I have personally owned residential real estate properties for over 30 years. Over those 30 years, Hoffman Realty has managed thousands of investment properties for other landlords. Based on that personal and professional experience, these are my five tips for the smart investor.
Take a Long Term View
Residential real estate is a fantastic tool for building wealth over the long term. I have owned some of my properties for more than 30 years, and the values have increased while my tenants helped me pay off my mortgage. That has increased my equity.
Good Tenants are Critical
Nothing works without a good tenant. No amount of good management or landlordship will make up for a poor tenant. Price your property right, and do a thorough background screening on all applicants. That will help you find a good tenant. Don’t overprice your home or get desperate and accept someone who doesn’t meet your criteria. That will only lead to a bad experience.
Keep Good Tenants
As real estate investors, losing a tenant costs money. Any time you have a vacancy, you have to pay to find a new tenant. You have to get the property ready to rent again. It can cost between two and five months of rental income when your tenant changes. So, work hard to keep the good tenant you have. Treat that tenant with respect, and be responsive to legitimate maintenance concerns. Don’t lose a great tenant over a rent increase.
Protect Yourself from Liability
Avoid liability. Make the property safe for your tenant and have good insurance. If you hire a professional property manager, don’t go for the cheapest company; go for the one who will operate your property with the lowest liability profile possible.
Operate as a Business
Don’t get emotionally involved with your tenants or your property. There will always be some turbulence over time; it comes with the territory. A tenant might break a lease and do a midnight move out. Sometimes, you just have to lick your wounds and move on. I’ve never made a good decision when I’m emotional. Treat your property like a business.
These are my five tips for smart real estate investors. If you have questions, please contact us at Hoffman Realty. We would love to hear from you.