A great property can have it all. It can have a nice porch, well groomed landscape, multiple bedrooms and curbside appeal. Even with all these amenities does not mean that a property can be a success. There are many things that affect the success of a property and could lead it down the pathway to failure. It's easy to stand back and criticize the faults of others until the same faults happen to you. Learning why two neighboring investment properties have a different ROI will help you understand how success is built. The price that you pay to own a property is more than a financial one. The investment of time and education that you make can all contribute to your success.
The economic area where a property is located will always be one factor in its success. A property that is in a stagnant economic area will likely be slow to recover if at all. At some point, monthly rental prices will need to be raised to compete with other prices in the neighborhood. If you have trouble renting property for its current price, raising the price will likely be a complete failure. You can be the greatest investor in the world and have a dead end property. A market research assessment is one way that you can use to determine the growth of a property over a period of years. Turning a property around always starts with the person that owns it.
A low tenant turnover is another contributor to property success. A turnkey property is so attractive to most people because it lets you profit almost immediately. Getting into real estate has many challenges and finding out if you can even rent your property can weaken the most energetic investor. A tenant that is attached to a turnkey property lease can lead to its success. There are no fees required for advertising the vacancy and no cleanup costs required because someone has trashed the home and left. Turnkey properties are how many people get started investing in houses.
The lack of management by the owner or by his or her appointed staff could be one reason a property is failing. Anyone can be an armchair manager and spot things that he or she could do better. When you first start out, you could be totally dependent on a property management company for advice. The tips that are given to you could be correct, but decisions made by the company could sink the potential of your investment property. Things like overzealous rent collection methods, scrimping on construction work and high management fees can eat away at your profit potential.
Hidden expenses and too high of a rent price can also contribute to property failure. Buying into a property always comes with the potential for errors and there is never a good time for problems to happen. Getting a home inspection as often as necessary can help uncover problems that could lead to expensive fixes. Paying attention to every detail in a home inspection, asking a lot of questions and getting outside investment advice can help reduce the risk of property failure. An investment property that is in decline might take a long time for you to sell if you decide to get out as a real estate investor.