Throughout 2020, the housing market has been in a fairly volatile position. Due to the effects of the pandemic, housing prices have flat-lined and even declined in some locales. This ultimately is due to a combination of reduced demand and increased supply. The unfortunate reality is that a greater number of people have been losing their homes at the same time that fewer people are seeking to buy.
Nevertheless, savvy investors recognize that periods such as this are optimal moments in which to buy property. For those who already own various residential and/or commercial properties, weathering the current market is easily feasible with a bit of experience and preparation. These landlords know a thing or two about navigating turbulent economic waters.
If you want to master the art of property ownership where renting and leasing are long-term investment strategies, then continue reading to learn about six expert tips that professional landlords use to be successful.
Utilize Property Management Services
Successful landlords with multiple properties don’t necessarily have the time personally to manage them. Whether they be commercial spaces leased out to local businesses or residential properties being placed on the market, a substantial amount of time, money and energy can be involved in property management.
This is why it is worth considering the use of property management services. Overseeing commercial, residential or industrial real estate, property managers are enlisted to handle a plethora of services. From listing properties on the market to performing vital maintenance tasks, property management entails quite a bit.
Property Management companies such as M/Property understand that landlords view their properties as long-term investments in need of care. Specializing in the management of apartments, these property management experts help owners lease apartments every single day.
Invest at the Right Times
Being a successful landlord with a repertoire of productive properties involves knowing when to buy (and when to sell) just as much as knowing what to buy or sell. As local housing and commercial markets can fluctuate in price from month to month and year to year, securing the best deal possible by investing at the right time takes a bit of foresight.
In general, the best time of the year to purchase properties is during the late summer and early fall periods. Fewer people are shopping for properties during this time of the year, which means it is more likely that a favorable deal can be reached. To sell properties, professional landlords want the opposite situation – to sell when demand is high. Late spring and early summer tend to be the best parts of the year for selling properties.
Consider Cash Versus Mortgage Options Carefully
When investing in a new property, it is important to consider the short-term and long-term costs associated with ownership. For smaller-scale landlords seeking a second (or third) property to rent to lease, they may choose to pay for the property upfront as a means of avoiding long-term interest payments. If long-term ownership is the goal, then this isn’t the worst idea.
However, those seeking to “flip” properties by purchasing them during down market periods and reselling them once their market values increase, are often better served by a traditional mortgage. This ensures that the landlord’s investments can be extended to other endeavors, resulting in a smaller percentage of assets being tied up in a single property.
However, consistent rental and leasing is required to ensure that a mortgaged property can be paid for each month. In some situations, landlords seek to pay in cash where possible to avoid the periods of hardship with respect to securing reliable, consistent tenants.
Location Means Everything
Likewise, a property situated in an excellent neighborhood can practically lease itself in many cases. However, it is still worth using property management services to ensure a speedy rental occurs.
Prepare for Irregular & Unexpected Costs
Expert property owners understand that a (literal) cost of doing business is being prepared for the unexpected. A wide variety of costs associated with property management can be expected over months, years and decades – but there are also emergencies and mishaps that can lead to huge unexpected costs.
Flooding, earthquakes, storm damage and other forms of natural or internal damage to a property can quickly become a nightmare when financially unprepared. This is why it is generally a smart idea to set aside one-quarter of all rental income earned over a five-year period for repairs that may be needed at a moment’s notice.
Remember that landlords are expected to repair any faulty aspects of a property. Most tenants will expect these repairs and unexpected costs to be handled quickly (otherwise, landlords can lose tenants or even be held legally accountable).
Invest in Affordable Properties
Last but not least, it is crucial to remember that most professional, successful landlords didn’t inherit their properties or start with a large number of rental options. They had to work toward earning the resources necessary to grow their property portfolios. Many successful landlords started out with just one or two low-cost properties initially.
Affordable properties in this case doesn’t necessarily mean a property that needs a bunch of work to be appealing. In fact, avoiding fixer-uppers in your first property is generally a good idea if maintaining any initial benefit in an investment is desirable. Once a landlord is established with multiple residential or commercial properties, then this type of affordable property can be considered.
Otherwise, it is recommended that the first investment property a prospective landlord purchases costs no more than the equivalent of four years’ salary.
Without a doubt, the real estate market is an incredibly lucrative industry – but it takes the right mindset to be successful. Please consider these tips if you are interested in becoming a professional landlord in the near future!