Rental Ownership Woes

Posted on January 20, 2011, 08:05, by real estate maestro and received No Comments ».

While real estate investing is a great line of business to get into in order to make copious piles of money there are a few things to consider before jumping into the fray. This is particularly true if you are considering going the route of a rental property owner. There are all kinds of reasons that this is a good solid investment for most that are interested in investing in the real estate business however, it doesn’t come without a few drawbacks, not all of which are financial. It would be wise to consider these things however before you buy your first rental property.

First of all, if you own rental properties and elect to manage them yourself, which is probably wise unless your first property is a multiple rental unit, you will quickly discover that your life is no longer your own. You are literally on call 24 hours a day 7 days a week to handle problems that may arise from pipes bursting, heating going out, electric issues, noxious fumes, leaky roofs and window sills and countless other complaints that may erupt at odd hours of the day or night. Your tenants will have your phone number and expect you to always take their calls.

Second, you have to play the role of Mr. or Mrs. Mean every month when the rent is due. This is probably the least tasteful task of owning rental properties for many rental property owners and one reason that many resort to the services of a property management agency above all other reasons. You will hear all manner of sob stories in your role as landlord but you need to treat this like the business even the things about your business you don’t like such as rent collecting and, when necessary, eviction proceedings.

Third, the constant need for upkeep and repair is often daunting to rental property owners. It’s a sad truth that people do not treat rental properties with the respect that they would treat a home of their own. For this reason you almost always need to paint and replace carpeting, at the very least in between tenants. This takes works and time not to mention the fact that the time that is spent painting and replacing the flooring is time that the property is going to be empty of tenants and not bringing in any income.

Finally, there is the constant need to have the property occupied. As the owner of a rental property you will need to find new tenants when the old ones leave because every day the property is empty is a day you aren’t making money. You want to have the property filled as often as possible and you really want long term tenants whenever you can manage that. One way of course is by making sure that your tenants are treated well, not overcharged, and happy with their homes.

Owning rental property can be financially rewarding but it is a lot more work than many people give it credit for being in light of other careers within the real estate investment field that may require more work upfront. Rental properties require a long-term commitment to keeping the property in good working order and making it a profitable venture for many years to come. If you are considering this business and the above things are a deterrent for you it might be a good idea to obtain the services of a property manager.

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Real Estate Investment Options

Posted on January 19, 2011, 07:58, by real estate maestro and received No Comments ».

There are all kinds of avenues available to those that are considering real estate as a likely method of investing in the future. And why on earth shouldn’t you? This is one way that millionaires around the world will agree to build a massive fortune quickly. At the same time, real estate can be a very risky venture for business so you need to have a few more stable methods of bringing in money in order to have a truly diverse portfolio and a better security system for your financial future. Even within the world of real estate investment you will find different manners of investing that each bear different risks.

Commercial real estate is a good place to begin because it is relatively secure when compared to some of the other forms of real estate investing. The drawback with commercial real estate is that it requires a massive investment to begin with. This is something that many real estate investors do not even consider until they have built a sizable portfolio and have plenty of money to risk. It is stable because most businesses that lease from you will want to lease on a long-term basis. This means that when you get clients, businesses prefer to stay in one location as long as possible because it’s bad for business in most cases to constantly be on the move, they tend to stay a while.

House flipping. This is becoming a popular form of real estate investing and many people have discovered that this is also a great way to make or spend money very quickly. This is a high-risk venture to say the least but the rewards are equally high when a flip goes well. You will have to decide for yourself if you are willing to take the gamble as house flips are part skill and part luck.

Residential rental properties. Becoming a landlord, while perhaps not as glitzy as owning business properties throughout the city or flipping fabulous properties for instant profits is a great way to work yourself into a rather comfortable retirement. This is a long-term type of real estate investment but the payoffs can be rewarding when all is said and done. For the cautious real estate investor this is a worthy type of real estate investment to pursue.

Pre-construction real estate. Pre-Construction profits are even riskier than house flipping in many instances, particularly as it has become so popular in recent years. The trick with this kind of investment is finding the right property in the right market. If you can get in a city that is about to have a serious housing shortage or is in the beginning stages of a housing shortage (such as a few desert and coastal communities have experienced in recent years) you stand to make quite a fortune for yourself. The problem is that this field is highly speculative and very competitive.

Lease or rent to own purchases can often bring better profits. For many real estate owners this is preferable to straight up renting for many reasons. First of all, those who hope to own their homes are much more likely to take better care of their homes than those who are just renting. This means that even if for some reason they decide to move elsewhere and do not complete the purchase you are less likely to need extensive repairs before you can move along to the next client. You can charge a little more than rent applying a certain amount of the monthly rent to the purchase price or down payment of the home, and you can actually be helping a family that might have hit a trouble spot along the way to achieve the American dream of home ownership.

Real estate investing is a great way to build great fortunes. You must decide where you want to begin your journey into this lucrative field however. Remember that once you’ve begun your real estate investment career it is a good idea to utilize more than one type of investment for the sake of diversity and spreading the risks, as this is a volatile market at best.

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Real Estate Investing in Rental Properties

Posted on January 19, 2011, 07:42, by real estate maestro and received 1 Comment ».

There are many ways in which a person can make a living when it comes to real estate investing some of them carry more risks than others. It goes without saying that those that carry the greatest risks are often the very real estate investment methods with the highest potential profit but slow and steady, in many cases, wins the race. Flipping houses is in the news a lot because so many fortunes have been made doing this-more than a few have been lost in this venture as well but those don’t make the news nearly as often.

Working with rental properties isn’t nearly as glamorous and doesn’t provide the almost instant profits that flipping houses might but it is also a great and very valid method of real estate investing that will build a steady profit over time if you plan properly. Rental properties are in demand now more than ever with so many people going into foreclosure and losing the homes they’ve worked hard to build for their families. For this reason rental properties are a good thing to own at the moment, especially those that are family homes.

There are many reasons that people rent and while there are some risks involved when renting properties, the risks are much lower than the risks involved in flipping or pre-construction investment endeavors. There are a few things you should consider when purchasing a property for the sake of renting however in order to make a wise and long lasting decision for your real estate investment.

First, only invest in rental properties in areas that people want to live in. It may be true that you can buy property cheap in a few very run down sections of town but it is doubtful that you will turn those properties into profitable rental units. It is best to pay a little more for a more attractive address for renters. You will find that your properties are inhabited more often, which will make you more money in the long run.

Second, pay attention to the types of people in the area and buy rentals accordingly. It is quite possible to turn large homes into multiple smaller apartment units (according to local zoning laws) that are ideal for college students. You do not want to do this however in an area that is geared towards family homes and won’t be friendly or tolerant of college students. Design the rentals according to the market you are attempting to attract.

Third, don’t be greedy. The goal of owning rental properties is of course, to make money. At the same time if your price your properties too high you will find that they sit empty more often than not. Every month that your property is empty is a month that you aren’t making money on that property at best and a month that you are losing money at worst.

Fourth, know the market. Study the local market for buying real estate and renting real estate. This will help with many things, not the least of which is determining whether or not any given property will make an attractive rental unit. Another thing it will help you determine is how much rent the units you are considering can bring in month after month.

Finally, when renting properties you need to keep your eye on the long-term goals rather than shortsighted goals. Property rental is a marathon rather than a sprint with the greatest profits coming at the end. You will want to pay as little interest on the property as possible and pay the property off as quickly as possible in order to realize the maximum profit potential and acquire new properties. The real money when renting properties as a real estate investment isn’t in renting out one or two units but twenty or thirty. The more rental properties you own the more money you stand to make from owning them.

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