We all know that investing in real estate is a great way to generate passive income and build a long-term investment portfolio for building wealth and retirement. In fact, we're experts in this particular strategy! But what about other strategies and tactics to earn even more passive income throughout your life?
ROI is one of those buzz words in real estate investment. People say it all the time but no one really seems to know what it means or how to actually measure it, do they? ROI, or return-on-investment, can generally be summed up as the profitability of any given investment.
So you want to learn a little more about cash flow real estate before you take the big plunge. It can be hard to know what to think about all of the information available online about real estate investing and rental properties for sale. What is reliable? What is too good to be true?
Dealing with MaintenanceMaintenance is arguably the most intrusive. This is due to the nature of maintenance, which is a twofold obligation. Preventative and ongoing maintenance can be scheduled and executed by an individual or outsourced. This requires either setting time aside to do the maintenance or time working with the provider to schedule maintenance, ensuring the maintenance has been completed correctly and in a timely manner, then tracking and processing the accounting; be it to yourself or a provider. But no matter how efficient your preventative maintenance plan and accounting procedures, the second maintenance obligation is unavoidable. Emergency maintenance can surface for any property at any time. A good preventative maintenance plan can mitigate some of this, but nothing can keep lightening from blowing out a breaker panel, or a hailstorm from damaging siding. The tragic flooding in Memphis, TN in 2010 illustrate this point in striking detail. Having a great property management team on your side to keep you informed of the condition of your property and alert you to any possible problems is another part of that preventative maintenance plan. The flooding did not effect a single investment property of Memphis Invest clients, but they were kept up to date and aware of the conditions daily and that updating meant a great deal to clients in far away locations.
Managing TenantsTenants offer another opportunity for your investment properties to encroach on the normal course of your life. Keeping property occupied is an obstacle course not for the faint of heart. Placing ads, showing the property, doing background checks on potential tenants, keeping rental agreements current to ever-changing laws, and intelligently handling deposits are some of the initial burdens. This doesn't even take into account inspections at the end of the rental terms, hiring a cleaning crew, and returning deposits in part or whole. The monthly obligations build up quietly and slice out bits of time in small increments. Collecting rent, applying late fees as necessary, and depositing checks are unavoidable necessities for investment properties. But that doesn't mean it has to be your time that is consumed in getting these things done. Still more unfortunate circumstances occasionally arise such as eviction, removal of possessions, or the untimely demise of an otherwise perfect tenant.
Time and Property ManagementWhat has been described here is somewhat minimal in that it does little more than keep investment properties profitable. There are other opportunity costs in doing business as described above. For example, if your time is spent keeping existing properties profitable the opportunity cost is that there is no time to expand holdings, and therefore, no time to expand wealth. Additionally, this situation implies a physical limit as to how many investment properties that can be owned and maintained. The problems may seem exasperating, but the solution is simple: engage a real estate investing company such as Memphis Invest to relieve you of these obligations so you can better pursue your lifestyle goals such as building wealth and spending more time with family. Image credit: bizior
Planning for Success Takes Preparation and Time
Real Estate investors should treat their investment properties just like a business and with every business there needs to be time set aside for planning. The entire staff of MemphisInvest.com came together last week to present our plans for 2012 and the owners presented our plan to the staff of new programs, new cities, new hires, new promotions and the exact steps we were going to implement to grow over 60% for the second year in a row! Spending five days together was fantastic for the entire team even though it really shook up our normal routines. Planning for success and sharing as well as involving the entire team was by far the best thing we could have done to start 2012 with a bang!
Real estate is being added to the investment portfolios of Americans and more are looking for real estate to provide a passive income stream in their retirement years.
Real estate investing sometimes gets a bad rap from investment advisers. They often prefer REIT's and other supposed easier forms of investing in real estate because it's easy for them to track and control their clients portfolios. I don't begrudge them for that attitude, I just think it short changes an investor and eliminates a very powerful source of income when investors will need it most...retirement.