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Adding Real Estate to your Investment Portfolio

Real estate investing by purchasing, owning, or leasing residential or commercial properties or land can diversify your portfolio and yield business or personal rewards as well. I work primarily with residential investment buyers/sellers – single family homes, townhomes, condos, multi-family up to 4 units, second homes and vacation rental homes, and land. For commercial investors I partner with the commercial real estate agents with NAI Landmark

There are two primary ways to generate income from real estate investments: rent income and realized appreciation. Whether you are an active or passive investor is a discussion to be had with your legal and tax professionals.

  • Rent: An investor who holds equity ownership of a property can earn income by leasing that property full time or part time. Rental income can provide a regular income stream. Depending on how a property owner manages their real estate (whether independently or through a hired property manager), they may keep all of their earnings or share earnings with a property management company.Each real estate investment carries its own set of risks and rewards.
  • Appreciation: As with the ownership of any equity, real estate ownership gives an investor the ability to earn money from the sale of that equity. The appreciation, or increase in the value of a property over time, represents the potential profit available to an investor when that property is sold.

How do you plan on deploying your real estate investment?

This is an important discussion to have with your real estate agent at the outset of your property search. Your intended use of the property will be a valuable part of the discussion with your realtor, so we can best help you identify properties that will meet your needs.

Second Home –

Southwest Montana is a lovely place to own a second home. It is the perfect getaway location for any time of the yearand may serve as a favorite family gathering spot through the years and for generations to come. Always be sure to consult your tax professional if you ever decide to convert your second home to a rental investment property.

Student Housing Option –

Many MSU parents opt for purchasing a condo, townhouse, or single family home for their adult children who are attending the local university. This can not only provide housing for the student, but may also generate income from roommates which helps to offset operating expenses. Upon graduation, the home is an asset which has typically appreciated in value and can be sold or converted into a rental investment property, or other preferred options.

Long Term Rental Properties–

Rental property owners earn regular cash flow usually on a monthly basis in the form of rental payments from tenants with long term rentals (more than 30-day leases). This can provide a steady, reliable income stream for investors, but it also requires investment of the owners’ time or delegation of responsibilities to a property manager to ensure that operations run smoothly.
Short Term Rental Properties –

A short term rental is a property that is rented on an overnight basis rather than a 30-dayperiod or longer lease. It can be self-managed or professionally managed by a vacation rental company.


  • First – tell your real estate agent that you intend your real estate purchase to be used as a short term rental (STR) property
    • This is important! Even if you are not yet certain that you will use the property for STR, it is important to have the conversation early so you can be informed of all the factors that may impact this decision and the property you choose.
    • You want to make informed decisions about property options and focus your search on real estate that will meet your needs.
  • Second – be sure your realtor isexperienced and understands the short term rental market and regulations to help you through the process of acquiring your short term rental investment
    • Zoning, municipality regulations, inspection requirements, etc. all impact the intended use of your property.
    • I have conducted extensive hours of research and share all information with my clients when they intend to utilize a property for short term rental. While you, the Buyer are ultimately responsible to be knowledgeable about any use restrictions for property you intend to purchase, it saves time when we work together, as I can guide you to those neighborhoods and zoning areas where short terms rentals are permitted.
    • Also, HOA restrictions are an important element in this due diligence. HOA’s can impose use restrictions within their scope of governance, so thorough review of all documents is an important part of your decision-making process.
  • Third – have a confirmed realistic budget
    • The purchase price of the real estate is the first component of your budget
    • Factor in costs of inspections, closing costs, mortgage fees if you are using a lender
    • Do some research to determine actual operating costs for the property: utilities, taxes, insurance, HOA fees, hot tub maintenance, and any renovation or updating costs that might be needed
    • Management fees are often for full service packages; but if you are self-managing you will want to be aware of all marketing, advertising, lodging taxes, permits& operational fees for a STR
    • If the property is an existing STR, it may come turnkey with all FF&E (furnishings, fixtures, and equipment). This is important to confirm when you are comparing properties
    • If it is a new property or one that has not been used for STR purposes, there will be additional investment costs for FF&E to set it up as a turnkey rental property. Don’t skimp here – or guess!–you want to create a vacation environment that you would be willing to pay market price for – so invest wisely in fitting out your vacation rental.
    • Be conservative with your revenue projections for Year 1. A newly promoted property will most likely take a year or so to develop an optimized occupancy rate, pricing strategy, and seasonal rental schedule.


  • I have a lot of experience working with vacation homeowners who are selling their investment property. I first meet with you to clarify your goals for divesting the property. We, of course do a comparative market analysis, and review the performance of the property. We gather all the necessary documents for prospective buyer review in advance of the listing to be sure we have a complete presentation package ready to go.
  • Together we develop a plan for positioning and marketing the property. A vacation rental property has unique challenges that must be incorporated into the overall marketing plan. For example, a high performing property may not be available for showings due to the rental occupancy schedule. We work with your property management team to collaborate with us on creative ways to maximize sales opportunities.
  • Addressing any deferred maintenance is an important step. Making small investments in your property over time to keep it in tip top shape will keep it market ready. Plan for the off-season and schedule ongoing maintenance and upkeep. If there has been deferred maintenance you might want to get a pre-inspection so you are sure to address the most important things prior to putting your property on the market for sale.
  • Many Buyer investors are shopping from afar. Virtual tours are now becoming standard for so many reasons, and they are invaluable when marketing a vacation rental property.
  • Work with your listing agent to present the property in its best possible way to maximize your sales potential.

There are many ways to invest in real estate with varying amounts of money, and varying degrees of time commitment, capital, investment horizons, risk, and return potential. Some earn income and appreciation, and some only earn income. Some are deployed as rental properties for an interim time period until the owner can move here permanently. Even if your vacation property doesn’t always ‘pencil’, earned income still makes a significant contribution to annual operating costs of your beautiful new vacation property in Southwest Montana.