A growing number of investors have decided to flee the volatile stock market seeking safety, and they will find this in hard assets like in real estate. Nevertheless, many people wish to stay a passive investor, and they don’t want to knock on doors seeking foreclosures and fixing toilets while working as the landlord. A simple search on Google for passive real estate will equate to people becoming the victim of online advertising in a market property known as turn-key rental properties. But what is a turn-key rental property? And is it truly worth your investment?
Turn-Key: What Does It Mean?
To most investors, turnkey sounds like nothing more than a buzzword, and a lot of people throw it around. Many times, the people who throw it around are the new companies that don’t have a definition of what this means. What’s the standard that defines this word? For the uneducated buyer, you might assume that turnkey properties mean that you don’t have to do anything. Don’t let something that looks too good to be true pull you in. The false belief that someone else will renovate, buy, lease and manage the property while all the other people have to do is deposit the rent check is false.
Some companies will sell a turnkey property that will be fully renovated to what looks like-new condition. You will need a property manager who understands how this works. Some companies only slap on a little paint, calling it turnkey. They have hopes that they will attract buyers from out of state.
How Can Investors Protect Themselves
People have to learn how to disregard the marketing in the message. The marketing is what investors have to stay alert to the most. People don’t want good marketers to manipulate them simply because they understand how psychology works. Beware of messages that say, “This is turnkey, and you won’t have to lift a finger.” In addition, investors should go to see the property before they buy it because of what it looks like in photos might be misleading in person.
What’s the bottom line with these investments? Although a may look like it has a cheap and reasonable price, chances are that there will be more work and time you will have to put in. If investors decide to pursue turn-key rental properties, they should always check to make sure that they will be receiving the best price.
4 Ways Landlords Can Improve Their Relationships With Their Tenants
Investing in a rental property can offer many benefits. Not only can it help provide a steady monthly income, but it can help build your net worth. However, by investing your time with rental properties, as a landlord, you will have to maintain it, and make it attractive for tenants, and find renters who can be trusted.
Often the relationship between landlord and tenant is poor and strained. Talk to any landlord and they are bound to share a tenant horror story or two about an unruly renter. By establishing a more professional and positive relationship with your tenant, you’ll find that you will have less tenant horror stories to share. The following are four ways that landlords can improve their relationships with their tenants.
Often, tenants are afraid to contact their landlord about issues they are experiencing. Sometimes tenants don’t tell their landlords about repairs until the problem worsens or is out of control. Tenants are afraid of asking for help because they don’t want to bother the landlord or are afraid. Landlords should be both supportive and approachable to ensure that their tenants feel comfortable calling in their time of need.
Be An Effective Communicator
A good line of communication is essential to solving many rental problems. Tenants should have an understanding of why something is happening and be given proper notice for anything that may be disruptive. By landlords providing the most up-to-date information, the tenant will be more willing to work with the landlord rather than against.
Be Hands On
When you lease your property, you must be hands on. Often landlords will want to have rent out their property but make little repairs to the home. You should help your tenant feel important by going out of the way to make improvements. Not only will this make your tenants happy, but it will keep your resale value high.
One of the most important things that any landlord can remember is that tenants are people too. Sometimes it can be easy to forget that your tenants are people with feelings and not just a monthly profit. As a landlord, you have a direct impact on the social and emotional environment for other people. That being said, treat your tenants with the same support and respect that you would want.
While your rental property can bring you in a nice passive income, it’s always a good idea as a property owner to reevaluate your property from time to time. Even though you can make money every month on your rental property, there are certain times when it might be more feasible for you to simply sell the property.
- When The Money You Invested Could Be Earning More Elsewhere
While you can’t predict the future, you can make an educated guess of how the real estate market will be by evaluating the present. If your rental property is located in a location with a dying industry, then it might be time to sell and reinvest elsewhere where you’ll be able to earn more in the future.
- When You Need Cash Now
If you need cash now or in the foreseeable future, you might want to consider liquidating your rental property. For instance, if you’ve had to undergo a major medical procedure or your need to fund your child’s tuition, then you might need to go ahead and cash out your rental property to get the funds you need.
- When You Could Get a Significant Tax Benefit
Tax laws are always changing, so it’s important for you to stay up on the latest. If you could realize a significant tax benefit from selling your rental property, then it might pay off more for you to do so than it would for you to keep the property. For instance, under Section 1031, you could avoid paying capital gains taxes when you sell your rental property so long as you buy another one in the next 180 days.
- When The Property Is Draining You
Sometimes you need to sell your rental property simply because it is draining you to upkeep it. If you’re ready to retire, for instance, you might not be up for all the property management and maintenance required to run a rental property. You could simply sell and cash out, or if you still want to keep earning the money from rents, you might want to consider automating as many tasks as possible and turning the rest over to a property management service.
Knowing when to buy and sell can be tricky parts of the real estate. If you already own rental property, the above situations can help you know when to sell.