Katlyn Graham: Hello, I'm Katlyn Graham here with Mr. Bob Gillis, the Senior Vice President at Cape Ann Savings Bank. Welcome, Bob.
Bob Gillis: Thank you, Katlyn, appreciate it.
Katlyn: Thanks for joining us here. We're discussing real estate investments today, an area of your expertise. What have you noticed about the real estate market lately, Bob?
Bob: The real estate market is pretty strong right now, Katlyn. There's a lot of demand for real estate. Property values are rising. Rents are somewhat high right now, and it's a strong market at the present time.
Katlyn: Strong market? That sounds good. I was doing a little research, and Gallup just released a poll that Americans now think of real estate as the best long term investment, and multi family units are particularly appealing. Why do you think multi family real estate are looking good to people right now?
Bob: Multi family usually refer to five units and over. With that many units in a property, there's a good cash flow associated with multi families. That's one of the appeals, strong cash flow.
On top of that, with property values rise in the long term, it's a good retirement program for someone.
Finally, there are tax benefits to multi family ownership. The one drawback, I would say, well there are other things to be cautious of but it's a people business.
Your tenants are your customers. You have to be prepared to deal with people issues, like we all have.
Katlyn: Very good point. What do I need to know before I invest in an income property like that? You just said, "Be aware, these are people." In what way do you mean?
Bob: Well, people have problems. People lose their jobs. They get divorced. They get sick.
As a result of that, sometimes there are problems paying their rent. People can have different issues with their unit. Some more than others. A lot of things like that.
Katlyn: So, it is an income property but sometimes there's little issues to deal with?
Bob: Sure, the key is, with a rental property like that, is you need to educate yourself. The first thing that you want to do is you want to have a property inspection done.
That's very critical because the inspection will determine for you what the property needs down the road. Does it need a new roof? A heating system? These are all things that you're going to have to plan for as you go along.
Katlyn: Yes, you definitely need to consider the cost, as well. What are your top tips for real estate investing?
Bob: First and foremost become educated. That is learn the market in your area, learn about different problems that come up with tenants, different problems that come up with properties, learn about the neighborhoods, things like that.
Unless you're flipping this property, if it's a long term investment and you're in it for the long haul, you really have to educate yourself. That's first and foremost. It's not something that you just put your 20 or 25 percent down and all of a sudden you're in the money. You're not going to get rich quick.
Katlyn: It's not that easy.
Katlyn: As for the Cape Ann area and Essex County what do you think are some of the best real estate investments to make today in this area, in Gloucester, Manchester by the Sea, Essex County?
Bob: Well, multi family properties. That's a great investment. The one problem, as I mentioned before, is supply. There aren't many properties out there and there are lots of real estate investors that are looking to do this because it's attractive. That's one issue.
You also have office properties, retail properties, and industrial properties. Those are also potentially good investments. But right now, you could say the one problem with the real estate market in this area is that there's somewhat of a lack of supply.
Katlyn: Not enough homes out there, not enough units.
Bob: That's correct.
Katlyn: So, what do you buy when there's not enough there?
Bob: That's the issue.
Katlyn: Well, thank you so much, Bob, for explaining all this to us. You've been extremely informative. I'm sure there are some people who are about to go on investing in real estate and they should really take your advice.
Bob: Thank you, very much, for having me, Katlyn.
Kaylyn: Thank you.
Cape Ann Savings Bank. Member FDIC, member DIF, Equal Housing Lender.