Keys to Investing in Real Estate

The recent economic downturn has affected prices of real estate properties in almost all localities in the United States. With economists predicting an upswing in the economy, now is the time for investing in real estate. If you have the money to make the down payment and sufficient borrowing capacity, you should seriously look into the option of buying either a second residential property or a commercial property – either of which can easily be rented out.

As any pro in the real estate business will tell you, the key factor that makes a property desirable is its location. By locating a property in a neighborhood that is both safe and clean, you can be sure that your real estate investing decision will pay richly. Proximity to good schools too is a factor that increases the value of a residential property. Commercial real estate, on the other hand, needs to be located in or close to the business district. It also needs to be easily accessible by both customers and employees. When you choose to become a real estate investor you have a few options before you. You need to inspect the property depending on whether you plan to hold the property for the long term or sell it within a few months. If you are a long term investor,
calculate the cost of repairs before the property can be rented out and add this to the total cost of your purchase. You can also choose to invest through a real estate group or a REIT, a real estate investment trust.

These function like mutual funds and are governed or managed by a professional. Though you need to pay fees for the manager, you have an easier time as you do not need to actively look for a property to invest in or deal with the nitty-gritty of locating a suitable tenant. This mode of investing in real estate also limits your exposure to the vagaries of this market. By choosing a good REIT and placing your funds in it, you can sit back and reap the benefits without further effort.

Though many offer estate investing advice, following such advice in real life is not easy. There are many variables that one has to consider and many contingencies that one has to plan for. For instance, if you plan to pay back the mortgage from the rent you receive, you need some reserve cash or periods when your investment lies vacant or unoccupied. By planning for such situations, you are more likely to be able to reap handsome profits from your investment. The main thing you need to keep in mind when on the look out for a good real estate investment is the location. While a run down building can be restored, the location cannot be changed. Both tenants and prospective buyers will be ready to pay a premium for a desirable location – one that is safe, clean, and near amenities such as schools, clubs, and shops.

While investing in real estate is no easy task, anybody with the willingness to work hard can succeed in this market.

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Why Professional Landlords Should Use Tenant Management

Why? Well the answer is a simple one. The relationship can be mutually beneficial and surely that has to be good news for the bank balance of the professional landlord? Having said that, there are still professional landlords and property landlords who do not see this and, come hell or high water, they will not use tenant management software. There may be a number of reasons for this reluctance; property managers can be protective of their property portfolios and business reluctant to hand over some control to another business and in the current economic climate all businesses want to keep functions in house where they can control and save costs.

So, what are these reluctant and hesitant property managers missing out on? What can property letting agencies offer the professional landlord?

Letting agencies find suitable tenants for the professional landlord. It sounds obvious and it sounds simple but it can be a daunting, time consuming and resource hungry task. There is also a lot of regulation surrounding tenancies, contract and property law can be a minefield. Good letting agencies are experts in these areas, it's what they do. Most professional landlords employ specialist to manage tax liabilities and carry out complex building and maintenance work why is this aspect of business any different? After all it is finding the right tenant for the right property that should secure the long term benefit of a good and regular rental income.

So, how should it work? First the commercial landlord needs to meet the letting agent in order to view the property and to discuss and determine where it fits in the rental market and what an appropriate rental income for it is. There is often no charge for this initial service and rental income assessment. Once an appropriate rental income has been agreed then the letting agent will advertise the property. You should discuss with the letting agent what the advertising options are and what is best for the property and the area. Letting agencies these days can advertise properties in their shop windows, in the press, in trade magazines and on-line.

Once the advertising has generated interest then the letting agent will show the property to the prospective tenants. Remember they are your agent and as such are acting on your behalf and under your instructions. You should be very clear about what you are prepared to negotiate in terms of rental income and lease provisions. The agent has a legal duty to act within the terms and scope of the authority that they have been given by you and if necessary they must refer any counter offers or other areas of negotiation back to you for further instruction. The law of agency affords the professional landlord some protection in this regard but you should be very clear and specific in your instructions to an agent.

Once the negotiations have been completed and agreement has been reached, the letting agent will draft and produce the paperwork, the tenancy agreement. Do make sure that you read and understand everything in it and if you have doubts, especially at the beginning of a professional relationship with an agent, then have it looked at by a lawyer specialising in commercial property. By building a professional relationship with a good letting agent you can get on with what you do best, acquiring and managing good property, confident in the knowledge that the right tenants are in them paying you a regular and good commercial rent.


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