Real estate investing is a fantastic way to diversify your portfolio and create many income streams. Whether you’re starting out owning your own home or investing in a small rental, real estate in Montgomery County is a solid investment.
With its proximity to Washington, D.C., Maryland is the perfect market to invest in rental property. It’s also a great place to own a home of your own.
If you’re interested in the competitive Montgomery County real estate market, take a look at this investor’s guide to Montgomery County properties.
Montgomery County Real Estate Bidding Wars
Montgomery County Families, like families across the U.S., struggled through the pandemic that drove housing prices skyward. Rising prices also reflected a dip in inventory which resulted in bidding wars due to supply and demand pressures.
The market is still hot but rising interest rates historically have a cooling effect on the housing market. Higher mortgage rates increase the cost of real estate but they also reduce the market competition.
In Maryland, about 33% of residents are renters. Much of Maryland is within commuting distance to Washington D.C., but real estate is more affordable than in the D.C. area. This makes Maryland real estate an ongoing good investment.
Another plus for Maryland real estate investors is the high-quality education. Maryland ranks as the second most well-educated population in the United States.
These and other factors now make it a great time to invest in Montgomery County real estate. What’s the first step?
Secure the Financing First
Whether you’re a real estate investor or a family looking to invest in your first home, it helps to secure financing first. Getting a mortgage preapproval helps sellers take your offer seriously.
The preapproval process also helps you understand what’s affordable for your budget. If you’re looking for investments, single-family homes are a great place to start. If you’ve got more capital, a small apartment complex is also a great investment.
Once you’ve secured the financing and you know your budget, it’s time to move to the next step.
Look for a High Return on Investment
Even if you’re looking for a home for yourself, look for neighborhoods that offer a good return on investment. Look for areas that offer easy access to shopping, entertainment, public transportation, and other amenities. Also, find neighborhoods with good schools and low crime rates.
If your property isn’t in a good location, it’s harder to rent out and harder to make a profit.
If you’re not familiar with Maryland neighborhoods, find an experienced agent. Even if you know the neighborhoods, an agent has a better feel for what areas offer the best return on investment. The well-known adage in the real estate industry – location, location, location – is true for a reason!
Your property investment isn’t only a tax shelter, it’s an income stream. A knowledgeable agent looks at least four elements when finding good investment properties. These include:
- Cash flow
- Principal reduction
- Tax savings
- Appreciation value
This way you end up with a property that works for you, instead of you working for the property.
Joint Venture Options
If you’re not going to live in your Montgomery County home, consider a joint venture option. Instead of investing in a single home or apartment complex, invest 10%-45% in several different properties.
With this type of ownership, you take a smaller tax hit on re-sale. It also means you can start real estate investing without putting as much cash down up front.
Making an Offer
Once you’ve found your property, it’s time to make an offer. In today’s volatile real estate market, it’s crucial to use an experienced realtor.
He’ll have his finger on the pulse of the neighborhood and what sort of offer to make. You don’t want to insult an owner with a low offer and you don’t want to overpay. It’s a delicate balance.
Once the seller accepts your offer, you’re ready to move forward with your investment property.
Increase the Desirability of Your Property
It’s nice when you get a property that already has a tenant and doesn’t need a lot of initial work, but it’s not always possible. Many rental properties need a little bit of work to make them as appealing as possible.
Renting is a competitive market, so make your property stand out from the others. Ensure that everything is in good working condition. A new coat of neutral-colored paint is affordable and goes a long way toward making your property look great.
Finding Tenants
Now that you’ve got your property and it’s in good shape, it’s time to find a good tenant. This is sometimes daunting for first-time investors.
It’s crucial to run a credit check on potential tenants. You’ll need their permission to do this.
It’s also important that you understand Maryland tenant and landlord laws. Ignorance of the law can cost you lots of money.
Are you busy with your career and don’t have time for the day-to-day operations of investment property? Turn it over to an experienced property management company.
The cost of a management company is worth it to limit potential bad outcomes and reduce your stress. It also means your investment property income stream doesn’t cost you tons of your precious time.
Investing in Real Estate in Montgomery County, Maryland
Investing in real estate in Montgomery County, Maryland is a smart move. With 33% of the population living in rentals, you’ll gain a steady and reliable income stream.
Brett McCurdy and his team are experienced and professional. They know the market inside and out and can help you find the perfect investment property for your needs. They’ll also help you get control of the property management side of your rental investments.
If you’re ready to invest in the Montgomery County real estate market, contact Brett and his team now.