Real Estate Investing: A Team Business

Working as a team when in investing in real estate has many advantages over going it alone. If you’re considering getting into the real estate investment market, you should take the time to decide if you can go it alone or if you should work with a team. Many small business owners are quick to think that it can be done alone, but realize when it is too late that they don’t know quite as much as they thought they did. There are only 24 hours in each day. No amount of knowledge can overcome a lack of time, which is why Jason Cohen Pittsburgh’s investments are always a team effort.

Because you’re building your team from the ground, you get to decide which roles will be represented and who will fill those roles. Some roles are necessary at an early point while other roles can wait until your business grows. Some of the essential roles are bookkeeper, assistant, and a communications specialist. All these positions can be filled by one person at the onset, but be sure to stay aware of when changes are necessary.

As a small business owner in the real estate investing industry, you need to know where you stand financially with every deal you make. You must know your budget. If you don’t know how much money is in your bank account, you can quickly add hundreds of dollars in overdraft fees. You also don’t want to be in the middle of a deal and have your credit turned off. It’s embarrassing and unnecessary. The function of a bookkeeper is to keep track of your finances, pay your bills, and help you stay on budget. If you are not ready to add staff just yet, you can look into hiring a service or a freelance bookkeeper.

Having an administrative assistant may sound like a luxury, but there may come a time when you realize that it is a necessity. If your list of phone calls to return is growing, if your voicemail is filling up on a regular basis, and if you’re forgetting to appointments, it may be time to hire an assistant. The main function of an administrative assistant is to answer calls, schedule appointments, type memos and reports, and assist with any other organizational tasks that arise.

A communications specialist will handle your marketing functions. The main function of this individual is to create your presence to build your reputation by telling the market all about you and your business. Online, a communications specialist will create your website and social media sites. Offline, a communications specialist will create your advertising campaign. Without a communications specialist your administrative assistant won’t have many appointments to schedule.

As your business grows, you’ll add more positions. You may hire a contractor to help with major repairs. A property manager and a handyman may become necessary if you are going to have tenants. You should also develop a close relationship with your insurance agent and loan officer.

When you have the perfect team, you as the investment business owner, can focus on what you do best while your employees and consultants do what they do best. You are the real estate investment brain. At Jason Cohen Pittsburgh, we know that with the right team, you can grow stronger in the field and have a better chance of success.

Should you invest in stocks or real estate?

Now that the real estate market has made huge strides in the way of recovering from the Recession, its appeal to investors is growing again. All over the nation, people are looking for ways to turn their money into more money. And real estate is looking like a better option every day.

But, which is safer — real estate or stocks? Where can you get the greatest return? And how much time are you willing to devote? At Jason Cohen Pittsburgh, we are clearly in the real estate camp for ourselves. But is it the right investment for you?

Unless you come from a family in which stocks and bonds were discussed at the dinner table, chances are you’re more familiar with real estate than the stock market. You see homes sitting on the market every day. You know how they can necessitate work when you see a pipe freeze, a roof leak, or a floor wear out. It’s tangible. Stocks are figurative. They exist in another space. When they go bad, it’s just as palpable — but not as visual. You may already know how to repair damages in a home.

Unlike stocks, that are subject to the whims of the market and business decisions made in boardrooms far from your office, you have some level of control over your real estate investments. Sure, weather and human error can wreak havoc on a home, but you can be insured against a great deal of the damage.

Time Commitment
Though real estate is generally familiar and fixable, this also means that it is more high maintenance to the investor. You may already know how to repair a damaged bannister, but do you have the time? Stocks and bonds are far removed from your daily life. Aside from monitoring them, they are a nearly effortless investment.

While stocks have generally proven to yield higher returns on investment, they are prone to extreme fluctuations. This can cause a novice investor to panic. Real estate values usually do not skyrocket or hit rock bottom. Their steadiness brings comfort to the investor. You can’t open the paper in the morning to see that the value of your investment property has plunged.

You hear the creed of “diversify” from every financial advisor. Because you can invest less money in each stock than in a single real estate property, you have more opportunities to diversify your investment portfolio. Real estate investors generally invest in a certain geographical area. Therefore, if this region takes an economic downturn, all the investments go with it. Investing less in stocks offers less risk.

Unless you love all the risk and work that goes into real estate investing, the stock market may be a better option for the casual investor. But if you’re like us at Jason Cohen Pittsburgh, and you live for turning that distressed property around, then real estate investing is the path for you.

