Income Property, blessing or curse?

By
Managing Real Estate Broker with Flexit Realty "Flexible Home Selling Solutions"

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!

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income property investment or money pit
tenants make investments
good investment properties
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Rainer
77,333
Marcus Valdez
Berkshire Hathaway Rocky Mountain Realtors - Fort Collins, CO
Good post.  if you need a good tool i have an excel that helps you calculate about everything you could possibly need to calulate to examine an investment.
Jul 20, 2007 03:25 AM #1
Rainmaker
1,073,964
Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375
Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI
Real Estate Services You can Trust!
Thanks Marcus, I purchased a while ago one of those investment property programs that puts everything in a nice neat package for presentation with the backup data.  Realite.com is the source, I think?  Yours probably works great and the price is right!  Thanks for the comment Marcus.
Jul 20, 2007 03:51 AM #2
Rainer
77,333
Marcus Valdez
Berkshire Hathaway Rocky Mountain Realtors - Fort Collins, CO
I got mine in a CCIM class i think it is the best tool i have seen.
Jul 21, 2007 05:01 AM #3
Rainmaker
1,073,964
Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375
Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI
Real Estate Services You can Trust!
Marcus, I am taking the CCIM class in another month,  everyone I know that has taken the CCIM certification are top commercial agents and have given the program a big thumbs up, what are your thoughts?
Jul 21, 2007 06:04 AM #4
Rainer
77,333
Marcus Valdez
Berkshire Hathaway Rocky Mountain Realtors - Fort Collins, CO
I think  it is brillant.  it is a big commitment to finish the whole program but i have liked the classes i have been in.  it felt like i was entering a whole new stage of real estate knowledge.  my brain sorta hurt at first.
Jul 23, 2007 03:03 AM #5
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Rainmaker
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Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Real Estate Services You can Trust!
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