Monday, October 17, 2005

Profiting From 'Disillusioned Landlords'

This Canada East editorial sees some real estate buyers as being unprepared. "Part of the growing demand for properties also occurs from the real estate investor who is eager to invest in properties solely for personal economic gain. They see real estate solely as an investment, but beware of exactly what this investment entails."

"Real estate is a great asset to own, but take the time to understand what is involved in owning an income property. The truth is when you invest in a 'rental income property' you're really buying a business with all the responsibilities that it entails. These responsibilities include administration, reporting, hiring, and lots of paperwork, to mention a few."

"The industry tends to have two groups of players the professional property managers and the disillusioned landlords. The professional property managers have all the knowledge on what it takes to make this type of investment work. They know the values of the properties, they know what numbers make the investment work from cap rates, to required return on investment to make the deals work."

"Then there is the disillusioned landlord. These are they ones with minimum experience who don't do their homework and invest into a rental property usually for a short period of time (generally less then two years) and then scramble to sell off the mismanaged property for liquidation prices hoping in the end to minimize losses!"

"Some of the best deals the property managers ever buy are from the disillusioned landlords whose comments always seem to sound about the same 'there is a lot more work than I thought' or 'the business part always takes much more time than I first imagined.'"

"In fact some property managers tend to prosper merely from buying 'mismanaged properties' from this second group."


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