By Christopher M. Leporini, REALTOR® Magazine
One of the first rules of investing is “invest in what you know,” and real estate practitioners are heeding that advice. According to the 2001 NATIONAL ASSOCIATION OF REALTORS Member Profile, 39 percent of REALTORS own rental property as part of their investment strategy. If you aren’t among these practitioners already, maybe you should join them. Real estate investment offers rewards for both long- and short-term investors, says prolific real estate author Robert Irwin. His latest book, Buy, Rent, and Sell: How to Profit by Investing in Residential Real Estate (McGraw-Hill Professional Publishing, 2001.$14.95.) offers an introduction to selecting, maintaining, and profiting from a real estate investment. The book is a follow-up to his 1991 book Buy, Rent, and Hold.
Experienced real estate investors will find little new, but novice investors can benefit from the book’s concise explanations and easy-to-understand tips, even if they have real estate experience.
The book is divided into four parts. The first, “Make Your Profit When You Buy” deals with strategies for evaluating and buying a property. In addition to tips on analyzing property values, the section devotes chapters to finding underpriced properties in changing neighborhoods, at foreclosure sales, and through government repossessions. The second section, “Multiply Your Cash” concentrates on the financial aspects of investing. The author provides an overview of securing a mortgage for investment property—and suggests some creative financing techniques if you’re cash strapped.
“Renting in the Real World” advises you on how to select good tenants and hold up your end of the landlord bargain. Several of his tips, such as renting for less than the going rates, may seem contrary to professional real estate practice, but may be useful for the fledgling owner. Finally, “Selling for Profit” leads you through how to unload your property without getting burned by taxes.
Real estate professionals will probably find the first half of the books less beneficial than the second. It isn’t that the first half doesn’t contain valuable information, but a real estate salesperson isn’t as likely to need tips on making offers that get accepted as the lay investor would be. Still, you might want to glance through Part 1 as a quick refresher course, especially if you aren’t overly familiar with the concept of flipping—quickly turning over properties for profit.
If you are more interested in establishing a long-term revenue stream for your retirement or your children’s college, “Renting in the Real World” is probably the most beneficial part of the book for you. The section outlines what responsibilities landlords hold, as well as how to select tenants and properties that will make successful rentals. make your investment worthwhile. Perhaps the section’s best advice for the real estate professional turned landlord is to remember that renting is a business. Set a friendly, yet business-like tone with your tenants, advises Irwin. Many landlords, afraid of being the bad guy, accept late rents and provide unreasonable services. Make it clear that you will fulfill you obligations, and you expect your tenants to do the same. Other tips include:
- Know who you’re renting to. Study tenants’ previous rental behavior to weed out chronically bad tenants.
- Don’t try to avoid children or pets. Welcome families into your property. The potential damage children and pets can cause discourage many landlords, but parents often make reliable tenants.
- Don’t delay fixing a problem. Address tenants’ complaints promptly. Leaky toilets, plugged drains, and broken heaters are your responsibility and will only get worse if ignored.
More than a third of real estate professionals are making money in investing in real estate; maybe you should be, too. Buy, Rent, and Sell sets you on the path from real estate salesperson to real estate tycoon.