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So you don't have to learn them the expensive way
Owner Education Lesson 3 of 4
These come up in almost every owner meeting I have. Most of them cost an owner real money before they learned it.
Here's an example I use. A $700,000 house in a market where it rents for about $2,500 a month is a beautiful home, but that's a lot of money sitting in one place for that rent. Sold, the same equity could buy something like a 10-unit building at $1,500 a unit: $15,000 a month in gross rent. Expenses go up too, but the long-term picture is completely different.
Remodeling makes the most sense when a place is rough and the work moves the rent a lot. Spend big on a house that's already nice and you usually get a small bump in rent for a lot of money, and your return goes down.
Roofs, furnaces, air conditioners and water heaters all wear out. The question is when, not if. Investors set money aside every month so a big repair is a line in the budget, not an emergency.
A bad tenant is real, and it's part of doing business. Investors worry more about liability, like a fair housing complaint, because that can cost far more than any damage a tenant does.
Either you manage the property or your property manager does. Investors agree on the limits up front, let the manager handle screening, leasing and maintenance, and only get the call when something is big.
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This is general education, not tax, legal or investment advice. Eclipse Property Management is a property management company, not a tax advisor, attorney or financial planner. Talk to a tax professional about your own situation.
