How to Look at buying income real estate


Property Management is crucial to making sure your property produces the highest rate of return. Over the last 12 years I have studied and looked at why property management companies are successful and why most are not.

When you are looking at buying any income property you should put property management at the front of the line to have before you buy a property.

Property Management is only as good as the property you purchase. Let me explain.

There are good and bad areas in every city to purchase real estate in. You have to get real estate that makes since for your portfolio and you management teams. When a less than nice home is purchased that has low rents and large tenant turn around, that spells disaster for you and your management.

Let's face it low rents mean low commissions and attracts tenants that may not pay be long term tenants. That means more work for the management and less money for you. You also get almost no equity and home prices are staying the same or going down. In time the property becomes something you need to sell quickly.

When you buy low rent real estate there is no money in it for anyone. So getting agents and contractors out to keep the home producing income is very difficult. I have seen rents at $450 a month on some duplex's in not great areas for rent.

$450 commission is not anything for an agent who pays their broker up to 50% of their gross commissions, and has to spend time chasing the potential tenant. If the agent splits that with another agent it's only a $225 gross commission.

Let's look at the properties we purchase. Our rents average $1100 a month and the homes are in good areas. That does two things you make money and the management can get quality long term tenants.

Homes we purchase also tend to grow in equity over a period of time. When you want to sell the home you can do that and make money. I just had that happen and my client made good money on the property.

The real estate you purchase will be the deciding factor if your going to have a good income property or not. Choosing it correctly can make all the difference in the world!

Need good Property Management and Real Estate call me 216-703-5740 Fathom Realty. I can help get it done!

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