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The Ultimate Guide to Out of State Real Estate Investing

Investing in real estate is one of the most secure additions for a financial portfolio. However, real estate isn’t cheap. It requires a substantial upfront investment. Depending on where you live, nearby houses might not be within your budget. 

However, that doesn’t need to keep you out of the real estate game completely. By investing out of state, you can find a lucrative investment property that fits your budget and offers other appealing advantages.

In this comprehensive guide, you’ll learn everything you need to know about investing in out of state real estate. 

The Benefits of Out of State Real Estate Investing

There are many benefits to investing in property out of state. When done right, you can find:

  • More affordable opportunities
  • Better ROI
  • Diverse properties
  • More effective landlord laws 

Also, consider commercial vs residential real estate before investing. Each has its own set of benefits, however, you might find that residential real estate is easier to manage when it comes to out of state investing. 

More Affordable Housing Options

First and foremost, out of state investing helps you find a property you can afford. There are many different types of residential property options, all of which vary by location. By choosing your investment location wisely, you can buy a beautiful home without steep property taxes or exorbitant home prices standing in your way. 

Choose an Up-And-Coming Area

Not all affordable areas are of equal value. Focus on finding an up-and-coming neighborhood. You can spot a promising area by its:

  • Growing employment opportunities
  • Developing local amenities
  • Good school districts

As more people flock to these areas, home prices will rise, and your investment will appreciate.  

Better Return on Investment (ROI)

ROI is a crucial consideration of any investment. 

Expensive investment properties generally offer lower returns. In exchange, their pricing is more stable. When home prices are already quite high, there’s not much room for them to spike upward—but there’s also not much chance they’ll suddenly dip either.  

The rate that real estate appreciates is largely dependent on a housing market’s local income-to-home-price ratio. If the home prices are 10 times that of the average income, they’re probably maxed out already. Conversely, if they’re only 2 to 4 times as high, there’s plenty of room for them to appreciate in the coming years. 

Portfolio Diversification

Every individual real estate investment is vulnerable to unique risks and market volatility. By diversifying your investments, you mitigate this risk. If your local real estate market crashes, you can take some relief in knowing your investment property is not impacted, and vice versa. 

Better Landlord Laws

Housing prices and market conditions aren’t the only things that matter to real estate investing. If you intend to rent out your property, landlord-tenant laws are relevant too.

Some states and counties have less favorable laws than others. For instance, some areas mandate:

  • Eviction restrictions
  • Frequent inspections
  • Rent control
  • Airbnb limitations

These laws are put in place to protect tenants, but they end up burdening landlords. However, not every state or county has these laws. By choosing to invest in a landlord-friendly area, you can save yourself a ton of money and hassle. 

The Risks of Out of State Real Estate Investing

While investing in faraway real estate has its upsides, there are a few notable drawbacks to consider as well. 

Long-Distance Management

Long-distance relationships are hard, even in the world of real estate. It can be challenging to renovate a property, screen tenants, and supervise a building from afar. 

You may have to travel to the rental property every so often to check up on things. Depending on the distance and your schedule, this can be costly and inconvenient. 

Fortunately, there is an easy solution. Just hire a local property management company like Great Jones. Providing services for property management in Gainesville, FL to property management in St. Louis, we’ll take care of everything, so you can stay in your home state and focus on other matters. 

An Unfamiliar Market

When you invest out of state, you’re essentially going in blind. You don’t know the area intimately. You’re probably unfamiliar with the:

  • Best neighborhoods
  • Demographic trends
  • Local politics
  • Local laws

Fortunately, you can get a sense of these elements by doing some research, visiting the area, and consulting with local real estate professionals. 

Improper Home Value Assumptions

Home valuation is complex. While comparing a house with neighborhood comps can help, it doesn’t give you the full picture. As a real estate investor, you need to take into consideration the following factors:

  • Nearby employment opportunities
  • Proximity to shopping and entertainment
  • School district quality
  • Home size, age, and condition
  • Local real estate market volatility

Keep in mind that online listings only show you so much. Not to mention, these listings are often misleading. They’re crafted to show a property in the best light possible. Without seeing a home in person, you have no idea if it’s located in a noisy area or has an off-putting smell. 

Furthermore, most homes require a few renovations and repairs. When you live far away, you’re at the mercy of your contractor. You run the risk of getting taken advantage of and overcharged.

How to Invest in Out of State Real Estate Rental Properties

While out of state investing has its challenges, the upsides still make it an attractive option for many people. If you’re one of them, you may be eager to get started. 

So how can you invest out of state? Here are a few tips. 

#1 Find Your Ideal Neighborhood

With the entire country as your oyster, the first step to investing out of state is narrowing down your options. Start by researching a few areas that pique your interest or the best places to buy rental property

Next, evaluate each area on the following qualifications: 

  • Proximity to a big city – Big cities offer a wide array of employment opportunities, shopping centers, and recreational activities. By choosing a property that’s close to a big city, you’ll enjoy a large market of potential tenants.
  • Market trends – Monitor the housing market trends in the area. Are the home prices going up? How fast are they rising? Is there any concerning volatility? What are the average rent prices? By analyzing this data, you’ll get a better idea of whether this area has potential. 
  • Vacancy rates – Another indicator of a desirable area is a low vacancy rate. This shows that residents enjoy the area. In turn, you can expect to maintain a low vacancy property too, once you get yours up and running. 
  • Favorable landlord-tenant laws – In high-price markets, local governments often employ rent control and eviction restrictions to protect tenants. As you can imagine, these hinder the profitability of your property. Thus, make sure to review an area’s landlord laws ahead of time.

#2 Establish a Trustworthy Team of Local Professionals

Once you’ve decided where you want to invest, it’s time to hire a team of local real estate professionals. 

Take time and review each person’s reviews and referrals. Ask other investors if they have recommendations. You want to ensure that you can trust your team since they’ll be making a lot of decisions on your behalf. 

Find a Realtor

Local realtors have valuable expertise in their area’s housing market. Once you find a realtor you can trust, have them send over a list of properties that meet your specifications.

Find a Contractor

Once you’ve chosen a property, you’ll need to hire a contractor to implement your desired renovations. As with your real estate agent, you need to select a contractor you can trust. This way, you can rely on them to complete the job on time and within budget. 

Finding a reliable contractor is crucial to any real estate investment project, but even more so when you’re a real estate investor operating out of state. Before partnering up with a contractor, review their licensure and referrals. Also, make sure they are bonded. This way, you’ll be protected if they don’t uphold their end of the bargain. 

#4 Create an In-State LLC

If you’re using your property as a rental, it’s beneficial to create an in-state LLC. This will provide you with tax advantages and limit your personal liability. 

Creating an LLC is easy. Once you review your state’s requirements, you can do it all online. While you’re at it, consider opening a separate business bank account for your property’s income and expenditures. This will separate your personal finances and offer a degree of protection should any deal go south.

#5 Choose a Property Management Company

Once you’ve gone through the other steps for investing in an out of state property, you have one last decision to make: self-management or outsourced professional management?

Outsourcing your property management can drastically simplify your life, especially if your property is located far away or if you simply don’t have the time to do it yourself.   

