To many, being an investment property owner is the best way to financial freedom. Owning real estate can certainly create and build wealth. However, owning investment property is not something that comes without work. Finding the best property, negotiating the contract, and then finding tenants and managing the property are all obvious tasks, but the most important things... are Time and Money. Managing these are the hardest jobs in investment property!
Before you get started – there are a two things you should know:
Time is of the Essence:
Do you plan to own the property for a long time, or turn it around quickly? These are important questions when trying to figure out what upgrades and improvements should be done. Also, you can expect that if you do own the property for 5-10 years, or longer, that there will be a new roof that needs to be put on, or a furnace that needs to be replaced. Your investment will need continual investing to keep it in top condition—but if you are only planning on hanging on to it for a year or two, you won’t want to sink money into unneeded expenses that you won’t be able to recoup.
Time is also important as you time the purchase and sale of the property, and balancing that against your needs, situation and the property you are looking for. Timing your sale or purchase is tricky, and that is where having a commercial real estate company on your site can make or break the investment. You don’t want to pay too much when you buy, nor do you want to wait too long when you are ready to sell. Timing can be your best friend or your worst enemy.
Money. Money. Money.
Having money on hand and a great credit situation is imperative for investment property owners. Besides having the cash to buy the property, having the monies available to make repairs and manage emergencies is important.
Work with you financial advisor to determine the property amount of cash vs. loans that you will need to get the right mix for your expenses as well as what you will need to make your payments and still have what you need “just in case.”
You also should make sure you can save enough for retirement and other long-term goals before making the investment. Property ownership is not a sure bet, so it is important to not put all your eggs in one basket!
Kuester Property Management
Charlotte, North Carolina