Non-Occupant Real Estate Owners Fall Into Two Major Categories. 1. Investors. and 2. Don’t Wanters. As a 30+ year observer of the markets, I have had considerable experience with both. In the late 1980’s, so called real estate gurus coined the term “Don’t Wanter” to describe a real estate owner who is holding a property hoping the price will increase so it can be sold. Seminar leaders held the opinion that the way to make an astute real estate purchase was to find “Don’t Wanters” who were sufficiently motivated to sell that they offered rock bottom prices or excellent terms to allow an investor to buy below market. I observed many owners who sold at the bottom of the market benefiting buyers who were able to make large profits over a relatively short holding period. If you are a Don’t Wanter, it is in your best interest to do what it takes to become a true investor. Here are some tips to help you along.
- Manage Your Fears. In most cases, fear is your biggest enemy. The best way to manage your fears is to make sure you understand the risk and reward potential of your investment. I remember a “Don’t Wanter” in 1989 who told me he wanted to sell his property at whatever price it would bring in order to eliminate the $100 monthly negative cash flow. When I showed him that he was getting $120 monthly reduction in principal on his mortgage, he informed me that he didn’t care. It was the current expense that bothered him most. He sold the property at a huge loss enabling the purchaser to reap a $25,000 gain in three years. Let us analyze your investment and give you a true picture of the investment potential of your property before you sell at a bargain price.
- Let Someone Else Deal With The Day-to Day Management. Since we manage properties, this remark may seem self serving; however, most don’t wanters are weary of the hassles of dealing with maintenance, delinquent rents, and neighbor complaints. The services of a competent company to handle these issues are often worth the nominal cost.
- Deal With The Market As it Is, Not What You Want It To Be. Many owners want to set their rent levels based on their own needs such as home owner association dues, real estate taxes, and mortgage payments. While these are important, they are not relative to the amount of rent the market will bear. While you may be successful in getting above market rents, it may not be worth the cost. Setting the rents a little lower may give you a larger pool of tenant applicants and allow you to select more responsible occupants which will save you money and headaches in the long run.
- Keep Your Property In Good Condition. You can often rent a property that needs to be cleaned up or renovated but the kind of tenants that will accept a substandard property is likely to be the type to leave it in even worse condition when they leave.
These are but a few tips to allow you to optimize the performance of your property. More will follow. It is our goal to help you with all aspects of your investment, not just collecting rents and arranging maintenance. Call us with any questions you have and take advantage of our experience with real estate investments collected over several market cycles.