Benefits of Outsourcing Property Management

By choosing to outsource, the following tasks will be placed in the hands of a professional management team:

  • Adhering to local laws
  • Managing contractors as they implement renovations
  • Performing background checks and credit checks on tenants
  • Providing 24/7 resident support
  • Collecting rent and handling evictions
  • Conducting property inspections

Outsourcing saves you the trouble of doing it yourself and ensures your rental property is run well. 

Great Jones: Professional Out of State Real Estate Management 

Now that you know how to invest in real estate out of state, are you ready for the challenge? 

It’s a great way to bolster your investment portfolio and take advantage of diverse opportunities. To make your investment journey a little easier, reach out to the property management professionals at Great Jones. 

Whether you need a team for Orlando property management or Austin property management, Great Jones will make sure your property is renovated appropriately, managed well, and occupied with the highest quality of tenants. In turn, you can enjoy peace of mind and a profitable investment property. 

Sources:

Landlordology. Landlord-Tenant State Laws & Regulations.
https://www.landlordology.com/state-laws/

Open Door. 8 critical factors that influence a home’s value.
https://www.opendoor.com/w/blog/factors-that-influence-home-value

Zillow. United States Home Prices & Values.
https://www.zillow.com/home-values/

Types of Residential Property

Interested in investing in real estate? When it comes to commercial vs residential real estate, residential is the way to go. Residential properties offer many perks, including the simple fact that they have a lower cost of entry than their commercial counterparts. 

Furthermore, residential properties are easy to get financing for. With some home mortgages, you can put down as little as 3.5%! In turn, residential real estate is more accessible than you’d think. 

To maximize your residential investment, however, you must choose your property wisely. Not every piece of real estate has the same investment potential. This article will review each type of residential real estate and explain its pros and cons. 

What Are The Different Types of Residential Property?

Residential real estate comes in many forms. While single-family homes are the first property type that comes to mind, you can’t forget the others:

  • Apartments
  • Condominiums
  • Multi-family homes
  • Townhomes

Types of Residential Real Estate Properties and Their Investment Potential

Whether you’re interested in in or out of state real estate investing, you should understand each type of property available. To help you make the right choice for your real estate investment, let’s review each type of residential property’s pros and cons. 

Single-Family Homes

When you think of a house, you probably picture what’s known as a single-family home (SFH, for short). These properties are characterized by:

  • Private lots
  • No shared walls
  • No shared utilities
  • On-site garages

As their name suggests, single-family homes are a popular option for families. Often located in the suburbs, they provide more privacy, storage space, and peace and quiet than other forms of residential real estate. 

Another advantage of single-family homes is that they’re yours to do with as you please. As long as you follow city, county, and state housing regulations, you can renovate your home to your heart’s content. 

The Investment Value of Single-Family Homes

As an aspiring real estate investor, keep these pros and cons in mind:

  • Pros – Single-family homes hold their resale value quite well. They also attract high-quality tenants. You’re more likely to get a family that lives a quiet lifestyle than a rowdy group of college kids. Lastly, you’ll enjoy full autonomy over your property.
  • Cons – With great freedom comes great responsibility. Unlike apartments and condos, single-family homes place all the maintenance burdens on the owner. You’ll have to take care of the yard work, plumbing, roofing maintenance, and repairs. Furthermore, single-family homes cost more to buy than other residential options, due to their lot size. 

Of all the types of residential real estate, single-family homes are arguably the best real estate investment. That’s because SFR real estate holds its value and is always in high demand. They make it easy to maintain an attractive, low vacancy property

Apartments

Apartments are residential units located in apartment complexes. They’re one of the most common types of residences, with 36% of Americans living in them as of 2018. 

While apartment units can range in size, they’re usually smaller than your average single family rental. Apartment units may have a patio or balcony, but they rarely have any private yard space. 

Despite this, apartments stand out for their convenient on-premise amenities, including:

  • Swimming pools
  • Fitness centers
  • Laundry facilities
  • Covered parking
  • Game rooms
  • Computer lounges
  • Shared outdoor spaces

The Investment Value of Apartment Buildings

If you’re up for the challenge, you can purchase an entire apartment building as an investment property. Here are the pros and cons:

  • Pros – Apartment complexes are easy to get financing for since they guarantee a steady stream of rental income. By choosing quality tenants and keeping vacancies low, apartment complexes can also be incredibly profitable.
  • Cons – From unexpected repair requests to problematic tenants, running an apartment complex is no small undertaking. Apartments require continuous marketing campaigns to keep them occupied. Lastly, apartment buildings have less liquidity than houses do, since they’re harder to sell. 

Managing an apartment building is a big task, so many investors choose to outsource their property management to a team of professionals. This way, you can enjoy the profits without the burdens. 

Condominiums

Condominiums, also known as condos, are single units within a larger residential building. If they sound a lot like the apartments you just read about, you’re right. 

The difference between condos and apartments is ownership. Each residential unit is owned by individuals. Each condo owner has partial ownership of the condominium’s shared spaces and amenities. Conversely, apartment buildings are owned by a single person who rents out the individual units. 

Since condominiums are owned by a group of people, they require oversight and management. Thus, they often come with a Homeowners’ Association (HOA) and Board of Directors. These groups decide the property rules, manage the maintenance, and charge fees to cover the costs. 

The Investment Value of Condominiums

Here are the pros and cons to be aware of as an investor considering a condominium:

  • Pros – Most notably, condos are cheaper than single-family homes. They give residents access to many attractive amenities that may not be affordable with a single-family home, like pools and gyms. Also, condos require less maintenance, since the building’s management takes care of most of it. As an owner, you just need to worry about the interior and immediate exterior of your own residential unit.
  • Cons – Since condos are located in a complex and share walls with neighbors, they’re less private than single-family homes. They also have more restrictions on renovations. You’ll be beholden to the complex’s rules. For instance, the complex’s Board of Directors has the right to enforce pet and rental limitations.

In general, condos are a riskier investment than other forms of residential real estate. Since you share ownership with your neighbors, if they get foreclosed on, the value of the residential building could be impacted. 

Additionally, many condominiums don’t allow condo owners to rent out their units. If that’s your investment plan, it may not be possible in certain condominiums.

Multi-Family Homes

Multi-family homes are houses that have been divided into 2 to 4 separate residences. Depending on the number of units, multi-family homes are referred to as duplexes, triplexes, and fourplexes. Typically, the entire multi-family home is owned by one person. 

Each residence within a multi-family home has a:

  • Unique address 
  • Kitchen
  • Set of bedrooms
  • Private entrance

If you own a multi-family home, you can live in one of the residential units and rent out the others. 

The Investment Value of a Multi-Family Home

Even though multi-family homes are the least common type of residential real estate, they offer some compelling investment benefits:

  • Pros – Getting financing for a multi-family home is easy, since you can expect a steady stream of income from rent. If you choose to live in your multi-family property, you can keep a close eye on building repairs and upgrades, all while lowering your personal living expenses. Your tenant’s rent can easily offset your property’s mortgage payments and taxes. Lastly, you can write off your home maintenance costs as a business expense. 
  • Cons – Compared to single-family homes, multi-family homes offer less privacy, while requiring the same amount of maintenance and responsibility. If you live in your property, tenants may reach out to you more often, since they know you’re close by. The boundaries between you and your tenants can easily get blurry if you’re not careful.

