Speed is critical for today’s real estate investors. Although many don’t realize it, speed is the most important element for maximizing returns in many parts of the real estate investment process. This is especially true when it comes to acquiring and enjoying cash flow from rental properties. So how does speed play in as a factor? How important is it really? What practices and tactics can real estate investors adopt to enhance speed and drive premium investment returns?
Speed in Rental Property Acquisitions
Perhaps the most important area in which speed comes into play for real estate investors today is in making purchase offers and acquisitions. Getting faster at making offers and being able to close faster means more attractive offers to sellers and being able to beat the competition. This not only helps lock up more great deals, but can also mean locking in far better discounts, profit margins and wealth. This is still important, even if planning to hold properties for the long term. Being able to close faster also means eliminating the risk that deals will fall apart or sellers will back out.
Speed in Rehabbing
It is truly incredible to witness the sluggish speeds at which some rental property investors take to fix up and get properties rent ready. This would never fly on a reality TV show. Just because properties will be held long term doesn’t mean that landlords should be dragging their feet on repairs and renovations. Every day is money. It is either money coming in, or money bleeding out.
Quality repairs are smart. Yet, this shouldn’t be an excuse for slacking. Similarly, many take the weekend warrior approach and attempt to DIY everything to save money, only to lose out on months of rent and often have to go back and redo work. In some cases, styles and trends are already way out of date by the time landlords ever get around to showing.
None of the above really matters at all if those marketing a property are slow at responding to inquiries from prospective renters or end buyers. Those that are serious will keep calling down the list of available properties until they get someone and can take immediate action.
Too Picky about Tenants
Some real estate investors are way too picky about tenants. Screening is smart. Yet, some take application process to extremes, which just reduce the likelihood they’ll land the best tenants. In some areas, it may be possible to land wealthy, 700 credit score renters all day long. In others, there may not be a tenant with a credit score over 600 for miles. Wake up to the reality of the local market. Better tenants are better, but it may not always be worth waiting for. Do the math on leaving a unit vacant for 6 months versus immediate occupancy. Quality could become irrelevant after 6 to 9 months of vacancy.
Some bizarre rental pricing is creeping in to markets. Everyone hearing about how fast rents are going up, and are trying to cash in. Sadly, many landlords are going off ‘asking’ versus actual local rents, which can kill them when making acquisitions). Even the difference of $1,200 vs. $800 a unit on a duplex is a big difference. Imagine a four-plex. If units aren’t already occupied and at what the Realtor claims are market rents, find out why.
Do your due diligence. It’s unlikely you’ll get 2,500 for your home from a great tenant (plus first, last and security) when competing properties are asking $800 for the same quality. Make it easier to move in, and maybe even offer rent to own.