Owning a residential or commercial investment property can be a great way to make money. Like most business opportunities, however, it’s not always as easy as it seems. There are a lot of details and moving parts involved in order to do it successfully—and profitably. Let’s look at some of the most common mistakes Seattle-area investment property owners make—mistakes that cost them money in the long run.
Related Reading: 7 Common Problems Landlords Face
Underestimating the Amount of Time and Effort Involved
Some people purchase investment properties in order to make money. Others may inherit them and have an idea that they can make a profit. In either case, the people in possession of an investment property often underestimate how involved they’ll need to be to successfully turn a profit. There may be physical work that needs to be done in order to get a good lease price. They’ll need to market the property (to the right people at the right price). They’ll have to maintain the property and make sure everything is in working order. And, of course, they’ll actually have to collect the rent. All of that takes time—and knowledge/skills. It’s not a one-hour a week requirement.
Paying Too Much or Too Little for Materials or Services
If you’re responsible for the maintenance of an investment property, you need to know where to find the right services and materials to keep things in top shape. If you don’t have access to the right labor and materials, you can pay more than you need to (which cuts into your profits). If you spend too little, you may not get the quality and reliability you need. That means fixing things over again (which also eats away at your profits).
Inadequate Marketing of Vacant Properties
Simply having a property (even a really good one) doesn’t guarantee that you’ll be able to lease it. And it doesn’t guarantee that you’ll get the best price for it. It’s important to know the market in which you’re leasing and to be able to get your property in front of the right audience effectively.
Legal Issues and Liability
There are legal issues and liabilities that come with owning an investment property. You’ll need to make sure any lease you execute adequately covers your liabilities. Making a mistake there can result in costly legal fees. Another mistake many owners make is assuming that once the lease is signed, everything will operate smoothly. What happens if your tenant doesn’t pay the rent? Will you be prepared to handle that?
No Systems for Staying on Top of Property
Commercial and residential properties don’t take care of themselves. Often the people that are looking to make money from this kind of a property don’t have a plan in place to monitor the property for needed repairs—or make those repairs. They also often overlook the need for systems to collect rent and manage repair costs.
A quality, full-service property management company addresses all of these issues—and more to ensure that your property generates the right kind of income now and into the future—without consuming more or your time and resources than is necessary. Click here for a look at the comprehensive services Powell Property Management provides.
Choosing the Wrong Management Company
Many investment property owners do recognize that managing a property profitably is a bigger job than they want to handle on their own. Unfortunately, many of them aren’t as careful as they should be when it comes to selecting the right management company. Click here for a free download of our 10 Questions to Ask Your Property Management guide. It will guide you through important questions to ask before making this important decision.
Who You Choose to Manage Your Property Matters
Powell Property Management is a division of Powell Homes, Inc., the oldest homebuilder in Seattle. We’ve built entire communities of single-family homes—and we’ve also created and managed a number of leading retirement home properties and campuses for several decades in the Puget Sound area. We understand building—and what it takes to maintain quality buildings. We also know the area and how to reach the local market. And we have the financial stability and connections to local services to ensure that your property will be well taken care of.
We can help you avoid the common mistakes that Seattle-area investment property owners make—so that your investment property generates the kind of income you’re hoping for—without generating undue stress and costs. It starts by asking the right questions.