Did you know that 89% of U.S. investors are extremely interested in real estate investing? And it’s not too difficult to see why. Most of the world’s millionaires – 90% to be exact - have amassed their wealth through property investments. Real estate is a favorite vehicle for wealth creation for many investors. However, in order to reap the fruits it is imperative to know how to invest correctly, especially if you are a rookie investor. That’s why we’ve put together these handy tips for new real estate investors.
Property Management Tip #1 Understand the numbers
There is a lot that goes on behind the scenes of property management. From maintenance, taxes, utilities to repairs, investors need to be aware of all the nuances and aspects of real estate management that will take money from their pockets. Before buying a property, take time to study the numbers. Do they make sense? Will there be positive cash flow every month? How long can you survive with an empty place before getting into trouble?
Property Management Tip #2 Purchase property through an LLC
New real estate investors planning on adding one property, or indeed a few properties to their portfolio would be wise to do so through a limited liability company (LLC). An LLC provides you with legal recourse and safety in the event of problems. Because the properties are owned by the LLC, you as the investor will not be personally liable if any issues arise in the future.
Property Management Tip #3 Create a directory of trusted professionals
Managing a property or series of properties requires an entire cohort of skilled professionals to assist. From attorneys to handymen (plumbers, electricians, contractors, inspectors etc.), you should have a directory on hand with the numbers of such people who can help you in taking care of the property. Alternatively, hiring a property manager would mean it becomes someone else’s responsibility to attend to matters concerning your property. Property managers will already have a list of such people whom they trust.
Property Management Tip #4 Due diligence is paramount for success
Not every real estate investment is a good deal. While it does take experience to teach you some of the inner workings of the industry and how to spot good properties, due diligence can certainly go a long way in helping new real estate investors. Due diligence is expansive but includes studying the area you wish to buy in, the demographics of the locale, understanding how to spot undervalued properties, how to screen tenants, and what rentals you can expect.
Property Management Tip #5 Formulate a solid marketing strategy
What good is a rental property if you cannot get quality tenants or you’re experiencing high tenant turnover? A common oversight made by new real estate investors is assuming that finding good tenants will be a hassle-free affair. Au contraire. It takes strategic work to find such tenants and it usually begins with putting together a solid marketing strategy. Ask yourself how you plan to advertise your property; figure out your expected rent by factoring in what’s being charged by neighbors; and how rent will be collected on a monthly basis.
Do you need a proficient property manager?
Would you like someone else to take the pressure of property management? PMI Front Range Colorado offers a range of property management services including tenant screening, property marketing, maintenance, rent collection/deposits, accounting/statements, move-in/out inspections and day-to-day management. Contact us for more information.
