The Insider’s Guide to Managing Your Real Property Investment

The Insider’s Guide to Managing Your Real Property Investment

According to A Property Manager’s guide to attracting and retaining small-portfolio investors a report by Buildium, and Propertyware, 52 percent of owners of rental properties now consider themselves to be intentional investors. This is an eight point increase since 2018. The pandemic has caused the market to shift from those who own a home for personal reasons or accidental landlords, to those looking for an income right from the beginning.

Plan ahead if you are also looking to invest in property. Spend some time learning about the basics of investing in real estate, and the challenges that you might face. This is your “ultimate guide”.

We outline here the typical paths for real-estate investment. Different types of small portfolio investors are also discussed, as well as common challenges investors face. This guide will help you determine the path you are on, how you should invest and how you can avoid some pitfalls.

Three typical paths to real estate investment

Three common ways to enter the world of real estate exist. Many people stumble into investing in real estate and quickly become overwhelmed. What type of real-estate investor are you?

Intentional Investor

Investors who are primarily motivated by profit purchase properties in 52% of cases. Investors who buy property with the intention of renting it out to make a profit are 52%.

This type of investor:

  • Rent multiple properties
  • Renting out properties that are profitable is a good idea
  • Plan to buy a new property in the next two-years
  • Identify yourself as a landlord or an investor in real estate.

Unintentional Investor

Nearly one quarter (24%) all investors in real estate are unintentional. The unintentional investor is someone who has found themselves in a lucrative real estate situation, either out of necessity or for a hobby.

Unintentional investors are likely to be the most common.

  • Rent a single family home
  • Rent as passive income
  • Renting out their properties is not your full-time occupation
  • Residential rentals are a smart investment for 2022

Accidental Landlord

This category is made up of 24% of investors. This investor type has become a tenant completely by accident.

It is likely that:

  • Only own one property
  • Rent out the property you bought originally to live in it as your primary residence
  • Inherit property unexpectedly
  • No plans to expand portfolio
  • Be overwhelmed

Prior to the pandemic, more homeowners bought their primary residences as long-term investments for themselves. Now, however more than ever, property owners own rental properties as a secondary or primary source of income.

You’re likely interested in Strategies to maximize profits and reduce risk, whether you enter the market intentionally. The strategy that works best for you depends on what type of investor you are. We’ll look at four different approaches to small-portfolio investor to help you determine your next step.

4 Approaches To Real Estate Investing

Investors with small portfolios tend to fall into four different categories, whether they are doing it intentionally, unintentionally, or by accident.

#1. #1.

DIY landlords manage their rental properties themselves without the help of a property management company. In 2022, 32% of small portfolio investors will fit this profile. This represents a slight increase of one percentage point compared to the previous year.

#2. Investors who are Growth-Focused

Investors who are focused on growth are actively buying new rental properties. In 2022, 31% of investors with small portfolios will fit this profile. This number has been stable since 2021 because investors’ interest to expand their portfolios is still strong.

#3. Distance Investors

Distance investors actively grow their portfolios, and they need the help of a manager to look after rental properties that are not near them. In 2022, 12% of owners of small rental portfolios will fit this description. This is an increase of 1% over the previous year.

#4. Profit-Conscious Investors

Investors who are concerned about their profitability want the help of a property manager to increase it. In 2022, 8% of owners of small rental portfolios fit this profile. This represents a slight increase of one percent since 2021.

Real Estate Investors: Top 5 Challenges

Buildium’s Small-Portfolio Investor report reveals the top five challenges faced by real estate investors.

Maintenance and Repairs

In 2022, maintenance will remain the top cause of stress for rental owners. This has been true every year since Buildium began surveying investors’ concerns. This was the top issue for more than twice as many rental owners than any other.

Second: Bookkeeping, Accounting and Taxes

Taxes, accounting, and bookkeeping are among the top three stressors for rental owners. These sources have increased since the beginning of the pandemic. This could be due to an increase in financial problems among both owners and residents.

Investors are more likely to feel stressed out about bookkeeping and accounting than accidental landlords. This is probably due to the complexity of managing multiple investments.

Finding and working with a property manager

According to the report and including investors, Finding a property manager was one of the top three stressors for rental owners. Finding and working with property managers causes rental owners to feel stress. This is also true for investors.

The most stressed out are accidental landlords who will eventually partner with property managers. They are followed by unintentional and intentional investors.

Setting realistic expectations about the value that they will receive and the communication level they will receive at the beginning of the professional relationship can help reduce the stress levels of rental owners.

You can start your search for a property manager here for free. Then, prepare for your initial vetting meeting by asking the correct questions.

Renovations #4

In 2022, renovations will be the fourth most stressful thing for rental owners. This is the highest ranking this issue has ever had, suggesting that owners are feeling pressure to upgrade their properties in order to justify higher rental rates and attract great residents to the current market.

Investors who are not intentional are more likely to be stressed out by renovations. This is because they may have less experience with renovating their properties as investments.

#5: Legal Issues

Since 2018, legal issues have steadily moved up the list of concerns for rental owners, and are now at a higher place than ever. The number of owners that chose this as their top stressor has decreased from its peak during the pandemic. This could be because the onslaught regulations prompted by the pandemic have slowed.

Investors have more legal concerns than accidental landlords. This may be because they are running their rental properties without the help of an expert, or they are simply more aware of how complex it is to run a rental in today’s regulatory environment.

What are the benefits of hiring a property manager?

All types of investors can benefit from partnering with a professional management company. There are five ways that property managers can make an impact and demonstrate their value.

#1: Cheaper Contracts

Renters without property managers who chose maintenance as their top stressor were 7% more likely to do so than renters who have a manager on hand to maintain and repair their rental properties.

It’s not surprising, as one of the most effective ways for property managers to save money on behalf of investors is by negotiating better (and cheaper) contracts with different professionals. They also bring more business to contractors than just one project. Property management companies can negotiate lower rates because of this. Over time, everyone saves money.

Second: Legal fees

Property management companies may not be legal professionals but they have experience in dealing with legal issues. This is something that your average real estate investor will not. They’ll have a good understanding of the local laws due to their years in the industry. This will help you avoid common pitfalls, and legal fees.

Renters who hire a property manager have less stress about legal issues. This difference is the largest on our list. It shows how hiring a professional with property law knowledge can provide owners peace of mind.

Better Technology

The technology is already available for property management companies to allow tenants to submit maintenance requests, pay rent online, and file work orders.

You can attract the right residents and keep them for a longer period of time by using the digital marketing techniques that best managers possess.

Better Quality Contractors

Most property management companies have better contractors available to them, in addition to being able to negotiate more affordable contracts. They have already built relationships and vetted contractors. They have better connections and more access to workers who can provide cost-effective and quality results.

#5: A Local Expert is a Must for Distance Investors

You may want to look outside of your local market for real estate investment opportunities. A local property manager can be a real expert on the ground. You can then build your real-estate investments wherever you are.

#6: A Trusted Advisor is a Must for Growth-Focused Investors

A property manager is not only a local expert but can also be a trusted adviser when you are looking to expand your portfolio of real estate. A trusted advisor can be extremely helpful if you are looking to expand your real estate portfolio.

#7: Freedom From Worry

Property managers take the stress and day-to-day-management off your plate. They have also dealt with many worst-case scenarios, which you can learn from. Property management companies can help you with a variety of tasks, including ensuring that your property is covered by the appropriate insurance, protecting yourself in the event that an accident occurs on the property, and settling disputes among tenants.

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