was meeting with a client of ours yesterday. He was adding another property to his portfolio, bringing his total to 12 rental units. He discussed his ideas for investment and it was a great refresher for how to be successful.
1) Have a strategy for long term. know what you want, financial goals and risks. He could clearly tell me what his goals are and why he chose those goals. Have money and partners to help you achieve this strategy
2) If you want to be a full time property manager, you can do it… but it takes time and expertise. He realized year ago that it wasnt worth the time or energy
3) Make your rental houses nice enough that you would live in them. He takes time to remodel at purchase and make improvements when vacant. This gets him higher rent, Better tenants, tenants who want to stay and pay rent on time. Existing Tenants who do not pay rent on time, don’t take care of the place are replaced with high quality tenants over time.
1) Don’t cause the owner/tenant death spiral: “owner doesn’t maintain place because tenant doesn’t take care of it. Tenant doesn’t take care of it because owner wont fix faucets and dishwasher”. end result: low rents and unhappy tenants
2) Don’t look just at short term cash flow. Investment in property leads to return. returns are based on cash flow and tax advantages and principle payments and property appreciation. saving $500 on AC repairs but losing $1000 rent per year due to unpaid rent or low rent is a bad idea
3) Don’t manage it yourself. If you want to be a full time manager, deal with reports, maintenance requests, rent collection, leasing and showing… fine. But realize that a professional company will get more rent collected, do maintenance faster and cheaper, and all you have to do is look at the statement each month and discuss strategies with management company
We have lots of ways to improve your return on investment… contact us today
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