If you’re comfortable living amongst your tenants, multi-family homes are a sound investment. They can bring in a substantial return and neutralize your living costs, saving you a great deal of money. 

Townhouses

Townhomes are a cross between a single-family home and a condominium. While they look like a standalone house, they share one wall with the townhome adjacent to them. 

Despite this, each townhouse is a unique residence with its own address and entrance, completely separate from the townhouse next door. Thus, townhome owners are responsible for all of their own maintenance expenses. 

Many townhouses are located in communities that have Homeowners Associations, which set rules and charge fees. In turn, they also enjoy appealing community amenities, like clubhouses and swimming pools. 

The Investment Value of Townhomes

Here are the investment benefits and drawbacks of townhomes:

  • Pros – Townhomes are more affordable than most single-family homes. Since they’re smaller and have less yard space, they also cost less to maintain.
  • Cons – The HOA fees and regulations that come with townhome ownership may be undesirable to some investors. Townhomes also provide less privacy than a single-family home, due to their shared wall. 

If you’re investing on a budget, townhomes might be the perfect piece of real estate for you.

Great Jones – Professional Property Management

Each type of residential property has its benefits and drawbacks. The ideal investment for you will be based on your personal preferences and budget. 

If you’re ready to invest in a lucrative rental property, consider partnering with the property management experts at Great Jones. Once you’ve purchased your investment property, they will take the following tasks off your hands:

  • Marketing your property 
  • Screening tenants with background checks
  • Collecting rent
  • Providing resident support services
  • Maintaining the property
  • Organizing inspections and repairs
  • Handling evictions
  • Providing investment advice

Whether you seek out Great Jones for property management in Indianapolis or property management in Fort Myers, you can sit back, relax, and watch your investment earnings multiply. Whether it’s an SFH or triplex, Great Jones keeps everything running smoothly for you. 

Sources:

The Street. How Much is a Down Payment on a House? Do You Need 20 Percent? https://www.thestreet.com/personal-finance/real-estate/down-payment-on-house-14686280

Bankrate. What is an apartment? https://www.bankrate.com/real-estate/what-is-an-apartment/

Noah Jeong

Noah works on the Growth Team at Great Jones. He's just as frustrated as you are with the status quo in the property management industry and is passionate about making contributions towards raising the bar for property management.

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Single Family vs Multi Family Rental Investments

When entering the real estate market, deciding between a single family rental (SFR) or a multi family rental (MFR) investment is no simple task. Like all things, there are distinct pros and cons of each, and it’s a good idea to consider all of them instead of taking a leap of faith.

The most effective way to look at the advantages and disadvantages in real estate investing is to first identify your goals, budget, and timeframe. Then, you can juxtapose how your personal criteria align with the single family vs multi family rental investment process. 

To ensure you make a confident decision, this pros and cons list will describe each path—that way, you can determine the best fit for you.

What is a SFR?

SFRs are single, standalone units on its own lot—houses, condos, or townhomes that often come with a yard, patio, and garage. They aren’t meant for multiple families or groups of people, and zoning laws typically enforce that, even if you’d like to transform your one-unit property into a multi-unit home.

Pros of Investing in Single Family Rentals

This fact alone could be seen as either a pro or con, although many people see it as a pro. After all, taking care of one unit is easier than taking care of many, no matter what the square footage is. 

Keep reading to see the full list of SFR real estate pros.

1. Less Expensive Upfront

For people who are new to the real estate investment space, picking a type of investment property that costs less money to get started is incredibly important. Multi family buildings are a more expensive business venture, so it’s less of a risk to start with a SFR property.

2. Opportunities for Resale

Single family rental investments are low risk for another reason: easy resale. SFR properties are easier to buy, which means that they’re easier to sell. Besides their lower price tag, you can sell to other real estate investors or to families looking to buy a home, making the buyer pool much larger than duplexes, triplexes, and other multi-unit buildings.

3. High (and Growing) Demand

According to data from Urban Institute, following the 2008 housing crisis, the single family home rental market became increasingly popular. In 2010, it surpassed single family homeownership and became the fastest-growing sector of the US housing market. It’s still the fastest-growing sector today and is predicted to continue its high demand for the foreseeable future—here’s why:

  • Credit card debt is at an all-time high
  • Outstanding student loan debt has reached record levels
  • The job market needs to recover from the global pandemic
  • Cost of living is increasing in most major cities

People still want their own space and to have a true home experience, rather than live in a multi family complex. But they can’t afford to buy a home themselves, leaving SFR as the best option.

4. Less Dependence on Local Economy

Local economies fluctuate regularly, so putting tons of money into a multi family rental property could be financially devastating if the local housing market takes a steep dive. Since SFR homes cost less, have a larger buyer pool, and depend on fewer tenants for rent payments, your revenue stream will take a much smaller hit, and if need be, it can be sold to someone else.

5. Low Tenant Turnover Rates

Every time a tenant moves out of a rented property, you and your property manager have a lot of work to do. This involves coordinating cleaning and repairs, stage the place to look more attractive to potential renters, list the property, screen applicants, and go through the entire move-in process.

All of those services can add up, especially if you’re doing it yourself and don’t know the most cost-effective way to tackle the tenant turnover operations. In addition, you also have to factor in the loss of income from rent payments while the unit is vacant. 

The single family rental turnover rate is roughly half that of apartment dwellers—most tenants stay for an average of three years, according to Market Watch. These are some of the reasons why:

  • Many SFR tenants have kids, and moving houses could put them in a different school district, forcing them to go somewhere else, which parents are often reluctant to do.
  • With homeownership less affordable than ever, people are renting properties and treating it like their own home, and become established in the area.
  • A positive landlord experience is less common than you would think. When people find a rental situation they enjoy, they don’t want to risk leaving, having a negative experience, and needing to move again.

What is an MFR?

As the name suggests, multi family rental (MFR) properties are buildings with more than one rentable space, designed to house multiple families or groups. All units are either contained in one building, or several structures within one complex. 

Multi family rentals, such as a duplex, triplex, or apartment complex, don’t come with an individual yard and garage per unit, but do often come with a patio or balcony, as well as shared amenities. This could be anything from laundry facilities to fitness centers, a pool and hot tub, parking garage, or communal workspaces. 

Pros of Investing in a Multi Family Rental

With SFRs making a strong case, what are the advantages of the MFR route?

1. MFR Scales Faster

If you want to grow your real estate investment portfolio as quickly as possible, you could either buy multiple single family homes or one multi family rental home. For the sake of quick expansion, multi family properties are a great way to own many units—purchasing 30 units of SFRs in an afternoon is nearly impossible, but you could easily complete that task with just one MFR.

2. Reduced Cost Per Unit

The idea of economies of scale can be explained by using the same 30 unit example. If you renovate or repair the shared outdoor amenities at your 30-unit multi family rental building, you’ve effectively updated the outdoor space of 30 properties. Outdoor renovations on all 30 units of your single family homes will cost more and take longer. 

