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The Real Property Management Issue Is Education

The Conundrum of Investment Properties

Investors seeking diversification have frequently turned to a rental property or a collection of rental properties to even out and spread risk across their investment portfolios. As with any investment, people should consider all the issues, problems, pitfalls, and potential returns. Unfortunately, many investors aren’t aware of the possible problems and do not take the time to investigate them before they close escrow.

A property management course and a course in basic real estate investment would be great time investments for someone considering rental properties as a source of income and long-term investment. Some of the problems and concerns are discussed below.

EducationInexperienced Agents and Uneducated Investors Make a Deadly Concoction

Rental property investors often utilize the services of an unseasoned realtor who does not fully understand rental properties, the return on investment, or cap rates. Often, these investors turn to their friend, ‘the realtor,’ or use any realtor they are familiar with or comfortable with to purchase these properties, sad as that may sound.

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Most real estate agents are not savvy enough to understand rental properties, cap rates, return on cash, return on investment, leveraged investing, and the common terms associated with investment properties. To compound this fact, most investors are initially equally inexperienced and lack the proper expertise to locate and purchase a high-performance investment property. No one needs to look further than this question:

Why would an owner be selling a high-performance investment property? That question should be the first of many the agent and investor asked. One problem is that some investors are just so excited to get into a property that they look beyond the truth and the numbers and want to control it. Often, this is a flawed approach because most agents will hesitate to stop the eager purchaser for fear of missing out on a healthy commission.

The Property Management Profession is an Equalizer

After an investor has closed escrow, if the inexperienced agent hasn’t offered to ‘manage’ the property, many decide to manage it themselves (only licensed real estate brokers can manage rental properties). When these unsuspecting owners are faced with the subtleties of Fair Housing laws, Equal Opportunity issues, civil rights issues, anti-discrimination issues, bad tenant screening issues, a notice of default issues, eviction issues, and finally, collection issues, many times they turn to a professional property manager or property management company to help rescue their sinking ship.

If rescued timely, a professional property manager can turn around an investment property and help make the investor’s decision pay dividends. With a competent property manager, the return on investment can be realized. The owner can have time to enjoy the investment, not dote on it or worry about it. The property management company will take care of the investment, the maintenance, the tenants, and all of the accompanying issues associated with the property.

Property Management Education Course

Educating inexperienced real estate agents and beginner investment property owners about prudent property management is critical for maximizing investors’ return on investment. It is rare for an owner to successfully manage their property or properties and make the maximum possible return available in that particular marketplace.

Rarely, the typical manager-owner does not utilize the latest and greatest property management techniques, software, and screening procedures, and most importantly, does not keep up with the ever-changing landlord-tenant laws.

Each January, several seemingly ever-increasingly tenant-debtor-favored laws are enacted, which most people are not aware of; when a new law takes effect, that is another potential pitfall for the lone-ranger owner to violate and end up on the wrong side of the complaint.

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