time than necessary due to inefficiencies and lack of knowledge. With proper information and preparation, the process can be much more efficient. She emphasizes the importance of learning from reliable sources to avoid unnecessary sacrifices.
11. **Getting Started with Real Estate Investing**:
Choose one niche and one strategy. Paula recommends starting with residential real estate and a buy-and-hold strategy for passive income. Research thoroughly and arm yourself with knowledge before diving in.
12. **Training Offered**:
Paula’s course, Your First Rental Property (YFRP), provides a comprehensive framework for building a profitable rental property portfolio. The course includes detailed lessons, support from teaching assistants, community forums, coaching sessions, and numerous resources to guide you through every stage of the process.
For more information and to sign up for free webinars, visit the course page. If you’re interested in learning how to start investing in rental properties, this is a great place to start.