2011 was a record year for real estate investment. According to a recent report from the National Association of Realtors, 1.23 million homes were purchased by investors last year, accounting for 27 percent of all existing home sales, the highest total percentage ever recorded. With home prices down 35% nationally, and reports indicating that foreclosures will continue to flood the market at the rate of roughly 800,000 to 1 million per year, new real estate investors are being minted in unprecedented numbers.
Unfortunately, not all of these newbie investors will succeed.
While common problems such as a lack of planning, unclear goals, and inadequate market research will always be contributing factors to nonexistent or negative profit margins for a certain percentage of real estate investors, a larger percentage will fall prey to what James McClelland, CEO and president of the single family home investment firm MACK Companies, calls the “Number one reason why people fail at real estate investing”—poor property management.
Many investors treat Murrieta property management “as an afterthought” and end up in over their heads when it comes to self-managing their rentals, McClelland states in the recent article “The Number One Reason Why Real Estate Investments Fail.” They choose problematic tenants, or, if they manage to find good tenants, find themselves unable to respond as quickly as they need to when things go wrong.
Reducing Investment Risks with Professional Murrieta & Temecula Property Management
While it’s tempting for first time investors to downplay the very real risks that come along with rental property ownership, there are several ways that a good investment on paper can quickly turn into an unprofitable venture in reality. Make-or-break factors include:
- Turnover and vacancy rates: The biggest factor in generating an acceptable profit margin on a single family rental house is simply keeping it rented. An average annual vacancy rate of more than 10% (or about 1 month per year) can often wipe out profits.
- Evictions: Without proven tenant-screening methods, first-time landlords often end up renting to unqualified tenants, which frequently ends up necessitating eviction proceedings. According to a recent survey conducted by All Property Management, the average evictions results in the equivalent of four months lost rent.
- Significant maintenance costs: Generally speaking, tenants are not as invested in the upkeep of their homes as they would be if they owned the property. This can result in small maintenance issues escalating into situations that require expensive repairs.
Knowing how to prevent these scenarios is where professional Murrieta & Temecula property managers like Benefit National Property Management come in. With even the smallest firms typically managing upwards of 100 properties at any given time, Murrieta property managers are experts, by necessity, at managing the risks associated with rental property ownership. They have proven methodologies for key aspects of rental management, such as tenant screening, rent collection, and handling routine and emergency maintenance. You can view some of the details at www.BenefitPropertyManagement.com or www.BenefitNational.com
Not only does Benefit National know how to reduce risks that something will go wrong with a rental property investment—if something does go wrong, they’ll handle it. From calling in contractors to handle maintenance issues to doing all the legwork involved in an eviction, a Murrieta property manager will handle any issues that arise, protecting the property owner’s time and money at every step.
Property Management Fees and ROI
For a more in depth look at Benefit National’s Flat Fee Murrieta and Temecula Property Management Services visit www.BenefitNational.com