So you have heard about the success stories of many people in the real estate industry, and now, you want to become a real estate investor yourself? This would be a good opportunity, but are you aware of the responsibilities that come with this type of a profession or business?
In order for you to become a successful real estate investor, you should know all the things that you have to do in this industry. There may be a lot of opportunities in this field, but take note that the competition is tough too. The tasks can be overwhelming, and if you are not prepared for it, you will just put yourself into failure.
The responsibilities of being a real estate investor
Buying several properties that you will rent out is not enough to attain success. In fact, this is just the first step, and you can expect more.
Here is a list of the important responsibilities of a real estate investor:
Improve your properties
When purchasing properties that you will rent out later on, you need to see to it that you improve them as much as you can so it will be easier for you to lease them. Keep in mind that buyers or renters these days also have their requirements when looking for properties. Therefore, it is essential that you meet these requirements, so you will be able to gain their business.
Market your properties
Here comes the part wherein you will have to do a lot of tasks. Advertising is easier said than done. First, you have to think of the best way in which you can market the properties that you want to sell or rent out. Decide on which marketing method would work the best. Would it be posting them on newspapers? Or, do you think you will gain more clients if you advertise online?
Moreover, make sure that you are well-prepared for the costs of advertising. It can be expensive, but as long as you do it right, you will get your money back pretty soon.
Contact potential clients
As a real estate investor, it is extremely important that you build a strong relationship with potential clients. You need to email or call them and encourage them to transact with you. Of course, you have to prove to them that your properties are what they are looking for.
Contacting potential clients could be overwhelming too especially if you have a lot on your list. With this, you might want to consider hiring an assistant.
There are some property owners who prefer dealing with tenants and home buyers on their own without contracting real estate agencies. For Sale Or Rent By Owner properties are considerably cheaper compared to those managed by real estate agents. Managing property is often a complex task especially when you have to deal with tenants as there are some who are usually not keen on paying rent in time. In most cases, tenants and property buyers who deal directly with the owner enjoy great benefits and advantages compared to those who deal with real estate agents. These advantages include:
Relatively lower rental charges and sale price of properties
Real estate agents are paid on commission charges depending on the rental amount or sale amount of property. This commission is passed to tenants as it is included in the total rent payable for renting a specific property. As such, the commission causes an increase in the rental charge thereby making tenants pay more than they would if they were dealing directly with the owner. Properties managed directly by the owner usually have a lower rental charge as no commission is paid to property agents. This works to the advantage of tenants and potential home buyers.
Fewer legal procedures
There are fewer legal procedures involved when dealing directly with the property owner as compared to using a property agent. For starters, the property owner has to enter into an agreement with the agent before the agent can manage the property on behalf of the owner. In addition to this, the agent has to make another agreement with the tenant before leasing the property to the tenant. The same procedure applies when buying a property through an agent. Often, the lengthy legal procedures result in added costs which are passed down to the tenant/home buyer.
Increase in the property’s value
The demand for property managed directly by the owner tends to be higher than that of properties managed by agents. This is because most tenants and home buyers prefer dealing directly with the owner as compared to dealing with a property agent. This increase in demand translates to a higher value of the property and consequently translates to higher tenant retention. What is more amazing about managing the property on yourself without hiring an agent is that you are able to make timely tax payments on rental income.
Understand your investment better
When managing property by your own without contracting an agent, it becomes easy for you to understand your investment better. This includes knowing the exact cost of repairs and renovations in the property and hiring a reputable contractor to make the repairs or renovations on the property. Some unscrupulous estate agents may exaggerate repair and renovation charges on the property thereby charging you more than the actual charges incurred.
Managing your property on your own requires you to be competent, well versed in the current rental and property sale laws, be a good manager and possess great interpersonal skills. With good management skills, you will be able to manage the property with less stress and greater convenience.