Once you walk away from the closing table and the initial jubilation of knowing that you're a bona fide real estate investor wears off, the reality begins to sink in. A major part of owning real estate is managing it. How prepared are you for the rigors of actively managing your real estate portfolio?
Copyright (c) 2008 Michel Lautensack
Once you walk away from the closing table and the initial jubilation of knowing that you're a bona fide real estate investor wears off, the reality begins to sink in. A major part of owning real estate is managing it. How prepared are you for the rigors of actively managing your real estate portfolio?
In order to maximize the profitability of your property - whether your property is a single family home or a 50 unit apartment building - you need to have a wealth of knowledge at your disposal. Successfully managing your property takes more than the ability to run a "For Rent" sign in the local paper and hoping for the best. If that's all you do, your investment could be at risk.
You face a couple of major challenges if you're trying to own and manage your own properties: * How knowledgeable are you about local rental rates? * How much marketing expertise do you possess?
Local Rental Rates - Rental rates in your local community can fluctuate wildly from neighborhood to neighborhood. Two identical apartments just a couple of blocks apart may rent for widely different amounts. Do you know what rental rates are in your local community and - more specifically - in the neighborhood where your investment property is located?
If you take a wild guess on what to charge for rent, you run the risk of charging too little or, possibly worse still, charging too much. If your rental rate is set too high, your property could sit empty for months while you learn, through the school of hard knocks, what the proper rental rate should have been.
Today's apartment hunters are a savvy bunch, and they can use the internet to very quickly price rental property in your area. You may not think a $20 or $25 monthly difference is particularly noteworthy, but to an apartment hunter, it could mean the difference between calling you or your competitor.
Marketing Expertise - What marketing strategies will you employ in order to rent your property quickly? Will you run an ad in your local paper? Stick a sign in the front yard? There are a couple of dozen ways you can market your property, but if you don't know what they are, your property will remain unrented and collecting dust.
You can utilize offline and online marketing strategies to attract high quality renters to your property and reduce the time your property is empty. The less vacancy you encounter, the higher your income will be. If you don't very quickly immerse yourself in marketing strategies to rent your property to good, high-quality tenants, your income property can become a money pit, sucking profits and tapping your other income.
A Better Way - There is a better way. A professional property management firm is out in your local community on a daily basis marketing property creatively. They are intimately aware of what it takes to find quality tenants and quickly fill vacancies. While you may not know the rent ranges within a city or even a neighborhood, a property management company can attract high caliber renters and get maximum rental rates.
Your property may have amenities that are unique or unusual that can add value to your property. A dishwasher or covered parking each influence the effective rental rate in different ways and a professional property management firm knows that difference.
If you have the time and the inclination to learn, you can discover all there is to know about rental rates and marketing, to make your property as attractive to a potential renter as possible. A better idea could be to outsource this task to a property management company that already knows this vital information. This can make owning property a stress-free, profitable endeavor, which can free your time for more lucrative, money-making opportunities, or free time in your schedule for idle pursuits, like improving your golf score.
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