Three Tips for Successful Residential Investing

Apartments come in differentsizes, with different amenities andsubstantially different income andcommitment levels. Deciding

what level of commitment you want to havewith your property should be a primaryconsideration before leaping into an investment.

Following are three things to think about when deciding what kind of commitment you are

going to make with your residential investment property:

Size of the Investment

Starting with smaller investmentssuch as duplexes will ease you intobeing a landlord. The smaller scalemeans less time will be committedto dealing with tenant issues and

building maintenance. There is a directrelationship between the size of the propertyand the size of your financial and personalcommitment.

Management of the Property

The bigger the property, the largerthe issues. A duplex may require afew hours a month to keep up thegrounds and deal with tenantproblems. A 12-plex, on the other

hand, has 10 more units, larger heating and coolingsystems and bigger electrical infrastructure, and it isjust a bigger physical structure. Bigger buildingshave potential for larger problems. This canbe particularly daunting for new investors, andproperty management may be the only option ifyour investment criterion does not meet yourpersonal experience and expertise.

Property managers can offer the best of bothworlds for some residential investors.Arrangements can be made to market and fillvacancies, deal with delinquent tenants andaddress building maintenance needs. Varyingcosts are associated with property managementcompanies. They come in a variety of sizes andtypes and can encompass groundsmaintenance, building upgrades, tenant issues,marketing programs and tenancy retentionprograms.

The more inclusive the agreement, the more itwill cost. However, the higher cost means lesscommitment from you and may enable you tohave a larger investment level than you would ifyou were going to manage the property yourself.

Budget

Work within your budget. A lot offirst-time residential investorsovercommit themselves financiallyand don’t leave a reserve fund. This

leads to stressed landlords and frustrated tenantsas building issues mount and fail to be repaired ina timely fashion.

A reserve fund is essential if you’re investing inresidential real estate. This reserve fund shouldbe established to deal with the unexpected.With any business, you need to have a plan todeal with the unexpected. You don’t want to bethat person looking blankly and saying, “I neversaw this coming.”

Whether you are a new or seasoned residentialinvestor, deciding how much time, energy andcapital you wish to invest is critical to the long-term success of your investment. Decisions needto be made about the size of the property, theinvestment budget and reserve fund, andwhether you are going to use a propertymanagement company. If you have honestlyanswered these questions, then you can buy aninvestment property that will provide you withyears of very positive returns.

Randy Bettwww.BetterGroupRealEstate.ca