Working as a successful real estate manager requires more than the ability to spot the perfect sale. Paul Turovsky, a residential and commercial real estate professional with more than 15 years of experience, offers valuable insight on how close rental properties should be to you and one another. Before investing in your first (or next) rental property, there are a few factors to consider prior to choosing the exact location of your investment.
Define Your Role
When working in real estate, there are many different roles to assume and take on, depending on your own professional goals and what you see yourself doing each day. As a real estate investor, do you plan to manage properties yourself, or work with a third-party property management solution? The most common routes to take when investing in commercial or residential properties include:
- DIY Management: As an investor and manager, you assume all responsibilities of managing the upkeep of your property investments.
- Full-Time Property Management Solutions: Outsourcing all of your property management responsibilities is possible with a full-time property management service.
- Individual Services: Some management companies will provide investors and landlords the opportunity to choose particular services they are interested in for properties they own. Some investors may want to handle repairs and upkeep but may prefer that a third-party management company handle the showing of properties and screenings of potential tenants. Using an à la carte solution is best in this scenario.
Familiarize Yourself With the Local Market
Paul Turovsky expresses the importance of familiarizing yourself with the local housing market, especially in areas that are booming in listings. Choosing one area to invest in that is projected to grow and expand can provide you with faster and larger returns.
While you are learning about the local housing market near you, be sure to compare options just outside of any particular region you are eyeing. By researching nearby neighborhoods you gain valuable insight into the current renter’s market and demand for property in all surrounding areas.
Responsibilities of a DIY Property Manager/Landlord
If you choose to invest in properties that are near you and decide to manage them yourself, it is important to become familiar with the responsibilities you will legally be required to assume as a landlord, including:
Tenant Management
Managing tenants requires completing background checks, interviews and thorough screenings. It will also require the ability to manage individual tenants, leasing contracts, complaints and repair requests.
Property Management
Managing your properties individually will require inspections of heating and cooling systems, common repairs and replacements and other household seasonal services. As a property manager you will also be responsible for documenting the condition of flooring, walls, appliances, outlets and utilities before and after leasing units to new tenants.
Finances and Accounting
When managing properties and tenants on your own, you will also need to handle the finances and accounting that are involved in the real estate rental market. From budgeting for repairs to handling security deposits, late fees and non-payments, managing properties on your own can be quite an undertaking if you are not properly prepared.
Advantages of Choosing Rental Properties Within Close Proximity
Investing in rental properties in the same city, neighborhood, or even in the same complex can help with DIY management tasks, from inspections to collecting rent.
Tenant Communication
Living near your investment properties and rentals can provide you with easy access to tenants who are currently living in them. When you are able to maintain constant and ongoing communication with rental tenants you are less likely to encounter disputes or tenants who refuse to pay rent on time.
Collect Rent
If you do not receive your rent from an individual tenant by mail or direct deposit, living within close proximity to your rentals is extremely beneficial. With the ability to visit your properties within just a few minutes, you can collect rent from tenants in person, rather than communicating via phone or mail.
Quick Fixes and Repairs
If you choose to work with a third party to manage your properties, the cost of minor repairs can quickly add up. Living near your rental properties provides you with the ability to assist with quick fixes, saving on costly repairs.
Better Insight Into the Local Housing Market
Investing in multiple properties in the same region is a way to gain valuable insight into the current local housing market. Owning more than one property in the same neighborhood can also help you to keep a closer eye on demand and neighborhood changes, both in the short and long term.
Understanding your role as a real estate professional can significantly help you to carve out a career strategy that is right for you, says Paul Turovsky. The more familiar you are with local markets and the responsibilities you will assume as a DIY property manager and landlord, the easier it will be to choose the locations of your future investments.
