Good management and marketing depend on continued study of competing properties and customer preferences. No one can tell you the specific strategy that always yields the highest profits. Certainly, you can read a dozen (or more) books on how to be a landlord, and most of them will give you a precise list of do and do not that cover everything from rental applications to waterbeds. Even though ideas from such books often prove helpful, never accept them as the final word. What works today may not work tomorrow. What works in Peoria may not go over in Paducah. What works in a tight rental market may prove less effective in a high-vacancy market.
What works best with HUD Section 8 tenants may actually turn away those upscale residents of your more expensive buildings. Should you accept pets, smokers, or college students? It all depends. In principle, always offer your selected segment of renters the value proposition that they prefer, yet, at the same time, make sure it's a value proposition that grows your bottom line. In practice, though, you can find that profit maximizing value proposition only through market study and experimentation. In this and the following chapters, you will see how to beef up your NOI and lower the cap rate that future buyers (other investors) will apply to your properties. But in keeping with the overall theme, recognize that no one can know precisely what will work best:
In your market
For the types of properties you will own
For the types of tenants that you would like to attract
With respect to your personal resources (time, money, effort, imagination)
Nevertheless, develop an alert attitude, an open mind, and a desire to learn, and you won't
merely build wealth with income properties but you will do so at a quick pace.
When you begin to shop for income properties, accurately assess the as is value of the property; otherwise, you risk overpaying. In fact, your need for intelligent analysis is heightened in the field of income properties (relative to single-family houses) not only because each multifamily commercial property stands unique to all others but also because owners and their sales agents rarely tell you everything they know about their properties. If you expect full and accurate disclosure, you're fantasizing. As a matter of law and practice, sellers and their agents in this market are held to lower standards of truthfulness. Before individual investors (buyers) can claim in court that they've been duped by a seller's misrepresentations or non disclosures, such buyers generally must show that they complied with their legal “duty to investigate. "
Step-by-Step, Affordable Training Videos on How to Build or maintain a Powerful commercial property Portfolio, covers land, apts, multifam, retail and more!
By: Raymond Pedersen