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There\u2019s no doubt about it\u2026the world around us is becoming more and more expensive. Electricians, plumbers, landscapers, handymen\u2026you name it, if you need them to help with your property, it\u2019s going to cost more than it did just a couple years ago. D-I-Y? Home Depot and Lowe\u2019s are gonna hit you harder too. With increased interest rates, even money itself is more expensive!\u00a0 With that in mind, it\u2019s easy to get stuck in the up-front costs and lose sight of the most effective strategy there is: staying focused on long term results and remembering the number one reason why real estate investment is so attractive.<\/p>\n
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A large reason many of us are pulled toward real estate investment and rental properties in general rather than other means of investment is the prospect of pocketing a couple bucks at the end of each month. To compare to alternatively investing in stocks, rental property is more likely to provide you with a handsome dividend every time the rents come in. And if that\u2019s what gets your dopamine going, the impact of the aforementioned increase in costs is really going to weigh on you.<\/p>\n
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The secret is to think of monthly gains as a bonus and instead focus on the greatest advantage that rental properties provide for landlords: the opportunity to have someone else pay your mortgage!<\/strong><\/p>\n \u00a0<\/p>\n As long as your rental units are occupied and generating rent, you\u2019re winning, provided you were wise in your purchase\u2026but that\u2019s a whole nother story. The point is that if you\u2019ve got a 4 family home and it generates $48,000 in revenue for the year, you\u2019re in great shape if that total covers your mortgage, taxes, insurance, and management expenses (mostly in the form of maintenance). Let\u2019s say those costs equalled $48,000 and your profit was zero. You weren\u2019t able to pocket anything additional and you weren\u2019t able to build up any reserves, but nonetheless, you paid off a year\u2019s worth of your mortgage without spending any of your own money!!!<\/strong><\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n If you buy into that logic, you\u2019ll be more comfortable spending money to take care of maintenance issues as they arise, which is also integral to any successful investment strategy. By approaching the extra money that might come in each month as a bonus, not a goal or necessity, you\u2019re more likely to add value to your property over the years. In this way, you\u2019re simultaneously improving the quality of your asset while it is being paid off. <\/strong>And how do you pay for these expenses? With the help (or entirety\u2026depending what your interest rates look like) of money collected from tenants. Another added benefit of owning rental property is that rental income can help finance your maintenance\u2026and these expenses can be written off against your income.<\/p>\n \u00a0<\/p>\n And then\u2026over time, your maintenance costs decrease because you\u2019ve been proactive\u2026and then the odds of collecting that monthly dividend increase further.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n The only way this approach doesn\u2019t work is if your investment wasn\u2019t a great one. The market has been pretty bad for several years now and it\u2019s easy for investors to settle as improvement hides the fact that prices and interest rates are still above what is ideal. If you\u2019re paying the bank 7.5% interest rates, there\u2019s less for you to put toward the property\u2026but it\u2019s still important you do so. Even if you end up spending a bit of your money each year, your tenants are still paying most of your mortgage and expenses. You just need a bit more capital of your own to cover the difference.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Nexus Property Management\u00ae has been partnering with rental property owners for over 11 years and now has franchise offices in four states. We are committed to the principles that helped our Rhode Island office grow rapidly and the most essential is the focus on long term results.\u00a0 Our clients come to us with varying degrees of experience and the vast majority become effective investors in no time. Reach out to the Nexus team closest to you<\/a>.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Mick Lefort is the General Manager of Nexus’ New Haven County Franchise Office and the Vice President of Operations for Nexus Property Management\u00ae, a National Property Management Franchise<\/a>\u00a0that manages all types of rental property from single family homes or condos\u00a0to large apartment buildings and complexes.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Your Property,\u00a0MANAGED<\/strong>\u00ae<\/p>\n The Real Estate Investing Authority\u00ae<\/p>\n Connecting You To Better Living\u00ae<\/p>\n \u00a0<\/p>\n You Could Own A Nexus Property Management\u00ae Office For Less Than You Think!\u00a0<\/strong><\/p>\nLEARN MORE: <\/em>CHANGE THE WAY YOU LOOK AT MAINTENANCE AS A LANDLORD<\/em><\/a><\/h4>\n
A DEEPER DIVE INTO LONG TERM FOCUS<\/strong><\/h3>\n
LEARN MORE: <\/em>TOP 3 MISTAKES OWNERS MAKE WHEN INVESTING IN RENTAL PROPERTY<\/em><\/a><\/h4>\n
THE ONLY WAY THIS DOESN\u2019T MAKE SENSE:<\/strong><\/h3>\n
LEARN MORE: <\/em>BUYING A RENTAL PROPERTY DOESN\u2019T MEAN YOU\u2019LL MAKE MONEY!<\/em><\/a><\/h4>\n
CONCLUSION AND NEXT STEPS:<\/strong><\/h3>\n
MOST POPULAR NEXUS ARTICLES THIS WEEK:<\/strong><\/h3>\n
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TENANTS ARE BOTH YOUR CUSTOMER AND YOUR BOSS<\/a><\/h4>\n<\/li>\n
THE 3 PROS AND CONS OR HIRING A PROPERTY MANAGEMENT COMPANY<\/a><\/h4>\n<\/li>\n
THERE ARE THREE DIFFERENT KINDS OF PROPERTY MANAGEMENT COMPANIES TO CHOOSE FROM<\/a><\/h4>\n<\/li>\n<\/ol>\n