Hey, we’re back with another installment of The Guide to Profitable Real Estate Investing!
If you choose great investment properties, per part 2 of this series, you will make money in equity when you sell (as long as your timing is right). But you came to us seeking information about professional property management, so you must plan to have renters. You are a “buy and hold” investor.
Do you know how buy and hold investors make money?
TENANTS
Your tenants are a key ingredient in building a profitable rental portfolio:
- They reduce your expense liabilities by covering your mortgage payments, property management fees, and other ongoing expenses. Basically, they are purchasing your property for you.
- They increase your monthly income through monthly rents. If you made a good purchase decision, the rent will be more than your expenses. That margin provides short-term profit and/or seeds a healthy reserve fund for maintenance.
- Vacancy Rate – What percentage of managed properties are vacant?
- Vacancy Durations – How long does it take to fill vacancies?
- Lease Renewal Rate – What percentage of existing tenants renew leases each year?
- Company Culture – Are staff members professional, knowledgeable, and courteous?
- Tenant Ratings and Reviews – What do tenants say about the company online?
- There is a recurring theme to tenant complaints.
- The company completely ignores negative reviews.
- The percentage of negative complaints is unusually high.
- There are zero positive reviews from tenants.
