Are you considering investing in residential real estate to reduce the volatility of your savings portfolio? Many investors—tired of the gut-wrenching, roller-coaster ride of common stock values—are deciding All County Property Management Cape Coral that rental properties are appropriate investments for long-term growth. The combination of a consistent cash stream, capital appreciation, and tax breaks have helped lay the foundation of great fortunes and stable retirements.
However, unlike investing in stocks, there is (sometimes) manual work and (oftentimes) a lot of personal time that needs to go into investing in real estate properties, particularly rental properties. Many newcomers to rental real estate overlook the importance of property management, similar to the dog who chases a rabbit without a plan if he catches it.
Read on to make sure you don’t make the same mistakes as that metaphorical dog so you can be prepared and at your top game as an investor.
Property management
The dream of every rental property owner is to have long-term tenants who never miss a rental payment, who take care of any maintenance needed as if they were owners, and who never cause a commotion or difficulty with other tenants or the community. Unfortunately, reality can be quite different. Many times, as a landlord you deal with:
Tenants who get behind on payments and may need eviction
Sinks and toilets stop up, rugs are destroyed by pets, and appliances that break down and wear out
Physical structures that decline from abuse, neglect, as well as age, and landscapes and swimming pools need regular attention
Sustaining a property’s value through regular care and attention is as important as buying or selling it at an advantageous price. If you are a property owner, management is not an option if you want to protect your investment. Ben Mizes, a veteran rental property owner, suggests that the variable costs of property ownership, including vacancies, will average 25%-30% of a property’s cash flow.
So, you also need to add a value to your own time and add that into the cost of having a property. Then, you need to ask yourself, is that a worthy tradeoff? Will you get an ROI that is worth not only your money, but your time and energy as well?
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