The Business of Being a Real Estate Investor

Successful real estate investing is more than just buying and selling. While you own the properties, you must manage them effectively if they are to continue to generate positive cash flow for you.

You could hire a property management company to handle this aspect for you, but don't do it at the start. No one manages property as well as the owner, because no one else has vested interest in it that the owner has. For the maximum return on your investment, manage your own  real estate at least until you accumulate a number of good properties and substantial cash flow.

Buy good reference books that deals with residential property management that could give you additional knowledge. You should also join a property managers' association. It will give you an opportunity to network with and learn from others. Because such associations have publications and programs that address common problems and serve as a resource for members' needs. You may also find this a good source for leads on properties you might be interested in purchasing.

The most important part of property management is to keep an eye on the property. Make sure tenants are keeping things up and no special maintenance needed. The idea is to prevent costly repair by correcting small problems before it does become big.

Keep your vacancy rate low by maintaining attractive exteriors, adding improvements based on tenants feedback if feasible, and setting fair rent value based on market. Ask for referrals on your existing tenants when vacancies occur and give a one time rent discount to existing tenants who bring in a qualified new tenant. Otherwise, post a For Rent sign  and consider placing an ad in the classified section of local news paper and even online resources.

Consider arranging for a resident manager to collect rents, show vacancies, and handle janitorial and landscape maintenance for a multi-unit building.

Every tenant should have a lease or a rental agreement.

Always maintain a cordial but strict business relationship with your clients.

Real estate is a business much like any other business, but it's different because it has significantly lower risk level. If you're thinking about going into business for yourself but you haven't quite made a decision, try small rental property. You'll have to do everything you would have to do in any kind of business, from management to marketing to record keeping, but on a small scale. That will give you the chance to get a feel for how you'll do in business for yourself. If you like it, you could either buy more property or another business of your choice. If you don't like it, you can sell the property, and you will have learned your lesson probably without having lost any money and in fact you'll profit on that educational experience. Is there any other fields that will pay you to get an education without any future obligation? And who knows, you might just be a little richer along the way.