Renting in Retirement

We talk a lot at Jason Cohen Pittsburgh about the benefits of renting for college students or recent grads. But that’s because Pittsburgh has a huge college presence and is a city that’s getting younger. We don’t talk a lot about the benefits of renting a home for retirees.

You usually think of retirement as a time when you’re slowing down, when life is about relaxing and enjoying what you’ve earned in your years of working. But, things are changing. People are living longer, and they are often working well into their golden years. The current economy may not allow for the leisurely retirement of yesteryears. With this climate in mind, renting a home instead of buying can have several benefits for retirees.

Buying a home can give a sense of security. It’s permanent and yours. However, it also comes with additional responsibilities that can offset that peace of mind.

If you’re weighing buying vs. renting in retirement, ask yourself the following questions:

Do you want to use retirement plan money to buy a home?

Unless you sold a previous home for a profit, you may have to withdraw retirement money to use as the downpayment. This cuts into your budget.

Do you want a permanent residence?

Some people retire in their hometown while others want to use their years off the job as a time to explore. Renting allows you the freedom of exploring different areas whereas buying requires more surety. Unless you are absolutely certain of where you want to retire, it may be best to rent first, at least until you’ve done a bit of exploring.

Do you really want a 30-year mortgage to start when you’re 65?

Let’s say you do get to retire at a traditional age — you’ll still have a mortgage until you’re 95.

Do you want to deal with banks and loans and all the other tedium that accompanies a mortgage?

You probably didn’t want to deal with this the first time around.

Above all, isn’t it time to enjoy retirement? That means, do you want a mortgage hanging over your head? Do you want to be responsible for unexpected expenses and unwanted repairs?

Basically, the question of owning vs. renting in retirement comes down to how much work you want to do at this time in your life. At Jason Cohen Pittsburgh, we try to take our residents’ minds off their apartments. That’s the major benefit of renting. It may cost a bit more per month, but that cost is consistent and the burden of maintenance is on us, not you. Ask yourself if that is something you value in retirement.

Why own when you can rent? Jason Cohen Pittsburgh answers

Countless stories out there espouse the opposite. Home ownership is part of the American Dream. It’s a rite of passage. Yeah, maybe when the American worker was able to climb the ranks of a single company, with job security and a pension. Unfortunately, that is just not the case anymore. The economy is volatile. Lay-offs followed by bouts of unemployment are a way of life. Nothing is as steady anymore, so it’s difficult to make your residence be that way.

renting a home

Yes, a recent study showed that in America’s major cities, owning was 35% cheaper than renting. However, that is down from 45% a year ago. The gap between renting and owning costs is shrinking, and with it, the biggest advantage of home ownership. At Jason Cohen Pittsburgh, we’re a lot like other multifamily investors — we don’t promote renting as strongly as proponents of home ownership plug their view. But renting has become quite appealing in today’s economy.

For the Young
The young generation is taking longer to settle down. They switch jobs more frequently. It’s more difficult to tie them down. That even applies to your daily time. If you never want to spend a weekend cleaning grout, or spackling, or re-staining a deck, you may be better off renting. The property manager will pay someone to do those things while you’re camping, or studying, or working. It won’t be your hours spent on home repair.

For the Unstable Job Market
If you don’t know where you’ll be in five years, it’s best to not have a house answer that question for you. Worried you may have to relocate for your career? Maybe renting is the way to go. Industries bubble and burst — the next big thing may be nothing soon, and you may have to move to find something else.

For the Commitment Phobes
Buying that home is pretty close to permanent. You better like the schools, the neighbors, that dog that barks at the moon every night — you’ll be there for a while. If you’re sick of the neighborhood or the people or anything else, you usually have only a matter of months before you can move out. Renting enables you to test different neighborhoods and living spaces to test what you like. You could try a split house in the suburbs or a high-rise in the city — figure out what you prefer before you make the investment.

For Retirees
Enjoy your retirement. You’ve earned it. Spend it relaxing, vacationing, exploring those interests that a 40-hour work week made impossible all those years. Unless you enjoy mowing the lawn, re-caulking the bathtub, and searching for contractors to repair the larger problems, renting may be a much less stressful way to enjoy retirement.

Outside of changing your light bulbs, while renting, you’re not only paying for living space but also for a team of professionals to jump at your every maintenance request.

Renting is kind of like having insurance. Sure, you’re paying extra each month, but that covers something that does break. As a homeowner, when something breaks, you have to fix or replace it with expenses out of pocket. When you own your home, you must manually put money aside to cover expenses as they arise. When you rent, it’s covered in your monthly payment. However, you do run the risk of putting the repairs into someone else’s hands. Just make sure you rent from a reputable company that is on top of things.