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Jul
07
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A Word On Investing
What?! A word on investing!? Isn’t this the commercial property management guide?!
Yes, it is. And, investing is a part of landlording; landlording includes investing. Any and all landlords, if he or she owns the property, can also be considered a real estate investor, for he or she owns property that he or she does not reside in. So then, why should we focus on investment? Part of being a good landlord is being a good investor. You will be miserable if you have a bad investment property, just as you will be miserable if you have bad tenants. So, we’re focusing on investing this post.
If you’re good, you own a property whose operations of physical state needs improvement. You can learn more about investment properties at Investment Properties Guide
So, you are looking for a home or other commercial building, and you have found one that needs physical improvement. The financing works out and the deal looks good from an investment standpoint, so you take control and you keep the current tenants; if there are no current tenants, you put them in there. In either case, you want to make sure that the tenant’s rent covers the property mortgage as well as all your expenses, except perhaps the improvement expenses. These can come out of your pocket. A lot of times, in commercial property management, you will have to spend your own money; the investment can’t make all the money you’ll need.
So, what do you do with the tenants in your property? You leave them! Tenants don’t mind you coming in (of course, you have to ask them and schedule it with them first; don’t forget to be polite!) if you are coming to fix and improve where they are living or working. Just be sure not to get too much in their way. If you need to do repair something like the flooring, you obviously must wait until in between tenants, or schedule it for a day where they will be out of town.
When you invest in real estate, the goal is to increase the value of the property. Well, real estate property is valued by the amount of income it can bring in (for investment property, anyway). Your goal is to increase this. After you make the repairs and the property improves, you can justify increasing the rent. This will be to your advantage, as the property value will go up along with it. Just be sure that when you’re buying the property you calculate this out, as you don’t want this raised rent to be any higher than average rent in the area. Having it still below average is the best bet.
You will have to break the news to your tenants that their rent is being increased. They may fuss a bit, but that’s okay, you can’t blame them. Still though, you must stand firm. You are not running a charity – your primary mission is to make money for yourself; this is an investment. Often though, when handled properly, you can keep the same tenants in place. Be fair with them, and be polite; things should go your way.