Income property can be a blessing or a cursedepending on how you manage your investment. Tenants are the key to your success. If you have tenants that pay on time and maintain the property like it is theirs you are blessed or maybe you just know how to interview tenants before the destroy your investment.
Recently I have been showing a potential buyer duplexes and quads. We have seen everything you can imagine within the same price range. Some should be condemned others are over crowed and nothing is to code. We have found that most investors are buying renting and using the life out of the properties. We did find one gem however. This was after review 30+ properties on the MLS and looking a ten of them. The gem was priced in the mid range of the market.
The key....tenants! The tenants had maintained the inside of their units like it was their home, which it is! The units were clean, well kept and the rent rolls showed payment history to match the upkeep of the property. Never to miss an opportunity, I asked the renters how they liked the property and the landlord. They all commented that whenever they called the landlord always responded and fixed whatever needed fixing. Another key to getting and keeping good tenants. As buyers of income property we like it hear good comments, the tenants went on to say, we want to stay. We like it here, music to a buyers ears.
Owners that suck the life out of properties and then discard them are fine if you are paying the discarded price and bring the property back. The price has to reflect current condition. It takes more than ROI, but cash flow is king "always" and so are tenants that help you maintain your investment.
Good tenants are not accidents nor is it luck although you can get lucky. Pre-screening tenants before they are in your property is key. Occupancy rates will impact cash flow no doubt about it, but poor tenants will impact your cash flow and property! If you keep your property in clean up to date condition you can create a waiting list. You can pre-screen your waiting list before a vacancy comes up and be ready to fill your rental with tenants that care as much as you do. You can even charge a application fee to cover the background check, credit report etc.
I do a cash flow analysis for my investment property clients. Commercial investments can be tricky if you do not know some of the tax issues and income considerations but tenants can make or break your investment. I recommend you consult your CPA or accountant before you make an investment. Cash flow and delayed maintenance issues that were not foreseen at the time of purchase can cripple the potential of an investment. You can do everything right including inspections and inherit poor tenants and spend months getting your investment profitable again. Most agents that deal with income properties will be able to identify money pits from real investments with potential. So make sure your investment is a blessing and not a curse!