How to Manage Your Real Estate Investment Property
Owning real estate investment property isn't like owning stocks or bonds. You usually get better tax benefits. You potentially get higher returns. And you get to manage a business. Rental properties are really small businesses that require careful attention to run successfully.
For many property owners, managing their tenants is the largest challenge. Between 2:00 a.m. calls for clogged toilets and excuses when the rent isn't paid on time, tenants are trying. Furthermore, the law isn't always friendly to landlord interests, so it's important that you always dot your i's and cross your t's. On the other hand, with a successful screening program, you can find good tenants that don't cause you any of these problems. Then, your only problems are holding onto them and convincing their usually equally-good friends to move into your other houses.
Renting properties to tenants adds an additional risk management component to buying insurance. Property insurance protects you against fire or other catastrophes, but you also have to worry about liability for your tenants and what they do at the property. At the same time, successful landlords also set up strategies to shift risk and responsibility to tenants. A good lease can do this, as can a requirement that tenants buy their own renter's insurance policies.
Real estate investment property needs to be taken care of to prevent it from deteriorating. Deciding between putting money into preventative maintenance, fixing problems, or replacing systems that are nearing the end of their lives is a real balancing act. At the same time, if you don't have strong vendor relationships, getting the work you need done can also become a source of uncertainty and expense.
If this is making your head spin, don't give up on owning real estate investment property. Just do what many successful investors do. Find a good third-party manager and bring him or her on your team. Whether you have a large portfolio and have your own employed staff or with an outside company, leveraging an expert's skills can save you money if you don't have the inclination to do the work yourself. Professional managers come in with lists of vendors, experience dealing with tenant issues, and expertise that they can leverage to design successful programs and procedures for your real estate investment property.