Essentially, for many repairs, your cost per unit is lower when all units are under one roof. Here are the other ways this scaled economy works to the advantage of MFRs:

  • You need only one insurance policy, rather than 30, per the example
  • All showings, inspections, repairs take place at one location
  • You only have to hire one property manager, rather than 30—unless you work with a property management company that serves multiple locations 

3. High Cash Flow Can Mean Flexible Financing

Without owning multiple SFRs, an MFR will usually result in a higher amount of rental income. With more units, vacancy is also less of an issue. If one unit of your 30-unit investment property isn’t currently being rented, your property is 3% vacant, but if one unit of a SFR isn’t being rented, your property is 100% vacant.

It’s important to remember that greater cash flow doesn’t mean greater return on investment (ROI). ROI is defined as gains on investment minus cost of investment, divided by cost of investment, according to Investopedia.

Here’s how to calculate your potential ROI:

First, calculate your profit by taking your total return on investment (rent income), and subtracting the original cost of the investment (purchasing price), and then divide that number by the original cost (again, purchasing price).

This seems like a con, and in some ways it is, but it does open up the possibility to more flexible financing options. While SFR’s value fluctuates with the real estate market, MFR’s value is based on the income it generates, so higher cash flow means a lower risk of foreclosure, which appeals to lenders. You can also calculate single family rental cap rates or multi family rental cap rates to measure the profitability of your investment. 

Single Family Rentals vs Multi Family Rentals: Cons

It might be apparent that the SFR pros are the MFR cons, and vice versa—they’re directly related to one another. A brief overview from the cons perspective can still be helpful for the sake of clarity.

SFR: Cons

  • SFR scales slower if portfolio-building is your goal
  • With many SFRs, cost-per-unit for maintenance is more than units in the same building
  • SFR’s value is linked to the real estate market, which can be unpredictable

MFR: Cons

  • MFRs are much more expensive upfront
  • The MFR buyer pool is much smaller, making it harder to resell
  • More tenants mean more occupations to account for—if local businesses close, there’s a higher percentage you have a tenant who is affected
  • MFRs have double the tenant turnover rate of SFRs 

Navigating the Market with Great Jones

For most people, the single family rental investment risk is much lower than that of a multi family rental. Most investors in the single family home rental market only have one or two properties, but the issue of running those properties and juggling management companies is still a major concern. That’s where Great Jones can help.

With professionals in many states with up-and-coming real estate markets, Great Jones can handle all the difficult parts of running your rental property—or properties. Whether you are looking for property management in Memphis or property management in Gainesville, FL, here’s how Great Jones can assist you:

  • Photograph and list your unit
  • Thoroughly screen all applicants
  • Take care of maintenance and repairs
  • Offer 24/7 emergency support for tenants
  • Collect and deliver rent to you quickly and free of fees

Beyond regular property management duties, if you decide you want to expand your portfolio later on, Great Jones will be there to guide you. 

Sources: 

Urban Institute. Five things that might surprise you about the fastest-growing segment of the housing market. https://www.urban.org/urban-wire/five-things-might-surprise-you-about-fastest-growing-segment-housing-market

MarketWatch. The new housing play: helping priced-out renters become long-distance landlords. https://www.marketwatch.com/story/the-new-housing-play-helping-priced-out-renters-become-long-distance-landlords-2018-07-30

Investopedia. How to Calculate ROI on a Rental Property. https://www.investopedia.com/articles/investing/062215/how-calculate-roi-rental-property.asp

What is SFR Real Estate?

Breaking into the real estate market can be challenging for an investor. You have to go into the purchasing process knowing what kind of real estate you’re interested in, and what specific type of rental property will give you the biggest returns. On top of that, there’s the property management and tenant relationships to consider. 

One type of residential property that should be on your radar, if it isn’t already, is single family rentals, or SFRs.

SFR real estate is a booming market that has stood the test of time, making it a great entry-level business decision for property investors. As a property management company that handles Raleigh property management to Austin property management for single family rentals, we know all the benefits of this type of real estate. Keep reading to learn more about the SFR real estate meaning for investors—what it is, why it’s profitable, and how to get involved.

SFR Real Estate Questions, Answered

First, let’s break down all the moving parts, so you’ll have a clear answer to the overarching question: What is SFR real estate?

What is a SFR Property?

Single family rentals are a one-unit, detached residence, as in a standalone property on its own lot. SFR properties can be houses, condos, or townhomes, and oftentimes come with a yard, patio, and garage.

The SFR property type has no units, meaning it isn’t zoned as a duplex, triplex, or other multi-family setups. It’s meant to be a living space for one family or group of people—it isn’t meant for, and typically isn’t allowed to be a space to house multiple families or commercial business ventures.

What Does the SFR Market Typically Look Like?

SFR real estate took over as the fastest-growing segment of the housing market in 2010, surpassing single family homeownership for the first time, according to data analysis site Urban Institute. They also noted that due to the investment potential, the SFR market players are also different in the following ways:

  • The majority of SFR units are owned by sole investors rather than giant institutional investors
  • Institutional investors only make up 2% of the market
  • Roughly half of today’s market is made up of investors who own only one unit

In comparison to all other commercial and residential real estate segments, SFR investments are typically the most affordable, stable, and profitable. SFR real estate is a strong market due to its necessity, and that demand has only increased in recent months—both in terms of property investors and renters. 

How is the SFR Market Doing Right Now?

SFR real estate is expected to be one of the few asset classes to experience a growth in demand following the coronavirus pandemic. Investment advisor Jeff Cline divulged that in April alone, he saw a number of stunning trends in the SFR market. Here are some of the most notable figures for April 2020, as reported by the real estate news site Globe St:

  • Buyer and seller activity increased by a whopping 650%
  • SFR homes outperformed multi-family rental homes (MFR) on early rent collections
  • SFR rent collections totaled at about 5% uncollected, while MFR rent was an estimated 24% uncollected
  • Record high credit card debt, student loans, and unemployment rates, alongside the job market and stock market hitting record lows, means more people will be renting

Beyond the scope of April, these upward projections of the SFR real estate market ring true for the entire year—and there are specific trends to be looking out for.

What are the SFR Trends for 2020?

Staying on top of trends as a real estate investor is important, but analyzing them before entering today’s market is critical. Knowing where to look for opportunities is a huge part of figuring out where to get started. Here are some elements to look for when choosing a city for a SFR property:

  • Employment opportunities
  • Good quality of life
  • Surrounding activities
  • Population growth rates
  • Rapid development of city infrastructure
  • Expansion of airports
  • Colleges and universities nearby
  • Technology industry growth
  • Suburbs with easy access to city life
  • Revamping of downtown area
  • Access to nature and outdoor sports
  • Bustling nightlife and regular events
  • Travel destinations

Not all of these boxes must be checked to be considered a good real estate investment. For example, a city with increasing employment opportunities and a revamping downtown area doesn’t have to be a travel destination to be a quality investment. To predict the profitability of a SFR investment, be sure to measure single family rental cap rates. 

