The key to mastering real estate, right off the bat, is to always think about costs. It’s easy to feel yourself going a little doe-eyed when you see an ideal property in an ideal location, with the opportunity for a fair initial investment. Of course, the initial price in terms of the investment you make and the property itself are only two parts of a very large picture when it comes to mastering the real estate business.
You’re not the best property developer in the world just yet, but you could be.
Returns are crucial in this industry, and it’s incredibly hard to predict them. However, there are ways to work the system and learn the secret skills of the trade. If you become street-smart, in a very different sense of the phrase, then you can start to cut down on costs and bring in much higher returns. It’s all about seizing the right opportunities and making the right calls once you have the perfect property. There’ll be no throwing your feet up and relaxing just yet – we’ve got work to do.
It’s time to advertise your service properly.
You’re not selling the property itself, but you are selling something when you put it up for letting. That means you’ve only done half the job by getting the property; now you need to find a tenant, and you need to sell this ideal location, ideal price and ideal set of furnishings, or amenities, like it’s the best property they’ve ever seen.
Of course, first of all you have to have something good to advertise. You can’t sell people a dream here, because you want tenants to stick around. So you have to get to work on fixing up the property, cleaning it and fitting it with every modern appliance or furnishing that other properties on the market, in your price range, are offering. Of course, it helps to offer slightly more, so as to sway potential tenants to rent with you, rather than other properties in the area.
The point is that, even if this is a brand new property for you, there will likely still be work to do on fixing the place up. Maybe you got such a good deal because it’s looking a little sparse, but you’ll need to work on that if you want any chance of marketing the place well to your clients. If you want them to pay money each money, then you’ve got to have something to sell to them.
Shift some of the costs elsewhere.
Landlords pour a lot of money into their properties, as you may know after having owned one or many for years. However, whether you’re old to the game or brand new to the world of property development, there are most likely costs you’re facing that you don’t need to face at all.
Through a little rethinking of your position in the property development industry, you could start to avoid some of the highly costly operating expenses incurred through letting properties. It might be tempting to lure in tenants with the offer of all their bills being included in the overall monthly rent cost, but, if they’re wasteful of electricity and water, you may find that you’re shelling out more on operating costs than you’re making.
That’s why investing in a triple net property might be the way forward for you. Instead of paying for all the operating costs yourself, if the tenant is the one covering whatever they’re using, then not only will the costs no longer be your problem, but they might be a little less wasteful. A turnkey investment is something that lots of property developers consider, but you won’t be able to sit back and relax just yet, because there are other things you need to think about in that case…
Is the tenant reliable?
Sometimes real estate developers go wrong by forgetting that, behind the business element of property development, there is a tenant at the heart of it all on whom you’re relying to keep the whole letting business flowing. Whether you’re new to the real estate industry or not, if you want to invest in any sort of property, triple net or otherwise, you need to consider the person to whom you’re letting the property.
If the credit quality of the tenant is no good, then you might run into problems with them further down the line. A good credit score is vital, as it ensures that you’re letting to someone with a record for honesty and reliability when it comes to paying rent on time. You’ve both agreed to the terms of the lease, and you don’t want the headache or the hassle of finding out that your tenant can no longer meet those agreements. If your tenant has a stable income, then you can depend on them to honour their side of the arrangement, and they won’t be causing you any grievances or financial worries later on.
Don’t go overboard with pricing, because an empty property is bad news.
It’s tempting to put up the price of rent, and some landlords might get lucky through doing so, but it’s a risky move for any property developer who’s looking to become an expert in the industry. Being the best property developer is all about keeping a level head, even when the housing and rental marketplace seems unstable, or completely unpredictable.
If you go overboard with the price of your property, you might be left with no tenants in your property, or properties, at all. You’ve made an investment on the basis of keeping your property occupied at all times, so the second you’ve got no tenants, it’ll be costing you a huge chunk of your revenue each month. You have a mortgage to pay and other costs to cover. The money you earn from rent is your life supply, so don’t rock the boat if you’re got a good thing going. That’s the key to being a great property developer – not greed.
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