WHAT ARE YOUR STRENGTHS AND WEAKNESSES AS A REAL ESTATE INVESTOR?
HOW PROPERTY MANAGERS HELP BRIDGE YOUR GAPS
Businesses are always assessing their internal strengths and weaknesses and making organizational decisions accordingly…but how often do we do the same as real estate investors? Because we’re typically acting as a single entity (working alone), we’re less likely to analyze our performance or choices with any formality or in thinking about accountability, but recognizing and playing to your strengths can have major advantages. Likewise, failing to recognize your weaknesses can create major drag on your profits and lead to derailing headaches and hardship. Limiting these negative effects begins with intentional recognition and thinking about your abilities, and most importantly, aligning those with your goals.
IT ALWAYS STARTS WITH YOUR GOALS
What is it that you want real estate investment to do for you? What do you expect your investment to yield? If the goal is cash now, you’re in the wrong business. If the goal is big cash in the future and passive monthly income along the way, real estate investment is where you belong. Apart from what you get out of it, you also need to consider what you can put into it. If you work a full-time office job and have two young kids at home, you’re in a far different place than someone who runs a consulting firm whose kids are both in college. Time and flexibility are important factors to always keep at the forefront when making major decisions.
Recently, a new investor came to us and found that the money he’d put aside to buy his first investment property wasn’t going to be enough. Prices are way up, lenders are asking for larger down payments, and insurance rates are rising as well. The barriers to entry have never been higher. Some might advise that you look into REITs (Real Estate Investment Trusts) instead while others might recommend just waiting until the market settles. This investor stayed true to his goals and his family situation and took a different approach: He bought a troubled property to flip with the goal of doubling his future downpayment on a long term investment property. As a teacher, he has lots of time and flexibility over the summer months and can make this happen. He didn’t change his goals from creating long term wealth, he just had to take a sidestep to create more flexibility, and it aligned with where he is in life.
[ LEARN MORE: TOP 3 MISTAKES INVESTORS MAKE WHEN BUYING A RENTAL PROPERTY ]
STRENGTHS AND WEAKNESSES
We all have strengths and weaknesses and how they play toward real estate investment will obviously vary. Common strengths we see in many of our most successful clients include networking abilities, experience budgeting, direct communication style, computer literacy, and organized book and record keeping. Common weaknesses include networking inabilities and difficulty working with people, inexperience budgeting, poor communication, technology illiteracy, and poor organization. Yes…I just flipped those, I apologize…but the point should be clear: what are strengths for many of us are weaknesses for others and vice versa. For this reason, it just doesn’t make a lot of sense to go it alone. Finding a professional to help augment your strengths and fill the gaps where you aren’t as strong is a no-brainer.
[ LEARN MORE: WHICH TYPE OF LANDLORD ARE YOU? ]
YOU’RE ALWAYS AT A DISADVANTAGE WHEN YOU FLY SOLO
Let’s be very direct: it’s in your best interest to hire a professional property management company to help maximize your returns and guide your investments along the way. Even if you just hire one to get you off your feet, it makes a lot of sense. There are a handful of professional athletes who eventually decide to represent themselves, but none of them start out without an agent. Why would you? Like a professional athlete, the very beginning of your career is the most risky and challenging in terms of financial decisions. People don’t bat an eye when thinking about working with a financial expert when it comes to their 401K or 403B, but there’s still a bit of hesitancy on the real estate side.
A reputable property manager helps you navigate the field that they plow day in and day out. For a minimal charge, you get a wingman that brings experience to the table and can help bridge the gap on any of those weaknesses you might have. Lacking flexibility and time? Without a property manager your best bet is to wait until life changes for you. With a property manager, you’re good to start chasing your goals right away. A property manager will help you bridge that gap between what you want and what you have.
LOOKING FOR A DOER, A COACH, OR A CLEANUP CREW?
There are typically four general types of new clients that come to us after already embarking on their own:
TYPE 1: EXPERIENCED BUT LACKING TIME AND FLEXIBILITY
These investors know what they want to do and how they want to do it, they just don’t have the time or resources. They’ve played the game and have wisely come to the conclusion that the best choice is to hire out. They’ll let our team know exactly what they want done…and we’ll execute accordingly.
TYPE 2: LOOKING FOR A COACH TO PARTNER WITH
Most commonly, investors seek us out for our expertise. We can do what they want when they want (like Type 1 above), but they also want to know what our team recommends and how we come to those decisions. Because they’re thinking long term, they want to learn the game, not just play it. They trust our decisions and actively use us to handle issues that are weaknesses for them.
TYPE 3: I TRUST YOU GUYS…DON’T BOTHER ASKING
These clients have 100% trust in us and they have no hand in management or decision making. “Don’t bother asking…if you think it’s the right thing to do, do it…when it’s time to evict, go ahead and evict…if there’s maintenance needed, take care of it…just send me my check at the end of the month”. We’re happy to have the capacity to meet the expectations of these Type 3 clients. We appreciate their trust.
TYPE 4: I NEED A CLEANUP CREW!!!
These are the clients who started on their own and failed to assess their own weaknesses. They might have 4 or 5 buildings and they’re all going under so now they’re looking for a professional to help dig them out. And we will. But often it’s expensive and relationships are tough to establish because the client has been doing it “wrong” for so many years and is reluctant to change when money is so tight.
A reflective conversation with yourself about your strengths and weaknesses as a landlord and property owner is essential to performance that will maximize your own profits. Very often, hiring a professional property manager is an investment that will pay dividends almost immediately, and most certainly in the long run. Whether you’re just starting out and you know finding vendors and establishing relationships with people in the business is going to be hard for you, or you’re already managing your own 6 units (3 of which are vacant, 1 needing an eviction, with a leaky roof to boot), hiring an expert in the field can minimize losses and bridge the gaps to your strengths.
If interested in learning more about the opportunities that professional property management can bring to you and your properties, contact our Nexus Property Management® team at any of our four New England locations.
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Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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