Most real estate investors speculate, buy and then hire a property management company to oversee their real estate investment. This can be a costly mistake when the property an investor puts their money into turns into a real life money pit. Real estate agents will sell their clients on buying the “right property” in the “right location” as this is one of the most influential factors in determining a rental property’s value. However, what if the “right property” is actually the “wrong property”?
One of the most costly mistakes any real estate investor can make is buying a property that costs more to repair than initially anticipated. To avoid this costly mistake real estate investors should hire a property management company with extensive experience in construction and the real estate market in the area they’re looking to invest. In addition to advising on renovation and construction costs, an experienced property manager can advise clients on their potential rental income. It’s one thing to have an “idea” of what one can get in terms of rent for a real estate investment, and a totally different thing to get a real hard number that you can bank on collecting each month from a viable tenant.
Property management companies have a much better idea of the rental market they serve than most people. Average rental rates, which you can easily obtain online may vary widely, and one high-priced rental can seriously skew the market average. It’s always best to consult a property management professional prior to purchasing a rental investment property to obtain a “real-life” assessment of your investment’s potential.
At C.A.B. Group we often sign management contracts with real estate investors prior to them finalizing the purchase of their rental investment property. “There have been many instances where we’ve worked with clients and advised them to not move forward with investment properties that would have been lucrative to us, but unprofitable to them”, says the Vice President of C.A.B. Group, LLC. “Our job is to look out for our clients’ best interests, and we treat their rental portfolios like our own. This is what we’ve built our business on and we wouldn’t be here if we did business any differently”, he adds.
It’s that kind of management style that makes it immensely worthwhile for prospective, and practiced, real estate investors to consult an experienced property management company in their market prior to purchasing a rental property. It’s best to know exactly what you’re dealing with, before you’re dealing with a real life nightmare.