Profit saving techniques for better cash flow
THIS IS A REPOST TAKEN FROM A SWFLREIA POST (SOUTHWEST FL REAL ESTATE INVESTMENT ASSOCIATION)
Management tips and profit saving techniques for better cash flow and better long term gain.
- All rentals that have carpet flooring should have no pets!! (Long term investment property should not have carpet at all, they should have TILE flooring!)
- Glass top stoves are the best. they last longer and have less parts to go bad.
- Perform Quarterly Inspections (check a/c filters, well equipment) You change/inspect the a/c filters while you are there.
- When meeting with your prospective tenant check these things; the upkeep and condition of their car, and drive by if previous rental is local.
- Prorate the second Month.
- Make it as easy as possible to pay (envelopes, labels, electronic payment options).
- Video tape/take pictures with your tenant in the pictures when you move them in.
- Run back ground checks! You get what you inspect not what you expect. Do more than just call their references, employers, and previous/current landlords. Use the internet (Google/Facebook are your friends).
- Be respectful and reasonable but do not be friends with your tenants.
- Do not call, return missed calls, and/or see how things are going with your tenant. Only respond to specific messages for for specific purposes.
- Be realistic with your monthly rent ($50 more for an overpriced home can add months of vacancy).
Expenses over $300 are what kills your annualized returns.
The most common expenses over $300 are;
- Septic System
- Well Equipment
Budget these for replacement. They will last longer if they are properly maintained
- Tile verses carpet
- Pool maintained by tenant or by pool company
- A/C filters changed by owner/manager or tenants
- Have tenants maintain well equipment verse company
Mistakes to avoid when investing in Real Estate
- Do not estimate or use the opinion of someone else to determine market value. (Used recently sold comparables to determine value)
- Never make a decision on impulse or emotion
- Avoid investment property that is not separately metered (water or electric)
- Septic vs. Sewer, Well equipment vs. City water.
- Avoid fixer uppers outside of your expertise or have an expert (GC) with you
- DISCLOSE, DISCLOSE, DISCLOSE (i.e. licensed realtor)
- Find out about the financials, board membership, and rules and regulations when purchasing in a community
- General contractor vs. jack of all trades… Never band aid a repair or rehab a property halfway…
- Have either an exit strategy or long term plan for the investment (when you sale with the asset be purchased by another investor or an end user?)