What really makes the difference in profitable real estate investments versus those that fail to live up to their expectations?
It’s really about the difference between opportunities and execution.
Potential doesn’t mean much if the execution is fumbled.
We hear a lot about real estate being about location, or timing the markets, or more data. Yet, it really all comes down to how well a real estate investment is managed.
The best-looking real estate investments can often be ruined if the ball is dropped. While even mediocre looking opportunities can become highly profitable and outperform expectations in the right hands.
This execution can really be broken down into two major categories; property management and contractors.
Many things may fall under this category. Including onboarding new properties in your portfolio and disposing of properties. As well as navigating the legalities and regulations involved.
When it comes to income property investments, this role is vital in screening and placing tenants, rent collection, and maintenance coordination.
If the rent isn’t collected and repairs aren’t handled in a timely and professional manner, then a property will certainly underperform expectations.
Many aspire to provide property management services. Yet, executing well requires building relationships over the long term, conducting the volume of business for a long enough period of years to run into various issues and glitches, and staying on top of the legal side. These things simply take time, organization, and experience to master.
While this falls under property management, it is a critical factor by itself.
Good intentions, attractive presentations, and genius redevelopment plans mean nothing without a strong contractor team that is capable, diligent, hardworking, and loyal.
Without that, turn times will grow long and units can sit vacant for months or a year, with no income. While risks like squatters and changing market dynamics grow.
There are no shortcuts here. Mastering this critical part of profitable real estate investing requires building relationships with the best contractors over time. It means processes, training them, earning their trust and loyalty.
These are the two areas which frequently destroy the best-looking real estate investment opportunities. They can also make all the difference in turning around assets with issues.
In fact, evaluating the asset management in these categories is more important than any individual asset for them.