Being successful in real estate investing requires more than just earning a good profit. You also need an effective strategy for finding and buying new properties, managing tenants, performing maintenance, paying the bills, and continuing to learn.
If you’re struggling to acquire profitable investments, find it hard to manage tenants, or can’t seem to get organized, the following strategies can help you become more successful with your investments.
1. Hire out as much as possible
As long as you’re the one responsible for managing every aspect of your business, you’re going to struggle to reach maximum profitability and it will be even harder to scale.
Here’s what you can outsource to be more efficient:
- Property management. It’s time-consuming to be the landlord for your properties. You’ll get more free time and serve your tenants better when you hire out your duties to a professional. For instance, Fort Worth property management company Green Residential takes on all landlord duties plus maintenance, repairs, and even bill management for their clients. This makes it easier for them to own multiple properties without having to worry about things slipping through the cracks.
- Marketing and advertising. Marketing your vacancies isn’t as easy as it seems. Depending on where you’re advertising, you might need to follow specific formats for your ads and if you aren’t a graphic designer, your images may not look good. It really takes an expert touch to craft effective ads that will not only attract applicants, but also disqualify the people you don’t want to apply without breaking any laws.
- Administrative tasks. Try outsourcing all those mundane, repetitive tasks you don’t like doing, like filing your taxes, organizing receipts, paying property-related bills, and sending notices to tenants when they’re due for some type of lease change. Anything that can be done inside of an application online can be outsourced to someone capable.
The more you hire out, the more time you’ll have for more important things.
2. Be selective about your acquisitions
From time to time, you’ll come across some properties that seem like they’re priced at an incredible deal, and that may be so, but there’s always a reason. If you find a property priced lower than market value, be direct and ask the seller what’s wrong with the property. Most people will be straightforward about what’s going on when they’ve lowered the price to account for some type of defect or disadvantage. For example, it might be that there’s a train that shakes the house every day at 3:00 p.m. Always ask for specifics.
Aside from being cautious about low-priced properties, be selective with your neighborhood and make sure you’re buying in an area that has a good job market and a stable rental market. Although, sometimes it’s appropriate to buy properties in a seller’s market even if they aren’t ideal. It all depends on your personal preferences and overall investment strategy.
Avoid fixer-uppers if you aren’t handy and don’t have the time or interest in managing a complete renovation from start to finish. Even if you hire people to do it for you, you’ll still have to run the show.
3. Charge full market rent
Having successful investments requires charging market rate rent. It doesn’t make financial sense to pay costs that increase, like property taxes and higher fees for maintenance and repairs, while still charging the same amount of rent. When your costs go up, you need to raise the rent.
Sometimes it’s okay to give a tenant a deal to renew their lease, especially if they’re an excellent tenant and pay rent on time. However, you don’t want to get stuck charging the same amount of rent in 2024 that you started charging your tenant when they moved in back in 2019. If you do this, you’ll be losing money. You’ll also lose your tax breaks, too.
4. Don’t rent to friends and family
As much as you might want to do someone a favor, avoid renting to relatives and people you know. They will be more likely to take advantage of you and expect favors. For instance, if you rent to a sibling and they’re late with the rent, they’ll probably expect you to forego the late fees. If you pursue late fees, they might get upset and put a strain on your relationship.
5. Buy multiple properties
Last, but not least, one of the most effective strategies for success is buying multiple properties. The more rental properties you own, the more money you will make. Once you develop a system for acquiring and managing your properties, this will be much easier.
