As Managing Partner of The Maryland Group of Long and Foster, Doug Gardner heads up a team of 20 agents and staff that keep up with the fast-paced world of real estate and investing. Known for being genuinely warm and intentional, Doug offers a firm handshake and greeting as he sits to talk about his secrets to success. He believes it is due, in part, to being very organized and high energy. “I’m driven by the day to day energy and by working with the clients. I have no problem putting in the hours,” he adds.
“Originally, I didn’t want to go into real estate,” he explains. He smiles when he speaks of his career change to real estate and says, “My mother had been in real estate with Long and Foster and desired for me to get into the business. She called me numerous times, and I declined her each time because I had my other companies. At one point, between jobs and having sold my company, she called again to suggest I try real estate. That time, the timing was right for me, and I decided to go with it.”
Owning import-export businesses prior to real estate ensured Doug a leg-up on how to run a real estate company. When asked how he learned the ropes of real estate, he explained, “My mom was in real estate. I was familiar with it from being around it, and it really just rubbed off. Coming from a strong negotiating background, it was natural for me to be able to negotiate for my clients. I really liked that part, and I’m a firm believer in trying to save people money, and not just trying to sell a house. There is so much to like about being in real estate,” says Doug, “everyone can sell a house, but I’m in real estate to change lives. It’s the biggest thing you’ll likely do but the least researched. My favorite experience is working with the first-timers. I love the excitement and energy. They know less than most, and I work with them to educate them on the process.”
“Everything is about having a plan,” Doug says. “Having a plan translates to what you are trying to accomplish with the property. Right now, there are a lot of young investors hoping to get into the market. As potential investment property buyers, it’s important to define the goal. What are you trying to accomplish? Are you buying a property to keep for the long term, or do you plan to sell quickly?” explains Doug. He adds, “I will sit down with the client and create a strategy and a time frame to assist the customer in the plan. It’s important to understand the timeline, particularly for short term investments. If the property sells before the deadline, that’s fine because you’re making money. However, every day that you are over the deadline, you are losing money.”
Doug continues by explaining the differences in the types of investments. Investing in short term buying is also called flipping. Often featured on tv, this is when a property is purchased to renovate and sell as quickly as possible to make a fast profit. This type of buying is high risk because there is a risk of the property not selling as fast as planned. If the property sits on the market unsold, then the carrying cost of the loan will eat into the profitability. Many people have their heads turned by the lure of a quick sale, but the reality is, if the plan doesn’t include anticipated carrying costs and the researched cost of taxes, this could be a losing venture.
Purchasing a property to hold for the future, Doug says, is termed long-term investing. This means buying with the intent of having someone else make the payments through a short or long-term rental. Many people use this avenue to gain wealth for retirement. A purchase of this type has the benefit of not being affected as much by taxes. Doug explains, “It’s not as flashy or as exciting as most people from HGTV want you to think [by featuring so many flipping shows]. Those flips can be risky if you don’t know what you are doing. The longer-term ones spread out your profitability over the course of time, which is important, and as that goes along, if you have someone renting, they are knocking down your hard note mortgage as you are gaining wealth. The idea is, eventually, all of that is paid off, and it’s just pure profit. You hope to get to that status. There are ways in which you can know how to get to where you want to be.” Doug adds, “It’s at this point when they sit down with me, and I evaluate their plan, help them with the plan and ask about what finances they want to have and let them know what we should do to acquire that. Once all is decided, I will work with them and give them a timeline for what they have to do, in what timeframe, and how long it should take them.” Doug continues, “Seeing people make bad investment decisions, unable to sell their homes because they owed more than it was worth and in such pain over it was the first eye-opening experience for me. This was when I developed in my mind the idea of changing lives, and I developed a strategy to help them get out from under.”
The second consideration, when purchasing an investment property, is financing. How are you going to do that? Doug says, “The home buyer might not have the funds, repair or carrying costs for flips so they’ll need to source that from somewhere. Aside from traditional loans and cash, another source is called hard money. This is a high-interest short-term loan. To do this, you finance a portion of the value of the property. They’ll appraise and give you maybe 65% of the value of the property. These are risky loans because If you default, they will take the property and will sell it.”
The third consideration for purchasing an investment property is to make sure that you have developed a team that is working for you. Doug says, “Be sure to have a full-time agent working for you. Make certain he or she is a professional and possesses a track record of success with investment experience. Decide if you are going to form an LLC corporation, and find an attorney and an accountant.” These are the ones who will make up your team and put you on sound footing for successful investing.
Essentials for Investors
1. Have a Plan
Having a plan will keep you on task and ensure that, in the end, you reach your goals.
2. Know Your Funding
Be confident in the amount and source of your funding so that you have no surprises in the purchasing process.
3. Develop a Team
A seasoned attorney and accountant are invaluable when it comes to investment decisions.
"I'm in real estate to change lives."