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Utilise Your Tenants

 

Every property investor will agree that without tenants you do not really have a property business.

Your tenants will pay the rent set by you. This rent will be used to pay for:

 Your mortgage repayments
 Recurring property maintenance
 Fixtures and furnishings in a furnished property

Any money left over will be used by the property investor for

 Advertising
 Finders fees for further property acquisitions
 Further acquisition financing costs
 Legal fees
 etc.

As you can see, there are numerous expenses here. To be successful, you need to treat property investing as a business and not just a hobby.

I know of a lot of people who have tried property investment only to find that their costs far exceed any income – this is certainly NOT the right way to run a successful business.

As with any business you need to look for ways to reduce costs or increase the income. Now the only way for you to increase the money coming in would be to increase the rent. This is not as easy as it may at first look.

If you were to increase the rent over and above the rent dictated by the market you may never be able to rent out your property. A tenant will only ever pay market rent unless your property is one of the best properties on the market and in an exclusive area where it is very difficult to find rented accommodation.

Unless your property meets the above two criteria, I would forget about increasing the rent. You must therefore focus on reducing costs.

One way to reduce costs is by making the best use of your tenants.

For example, you could ask your tenants to do a lot of the simple upgrading tasks on your property for you. I’ve often asked tenants to paint my properties for me! If I supply the paint in a colour that is agreeable to both myself and the tenant I find that they are only too happy to paint the house for me.

By painting the house, the tenants feel more involved in their property and also house proud; hence they often stay longer resulting in fewer voids.

I also make it clear to tenants that I am looking for other properties in their area. If they know of any vendors that may be looking to sell, please let me know. This is another way to find that elusive deal. I am happy to pay the tenant a finder’s fee for this service.

Finally, when a tenant decides to move on, I ask him/her if they know of anyone that might want to rent the same property. I normally ask them to put a notice up at their place of work or local pub.

Again, I will offer the tenant a small financial incentive if they are successful in finding me someone.

This financial incentive is far less than it would cost me to advertise the property, hence I’m saving money straightaway.

I’m sure you can probably think of a few more ways your tenants can help you run your business. The bottom line is that you must treat your tenants as an asset and help them help you grow your business.

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How To Successfully Buy Your First Investment Property

 

Once you have decided that you want to invest in property, you need to decide how to source your property at a good price. There are several methods that you can use to source property below market value. Three such methods are listed here.

The Internet

One of my favourite Property Mentor’s Dolf de Roos talks about the 100 – 1 rule (he calls it the 100:10:3:1 rule) in his book:

"Real Estate Riches" If you don’t have this book, I would highly recommend that you buy it. It’s one of my favourite ‘right-to-the-point’ books on real estate.

The 100-1 rule stipulates that if you were to look at 100 properties, you may end up buying one good deal! Property is very much a numbers game. The more you look at, the more chances you have of knowing exactly what it is you’re looking for, and henceforth finding your deal.

Not a day goes by when I’m not looking at property – if not physically, I will be analysing deals in the local property paper or on-line. I prefer on-line as I can literally analyze hundreds of deals in one sitting. If you’re not already familiar with the following websites, I would highly recommend you spend some time familiarizing with them:

If you are a beginner and are not sure of the type of property that would best meet your needs, it is definitely worth spending time doing research on the internet. You can also search for properties to let. This will allow you to understand rental values and help you to decide how much funding you will need in you purchase, as buy to let financing tends to be based on rental valuations.

Estate Agent

Regardless of what people say, I find estate agents to be a valuable resource when it comes to buying property. I have bought several below market value properties through estate agents.

By being persistent, and proving to an estate agent that you are a serious investor, you will have them ringing your phone of the hook with potential deals. However as with anything, you need to be careful that you are not receiving ‘dogs’ – and that the deals are indeed deals. Once you understand your market, this should be simple.

Get to know your local estate agents and get them to know you. Be persistent in your approach. Go around in person and speak to them. Use them to give you their opinions on any particular area. If you are serious about investing in property, you need to maintain regular contact with at least three good estate agents in your preferred area. Over time, as I have found, these agents will be worth their weight in gold!

Do Your Own Marketing. This is my preferred method of acquiring property. You could start off by advertising in your local newspaper.

Typical adverts might read:

"Properties wanted. Cash buyer waiting, any area considered"

"Repossessions stopped. Don’t wait for your house to be repossessed.
Ring now for an instant decision" TEST your adverts. What works in one location may not work in another area for any number of reasons ranging from social demographics to the type of newspaper you’re advertising in.

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