Trending Cities for SFR

Here are some examples of cities that fall in line with this list, as reported by PricewaterhouseCooper’s Emergency Trends in Real Estate research:

  1. Austin, Texas – Austin is number one in terms of SFR investment and overall real estate, proving itself a highly desirable place to live. With colleges and universities, suburbs not far outside of downtown, access to nature, artistic style, and thriving business and tech scene, its unique mix of features amounts to a high quality of life for many different people.
  1. Raleigh-Durham, North Carolina – With colleges, universities, and some 90,000 tech jobs, there’s a constant stream of renters in this city. In terms of current properties, suburban office spaces and multi-family homes are seeing the largest investment right now. But as an up-and-coming city, Raleigh-Durham topped the charts for homebuilding prospects, which is a huge element of the SFR market (more on this below).
  1. Nashville, Tennessee – This city slipped from first to fourth place in terms of homebuilding, but continues to climb in terms of real estate prospects due to its continued investment and development. Known for its music scene and local culture, Nashville’s high population growth and low cost of living make it a leading 18-hour city.
  1. Charlotte, North Carolina – Moving up in the charts in every sense, including homebuilding prospects, where it now places second, this city has proven to be a massive attraction for technology, manufacturing, and start-up companies, diversifying beyond its banking reputation. Plus, with a leading research university just a 20-minute drive from a developing downtown scene, more students are looking for off-campus housing.
  1. Boston, Massachusetts – Boston seems like a comparatively small metro market due to its population size, but its top-tier economic performance has resulted in a flouring real estate market. While downtown is more business and multi-family oriented, the city’s successful job market, family-friendly suburbs, and proximity to some of the country’s top universities make Boston a growing SFR hotspot.

Trending State: Florida

If the cost of investment is your priority, you should consider one state in particular: Florida. 

With average home prices below the national average, low cost of property tax and insurance, and no state income tax, Florida homes are an easier real estate investment. Plus, with amusement parks, beaches, and universities, there will never be a shortage of tenants—the Sunshine State is the known retirement capital of America, after all. 

If you invest in Florida real estate, here are the three best cities for SFRs, according to the Real Wealth Network:

  1. Orlando, Florida
  2. Tampa, Florida
  3. Jacksonville, Florida

Build-to-Rent Market

The build-to-rent market, also called build-for-rent, is a huge player in the SFR real estate market today. According to Cline, build-to-rent properties can have even higher margins than other SFR properties, and subdivision sell-out is 75% faster.

Building a home with the sole purpose of renting it out is a relatively new idea. What was once a niche market is now seen by investors as an additional long-term revenue stream that appeals to renters.

What Are the Benefits of SFR Real Estate?

From an investing point of view, there are several reasons why SFR real estate has become the fast-growing sector and primary strategy within the housing market. Here are some of the major benefits:

  • Appreciation potential – Traditional homes have some of the strongest appreciation, so you can expect the value of your purchase to increase over time.
  • Positive cash flow – Tenants’ rental payments typically exceed your usual rental expenses, so you can put the remaining money toward mortgages, property management, or in the bank.
  • Higher rent than MFR units – When comparing SFR property to apartments and smaller multi-unit property, SFR rent is usually higher—people pay to have more space, a garage, yard, and to not worry about the behavior of the tenants next door, below, or above.
  • Lower entry price – Not having to spend as much money upfront is a less stressful decision, and it makes bills easier to pay off sooner.
  • Easy ways to boost returns – Being able to customize each investment property is a huge advantage of SFR properties, and without tons of small apartments, your property manager will easily be able to handle the job. From the exterior paint, to appliances, to interior decor, you can keep your rental property up-to-date at a lower cost.
  • Tenant consistency – Long-term SFR homes are known not to have the quick turnover rates that multi-units have. SFR tenants that stay for longer periods of time means less incurred costs and guaranteed rental payments.

Getting Started with a SFR Property

If you’re looking to invest in an existing property, you’ll be surprised by how easy it is—you can quickly find SFR properties for sale online. The hard part is what comes next: setting your rental rates, finding tenants to rent, and learning all the skills of managing a new investment property for the first time. 

Thankfully, Great Jones can take care of all that.

The property management experts at Great Jones offer a number of services that make the SFR renting process simpler, including the following:

  • Taking professional photos of your property
  • Listing your property across multiple sites
  • Finding and screening all applicants
  • Handling upkeep and repairs
  • Providing 24/7 support for SFR tenants
  • Collecting and delivering rent with no hidden fees
  • Helping you find new ways to increase revenue

Located in many of the best cities for SFR real estate, Great Jones will ensure you have reliable, long-term occupancy—and they have a 0% eviction rate to prove it. Whether you need property management in Fort Myers or property management in St. Louis, contact Great Jones today to learn more about how they can help kickstart your residential real estate goals.

Sources: 

Urban Institute. Five things that might surprise you about the fastest-growing segment of the housing market. https://www.urban.org/urban-wire/five-things-might-surprise-you-about-fastest-growing-segment-housing-market

Globe St. Demand Jumps in Single-Family Rental Market. https://www.globest.com/2020/04/29/demand-jumps-in-single-family-rental-market/?slreturn=20200517130918

PricewaterhouseCooper. Top Five markets to watch in 2020. https://www.pwc.com/us/en/industries/asset-wealth-management/real-estate/emerging-trends-in-real-estate.html

Real Wealth Network. Best Places to Buy Rental Property in 2020. https://www.realwealthnetwork.com/learn/best-places-to-buy-rental-property/

Laura Fayer

Laura works on the Finance & Analytics Team at Great Jones. She's eager to help Great Jones scale as a business and make our services readily available to more investment property owners across the country.

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What Does a Property Manager Do?

If you’re new to the real estate investment, you may be reluctant to spend any extra money on property management. Between property taxes, insurance, and mortgage, But once you start getting the 2 a.m. Saturday night emergency calls, it will start to sound like money well spent. 

So what does a property manager do for you on any given day? The short answer is: everything. And the best property management companies can actually save you money in the long run. At Great Jones, we provide best-in-class property management services to real estate investors across the U.S. Offering property management in Fort Myers to property management in Indianapolis, we have teams on the ground dedicated to making your life as an investor easy.

So how does property management work? Learn what property managers and property management companies do below!

1. Arrange Informed Renovations

A property management company can guide your choices as you improve new assets and make them ready to live in. From connecting you to the best contractors to creating a budget that will maximize your income, an experienced property manager will have the expertise to help you improve the value of your assets without overextending yourself on the budget. An expert will fully understand the responsibilities of how to manage multiple rental properties at once.

When you purchase a new home, you’re depending on the rental income to pay your mortgage, insurance, and property taxes, and still leave you with a profit. Unfortunately, the local market determines the amount you can charge for rent each month. If you spend too much on your renovations, you’ll increase the appraisal value, as well as the amount of property tax you pay each year, without collecting enough rent to make it worth your while. 

2. Conduct Property Maintenance

Of course, your rental property will continue to need work even once tenants are placed. Without regular maintenance, little issues, like missing shingles or cracked masonry, can become much bigger problems. There are many benefits of using a property manager and an excellent property manager will stay on top of these repairs for you, and keep you in the loop so you know exactly where your money is going. 

