Investing in real estate is a big decision, and once you’ve committed to it, you want to make sure that you can grow your business and keep the money coming in. There’s a lot that goes into managing a successful real estate investment portfolio. You can do it on your own with some luck and determination, but finding a North County San Diego property management company to take on a lot of the work for you can be a big help.
You Aren’t Shopping for a Home
This isn’t your first time at the table signing closing papers, but it can be different if you aren’t buying property for use as a home. You know what you want in a home and a neighborhood, and you know your plans for the next few years. It’s easy to get a sense of what a worthwhile investment looks like for your own life. It’s a bit more complicated when making a business decision to expand your profile of investment properties. You’ll have to step outside of your expectations to be successful here.
Consider these two things: the property’s potential to bring in a good return on your investment and your local market. Let’s address your local market first since they’re the ones who are ultimately paying the bills. Before you can make a reasonable decision about what a good return on investment looks like, you’ll need to understand to whom you can reasonably market and rent your property.
Think About Your Target Market
If you’re hoping to rent to quiet families, it may not be wise to purchase property too close to a local university for example. Think about the things that your tenants may value. These things might be proximity to freeways, public transportation, local schools or universities, or a good nightlife - this will vary wildly across different demographics. Young families with children will put a premium on good schools and safe streets. College students will be looking for good bus routes and fun bars. Retirees may be looking for quiet streets and walking paths. Know your target market and be sure to price your property accordingly.
Setting the right rents will depend on the condition of the property, what kind of turnover you’re expecting, and many other factors. You’ll be looking at different rental time-frames as you deal with different groups of tenants. Retirees may stay in place for years or decades at a time. College students or young professionals may be in and out within a year or two. Young families may fall somewhere in the middle. Your target demographic is up to you, but be aware of their behavior patterns and priorities. A property management company can help you make this decision and advertise effectively, and may be able to do most of the work for you.
Selecting the Right Property
You’ll want to choose a property that’s in good condition, or that you can rehabilitate relatively easily. Don’t overestimate your skills here. It can be tempting to purchase a fixer-upper, but that sort of property can quickly become a time and money sink. A property manager with established connections can help you here.
Generally speaking, a property should bring in 1% of the total cost of the property each month in income to be considered a good investment. In this case, if you paid $200,000 for a home, you should be renting it for at least $2,000 a month. You can disregard this rule if you think that property values will go up in your area pretty rapidly, but it’s a good idea to stick with it as often as possible.
A Good Property Manager is a Good Investment
If you have a property that's in good shape and rental prices that are locked in, you have a good investment. A property manager can help you get there. They’ll help you to grow your portfolio of investment properties by bringing you a wealth of knowledge about your local area and market. They can help you to make good purchasing decisions and recover if you’ve made a bad one. They’ll let you maximize your return on investment and get your units ready for occupancy. Finally, they can take on the work of marketing and pricing your property, screening tenants, and taking care of their concerns once they’ve moved in.
You may be wondering how to bring these resources to work for you. Take the first step by downloading our free guide to selecting the best North County San Diego area property management company. Just enter your name and an email address, and you can be on your way to investment success and properties that are bringing in money.
