“a lot of property investors are only saved from frustration by the equity built into the property over the years”
1. Have the Right Mindset (It’s a Business)
Unlike the property you bought as a homeowner, remember that this is a business. Everything done regarding the business must be for the benefit of the business.
2. Do Your Research
You’ll need to read up on everything that concerns the industry. The more you read the better the feel you’ll have for what you are about to embark upon. You’re likely to come across a model you’ll want to use eventually.
3. Crunch the Numbers
A lot of homeowners don’t keep proper track of their maintenance expenses, which can be a serious problem if this practice is applied to an investment. A lot of property investors are only saved from frustration by the equity built into the property over the years. Even then they may still take a significant hit due to being forced to sell during a bad spell or facing levies and penalties from the non-payment of taxes.
4. Choosing a Property
It’s important to choose a property that matches your capacity to manage it. For those that self-manage their properties, distance remains one of the most significant factors as it impacts your ability to visit the property and resolve issues that come up without severely disrupting your schedule. It also pays to have closer proximity as it usually translates to a greater familiarity with the location and trends.
You probably won’t have to scramble out of bed at 2am because the furnace broke down during winter. Then again, Westhawk manages properties for people that live halfway across the world.
5. What works for you?
The strategy of playing to your strengths may sound cliche but it’s simply the way to succeed without burning yourself out in the process. You need to understand yourself and the kind of property and people you are best suited to. If you own a property in a location known for higher tenant turnovers for example, you may need to be patient while searching for a more long-term tenant.
6. The Business Plan
Any investment property must make sense from a business point of view. It’s not such a passive hands-off revenue stream as a lot of people think, and a lot of thought needs to be put into it. The property should be brought up to a standard that will attract the best of tenants with interest in such locations without digging a hole in your pocket.
7. Talk to Experienced People
It’s amazing what buying someone coffee or even an expensive meal (if it’s the right person) can get you. You can jump ahead by several years of experience within one conversation by listening to someone that’s been in the trenches. A property manager like Westhawk will help you avoid even more issues by virtue of their experience.
8. Establish a Buffer Fund
It’s always advisable to have a buffer fund for personal homes. With an investment property, this need is greater as there are more risks due to the greater complexity of repairs and cash flow. Risks of litigation, lost income due to vacancy and extensive damage due to negligence or even malice are also increased.
9. Tenant Retention Tactics and Strategy
Retention strategies are never foolproof because there are things you can’t control. If a tenant gets a dream job far away or buys their own house, there’s nothing you can do. However, you should pay attention to things that may keep the tenant from moving a block away to a similar place.
10. Start Smart
Mistakes are inevitable in life. It might be due to using the wrong vendor, buying materials at expensive places, or even using fixtures that aren’t required for the class of property investment being made. It may be better to make such errors with one property rather than five. The resulting lessons will be very useful as you expand your business.
Any information contained herein is intended solely for information purposes and is not to be considered legal advice.
The user of the information is solely responsible for implementation and results. It is recommended that any person(s) acting on the basis of information provided in this article familiarize themselves with the applicable laws of their appropriate jurisdiction(s)
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