When it comes time to fix big-ticket items, like busted water heaters or aging air conditioners, your property management firm can contact service companies, schedule repairs, and send you estimates via text so you can approve the expenses. And because they have established a relationship with these vendors, they can get you wholesale rates on parts and discounted labor. 

3. Handle Emergency Calls

When you’re the property owner, you’re responsible for responding promptly to all kinds of issues your tenant may face, whether it’s a leaky faucet or faulty outlet. And if you want to know how to be a good landlord, responding promptly is key. Sometimes, though, things require immediate action, no matter when it happens. 

Luckily your property manager can be on call 24/7 to handle emergencies, no matter what the scope. If your tenant has a burst pipe, they will get it taken care of without having to wake you up in the middle of the night. 

Property management teams have the staff to handle the move-out inspection, cleaning, and repairs efficiently. This will significantly reduce the cost of tenant turnover, as well as remove a ton of stress from your plate. 

4. Serve as the Face of Your Business 

A property management firm will handle all day to day communication with your renters. This includes everything from applications, rent collection, tenant complaints, and any other questions that come up. For larger apartment complexes, they can provide onsite managers to keep things running smoothly and ensure your vacancy rate stays low. 

They’ll also handle showings, move-in, and move-out inspections, and return the security deposit to your tenant within the legal time frame. They even have the power to sign a lease for you, so you are only as involved as you want to be for your investment property.

5. Find High-Quality Tenants

Your property management team will market your property to quickly and efficiently fill vacancies on your properties. That includes everything from taking photographs, writing compelling listings, and using every available app and website to put your property in the sights of potential renters. 

Through careful tenant screening, a property management company can maximize your rental income. They will follow through with personal recommendations, contact old landlords, and verify employment and income to minimize tenant turnover and prevent a costly eviction proceeding. 

A property manager will put in the work to find the best potential tenant for your property. It’s in their best interest to keep your monthly rent flowing—after all, their paycheck depends on it. And it’s worth every cent to you. A bad tenant can cost you thousands of dollars in damage to your home, delinquent rent, or the cost of legal proceedings. 

6. Keep Your Documents Organized

Keeping track of your paperwork is crucial to your business. This includes everything from invoices, rent payment recipes, lease agreements, and move-in inspections from your tenants. This can keep costly rent disputes at bay. 

Beyond keeping your files organized, your property manager can provide you instant access to all your financial information with property management technology or software. Plus, they can send you quarterly 1099 documents to help you make your tax payments throughout the year. 

Not only does this make your accounting simpler, but it can also provide key insights into your business and inform your financial decisions. Knowing exactly how much money each property is generating and how much equity you have at your disposal is key to deciding when to buy more properties. 

7. Expand Your Reach

A property management company allows you to own and purchase homes to rent out in the best cities for real estate. They can connect you with an experienced local real estate agent and research neighborhood demographics to find incredible deals on properties where the potential tenant renters want to live. In fact, quite a few property management companies have a real estate agent on staff, and many of them operate in burgeoning markets across the country. 

Even during a recession, real estate is a great investment that can appreciate in value while hedging your assets against inflation. As soon as you fill new rental properties with tenants, your investment starts to pay for itself. With enough research and a little luck,  your property can increase in value dramatically in a few years. A property management firm can give you valuable insights into some of the best markets in the nation, regardless of where you live. 

8. Grow Your Investment

Now that you’ve got someone to handle the day-to-day operations on your rental properties, you’ll have more time to focus on growth. When you work with a property management business, they can help with market research so you can analyze the cost of purchasing a new rental unit against the projected rent price you can charge.

They will know the neighborhoods that are trending upward so you can rest assured your new property will increase in value over time. They can also advise you on which properties would benefit from major renovations and help you sell off assets if you want to transition out of a specific neighborhood.  

9. Keep You Protected

A property manager has the knowledge and experience to make sure you follow the letter of the law. Local regulations on tenant and landlord rights vary wildly from state to state and even from one city to the next. Lawyers are incredibly expensive, and even one lawsuit can wipe out your entire annual profit in legal fees alone. From ADA compliance to building code, a property manager can help you do your due diligence and keep you out of court.

Who Needs a Property Management Company?

Property management is beneficial for any rental property owner who wants to maximize revenue on their investment property. Even if you only own one property, they can provide you invaluable advice on growing your portfolio with your real estate equity.  

If you own property in another city or state, a property management company can keep an eye on your rental unit and ensure you remain compliant with local fair housing laws and other regulations that differ from city to city and state to state. They’ll also have trustworthy contacts for quality service and repair work at a reasonable price. 

Having income from a full-time job is a huge asset when you’re growing your investment portfolio. Unfortunately, if you own multiple rent houses, your nights and weekends start to disappear. A property management company can free up your time to let you relax and enjoy the benefits of all the work you’ve put into your investment. 

Great Jones is Here to Help

Our property management team has helped real estate investors buy, manage, and sell thousands of properties in some of the most lucrative markets across the US. Whether you need property management in Gainesville, FL or property management in Charlotte, NC, we have teams ready to help all over the U.S. We are dedicated to placing high-quality tenants for every one of your properties, and we will handle every aspect of tenant placement, from marketing to move-out day.

The average landlord pays as much as 23% of their rental income in property management fees. We use transparent pricing, with no hidden fees, and we never upcharge for parts and labor. That means you can expect to pay as little as half of what other landlords pay for their property management service. 

Noah Jeong

Noah works on the Growth Team at Great Jones. He's just as frustrated as you are with the status quo in the property management industry and is passionate about making contributions towards raising the bar for property management.

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How to Manage Multiple Rental Properties

Your charge into real estate may start with the simple decision not to sell your starter home when you move. But with patience and steady cash flow, you can build your equity and borrow against it for a downpayment on multiple investment properties.  As you expand your investment portfolio, there may come a time when it makes sense to hire a property management company.

So once you’re there, how do you find the time to keep up with them all? In order to maximize your revenue, you’ll need to keep multiple rental properties occupied, collect rent, and stay on top of property maintenance and repairs. If you can’t efficiently manage your time, it won’t take long before you’re in over your head. 

Meanwhile, every moment you spend dealing with them either comes from your free time or keeps you from researching potential properties to add to your portfolio. So unless you’re ready to hire a property manager, here are some tips to keep in mind:

Keep your files organized

For every rental property, there’s a slew of paperwork to keep track of. Lease agreements, inspection checklists, invoices, and applications—all of which you may need to reference at any given moment. 

There’s no one size fits all approach here—some landlords may use file cabinets organized either by property or by tenants, others may prefer a digital approach. Find a system that works for you and don’t let things get out of hand. It can lead to some seriously costly consequences down the road. 

Screen your tenants

Do your due diligence with every prospective tenant. Verify their employment, follow up on their personal references, and check their rental history. It may take more time, but a few extra days in lost rental income is worth it to find an ideal tenant who will pay rent on time, stick around for a while, and help you keep the property in good shape. 

The major red flags you need to check for are income, credit score, criminal record, and frequent moving in their history. You should also be wary of a potential tenant that’s in a hurry to move in. If you’re not thorough, you can wind up with a bad tenant with a history of delinquent rent or that might cause damage to the property.

Use a written lease  

Maybe you prefer to do business through handshake agreements, but renting out an investment property on a handshake is a bad idea. The lease agreement defines everything from rent collection procedures, late fees, ground rules, and what’s expected of the tenant. Without clarifying those terms, there’s no guaranteeing either of you will remember the terms of your arrangement. 

The property owner’s responsibilities should be laid out just as clearly as the tenant’s responsibilities. Make sure you take the time to go over the lease agreement with them so they understand their rights and respect the rules you have in place for your property. 

With every lease agreement you have, you need to include an inspection sheet for the new renter to fill out. This will give them the chance to request any repairs and review the state of the place, for your benefit as well as theirs. Keep track of this checklist to reference when it’s time to do the move-out inspection. That way there won’t be any surprises when it’s time to return the security deposit. 

Stay consistent from one property to the next

Some aspects of a property may require additional language in a lease agreement, but it’s best to stay as consistent as possible for each of your investment properties. Rent should be due on the same day for everyone, and there should be consistent rules for late fees, visitors, pets, maintenance requests, and smoking.

The same should hold true for your tenants. It doesn’t matter how close you feel to a particular tenant–offering them special treatment leaves you vulnerable to discrimination lawsuits and can make it extremely difficult to begin legal proceedings against a tenant if the relationship ever turns sour. 

Schedule routine visits

Vigilance is key for successful landlords if you want to fix problems as soon as they crop up. Ideally, you should inspect your properties once every three months, and work these inspections into the rental agreement so your tenant isn’t surprised when you call to schedule your visit. 

These visits also give you a chance to build a good rapport with your renters. Additionally, they’ll help you keep an eye out for people living in your property without permission. Still, even if it’s on the lease agreement, you need to give your tenants proper notice and work with their schedule to find a time that isn’t inconvenient for them.   

On top of the regular inspections, it’s a good idea to drive by your property whenever you’re in the neighborhood. You can make note of extra cars that are always around or check for any evidence of an unauthorized pet. It can also save you a ticket from the city’s code enforcement if you spot something in the front lawn that doesn’t belong. 

Respect your tenants

On that note, It’s crucial that you treat every tenant with decency. Respond to their concerns in a timely manner, be patient, and never drop in without notice. Remember, it may be your property—but it’s also the tenant’s home. They have a right to privacy, and not only is violating that right rude, but it’s also against the law. 

Beyond that, you need to take the utmost care to respect people regardless of gender, race, religion, and sexual orientation, and be very mindful about how you speak to your tenants. If you remain professional at all times with the people in your rental units, you’ll greatly reduce your chances of facing a lawsuit. 

Budget for disaster 

Sooner or later, you’ll run into some unforeseeable expenses. You may purchase a house that needs a lot more work than expected, or one of your current properties may be severely damaged, whether it’s from a natural disaster or a negligent tenant. If you overextend yourself, you won’t have any room in your budget to deal with these expenses, and you may have to liquidate some of your assets to get back on track. 

Rental property insurance is crucial for protecting your real estate investment. They can cover everything from fire or flood damage,  lost rental income, and rehoming expenses for your tenants. The more properties you have, the higher the risk you face from a lawsuit if one of your tenants suffers a serious injury. An umbrella insurance policy can protect you if you’re liable for a tenant’s injuries.

It’s also a good idea to shop around for local vendors you can count on. Air conditioners and heaters need service regularly, and sooner or later you’ll have to replace a roof on every property. If you establish good relationships with local businesses, you’ll get quality service and save a lot of money in the long run. 

Quit your day job 

Okay, this may not be an option for everyone. But at a certain point, your investment properties will require so much of your attention you won’t have time for a 9-5. With smart purchasing and low vacancy rates, you’ll have a steady, predictable cash flow each month. It should be fairly clear cut when you can afford to walk away from work. 

There are ways to help speed this process along. Every time you consider purchasing a new property, you should always make sure there’s about 10% in the budget to put towards property management. If you’re going to do all the work, you should compensate yourself fairly, and use the extra income to walk away from your other work. If you can’t afford the operating cost, don’t buy the property. 

That way, if you do start to get overwhelmed with the day to day operations, you can easily afford to outsource your work to a rental property manager. If you love your job, you don’t have to quit when it all becomes too much for you because of the many benefits of using a property manager.

Hire a Property Management Company

Maybe you love being a landlord. But if your goal is to generate passive income and work towards financial independence so you can retire, is all this running around really worth it to you? So, what does a property management company do, and can certain management services help grow your business overall? A property manager has the expertise and resources to keep things running smoothly so you can enjoy a little rest and relaxation on the weekends. 

At Great Jones, we are committed to placing quality tenants for every property we manage using data-driven analytics. And that’s just the beginning—we’ll be on point for all your tenants’ needs through every step of the way, so you can focus on growing your investment portfolio. From routine maintenance to big-ticket repairs, we’ll keep you in the loop, get your permission to go ahead when we need it, and otherwise stay out of your hair. With teams on the ground for property management in Gainesville, FL to property management in St. Louis, our company is well versed in assisting with day-to-day operations for a number of properties.

Want to increase revenue and expand your investment? We’ve got you. Our team has bought, renovated, managed, and sold thousands of properties in each area we operate in. We’re more than happy to help you research the market and vet any investments you want to make.

Learn more about all the ways Great Jones can make your passive income truly passive.

10 Benefits of Using a Property Manager

If you’ve looked into investing your assets, you’ve likely heard about the benefits of investing in real estate. But once you start expanding your investment portfolio, you’ll discover that being a landlord can feel like a full-time job. If you’re a real estate investor that already has a full-time job, you might not be prepared for the amount of work you have to put into it. 

Enter property managers. But, what does a property manager do on a daily basis? They are real estate professionals that can handle every aspect of running your business operations, for a fixed percentage of your rental income. And the best property managers are absolutely worth every cent. 

In the long run, property management can save you tons of money. At Great Jones, we can speak from experience. We help real estate investors with property management in Gainesville, FL all the way to property management in Indianapolis. You’re paying for a team of experts that can help you avoid the common pitfalls a property owner faces. More importantly, we protect your valuable time and save you from countless headaches. 

Wondering why you need a property manager? Here are some of the benefits of using a property manager:

1. Expert Real Estate Advice at Your Service

Whether you’re purchasing your first investment property or your fifth, it always helps to understand the fundamentals on how to buy and manage rental properties. An experienced property manager has the expertise to help you work through every step of real estate investment. 

They can help you with market research on new homes to buy, how to negotiate the purchase, manage renovations, and set the rent at market rates. Real estate takes a keen eye, and not every cheap property is a bargain. Your property manager can help you project your expenses and income before you make a purchase and help you avoid sinking your cash into a money pit. 

Want to sell an investment property? They can even help you do that.

2. Promotion of Listings

Property management companies can save you time and money marketing your property to find tenants, and that involves a lot more than sticking a For Rent sign out front. A good property manager will use a professional photographer to shoot high-quality photos of your property and to show off your listing. 

There are dozens of websites and apps used to promote rentals, and self-show property management technology can increase the number of renters that can check out your space. Your property manager can utilize all of them to expand your visibility and to find the best potential tenant and reduce vacancies to protect your bottom line.

3. Tenant Screening

Property management companies can handle the grueling work involved in the tenant screening process. That means running credit checks, contacting former landlords, and personal reference checks for each prospective tenant until they find the best match for your rental property.

Having a professional handle this for you will save you a ton of time, but they also have the experience it takes to help you avoid discrimination lawsuits and scams. Plus, a reliable tenant will pay rent on time, keep your property in good condition, and rent long term so you don’t have to deal with as many move-in expenses. Over time, that can save you money and a lot of headaches. 

4. Top-Notch Lease Agreements 

While you can find standard lease agreements online, it may not leave you protected. Every property is different, and a property manager can write a lease that will account for these differences.  

This may be anything from parking needs, rules on visitors, and different aspects of the property the tenant will be responsible for taking care of. Plus, they will do the work to make sure the tenants keep up their side of the bargain, including taking the time to sit down with them and review every item on the lease. 

Not only will a well-written lease agreement protect you and your income property, but it will also protect your tenants. And it can help you root out a bad match. If a tenant doesn’t like the rules for the property, they can find a place that’s a better fit and save you and themselves a lot of hassle.

5. Rent Collection

If you’re spending the first few days of every month collecting rent payments, it eats into valuable time. Your management company can set up a payment system that makes paying rent painless for your tenants, and you won’t have to lift a finger to make it happen. 

Your property manager doesn’t make any money unless you do. If a tenant is delinquent on rent, they are incentivized to handle delinquent rent collection quickly and effectively. That includes keeping in touch with your tenants, adding late fees for non-compliance, and issuing an eviction notice if necessary. 

6. Time Back from Day to Day Interactions

A property management company will handle all of your tenant interactions for you.  They can provide 24/7 service to answer phone calls from renters and address each of their concerns in a timely fashion, no matter how big or small the request. If you own an apartment building, they can handle nuisances as minor as a noise complaint from problem tenants without you ever having to hear about it. 

Whenever one of your renters needs repairs, they’ll fill out a maintenance request with the property managers, and they can work with the tenant to schedule the service and keep you up to date on the maintenance that needs to be done. 

7. Help with Finding Service Repair Professionals

Speaking of maintenance, a good property manager will have their own network of specialists to handle everything. They will know the roofers, plumbers, HVAC technicians, and more that are reliable and reasonably priced. You’ll almost always get a better deal through these vendors than you would if you tried to find your own, and they can save you a ton of money by catching problems early. 

Better yet, your property management company should be able to keep you in the loop and get your approval on repairs without taking up too much of your valuable time. This will keep your tenants happy and your rental property in great shape for years to come without requiring you to do anything other than answering a text now and then. 

8. A Leg Up on Your Accounting

Your property management company with state of the art property management software. With Great Jones, you’ll have access to your revenue stream through the Owner Portal, as well as valuable insights to inform your business decisions. 

Transparent invoicing lets you keep track of expenses and never leaves you guessing at what it is you’re paying for, and they’re updated in real-time so you’re always up to date on your finances. Investing in real estate has some incredible tax benefits, but the only way to make the most of them is to stay organized with your income and expenses. 

9. Handled Eviction Proceedings 

Eviction is an ugly process, and no one wants to go through it. Unfortunately, there are times when the property owner is stuck with a bad tenant that is either refusing to pay rent or causing massive amounts of damage to the property. A property management service has your back in several ways. 

The number one way your property manager helps you with evictions is by keeping them from happening in the first place. Through careful screening, your property manager will place a reliable tenant that’s unlikely to become a problem. In fact, they should be so confident in their work that they guarantee it. 

Eviction is a little different everywhere, and your property manager will know the legal actions to take to avoid common eviction mistakes and provide your lawyers with everything they need to get it done. And if they guarantee their work, they should pay for any court fees along the way. 

10. Guaranteed Compliance

Property management can help you stick to the letter of the law every step of the way. That includes inspecting a property for ADA compliance and making sure it’s up to the local safety codes. A single lawsuit can easily cost you tens of thousands of dollars, if not more. If your property manager can help you avoid even one of these lawsuits, they’ve more than made up for the cost of hiring them. 

Local laws regulate everything from the way the plumbing has to be done to the amount of money you’re allowed to charge for rent. And no matter how much you research everything, it’s easy for newbies to miss something. Real estate experts are familiar with local laws and up to date on any recent changes to the law that you might miss. 

Professional Property Management Done Right 

So, why hire a property management company? At Great Jones, our team is prepared to handle all the hassles of renting to tenants. We’re on the ground for move-in and move-out inspections, finding the most qualified tenants for your listing, dealing with maintenance. In the meantime, you can use your extra time to reinvest your income and expand your portfolio so you can work your way towards financial independence and retire sooner. And we’re more than happy to help you with that, too.

Noah Jeong

Noah works on the Growth Team at Great Jones. He's just as frustrated as you are with the status quo in the property management industry and is passionate about making contributions towards raising the bar for property management.

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How to Maintain a Low-Vacancy Property

When you invest in real estate, you want to maximize your return on investment. To do so, you must keep your rental properties occupied with reliable, trustworthy tenants. This way, you can enhance your finances and mitigate your frustrations as a landlord. 

However, if your properties have a high vacancy rate, you will earn less income. High tenant turnover means you’ll end up spending more money on maintenance, repairs, cleaning services, and marketing expenses. Thus, you want to reduce the length and frequency of vacancies as much as possible. 

So how can you maintain a low-vacancy property and decrease tenant turnover?

Average Vacancy Rate for Rental Property

The average vacancy rate for rental properties is around 6.6%, depending on the location. Cities typically have less vacancy than rural areas, since they attract more renters and their population density is greater.

How to Maintain a Low-Vacancy Property

Your rental property’s vacancy rate is the most critical component of its ROI. Ideally, you want to optimize your tenant retention and turnover times to bring the rental vacancy rate down to around 2% to 4%. 

Here are some ways to achieve this.  

1. Screen Tenants Properly

Even if you’re eager to fill a vacancy, you should never rush through the tenant screening process. You must do your due diligence to score a reliable, long-term renter. If you accidentally accept a problematic renter, you’ll be forced into a costly eviction and end up right back where you started. 

Review prospective tenants for the following red flags to avoid common eviction mistakes:

  • A pattern of past evictions or delinquent rent
  • A poor credit score
  • A concerning criminal history

With Great Jones, we take care of the tenant screening process to ensure you have the best tenants possible.

2. Keep Your Current Tenants Happy 

The best way to decrease your vacancy rate is to satisfy your current tenants by offering them an outstanding renting experience. All this includes is knowing how to be a good landlord. Do so by responding to their needs promptly, communicating well, and going above and beyond in little ways that they’ll appreciate.

Most renters don’t want to move around constantly. Moving is costly and cumbersome. They’d prefer to stay put, as long as they have a satisfactory experience. By keeping your renters happy, they’ll be much less inclined to move. 

Offer New Tenants A Welcome Gift

Upon move-in day, renters want to celebrate and begin settling into their new home. Contribute to this day’s excitement by giving your tenants a welcome gift. This will start your new tenant-landlord relationship off on the right foot.

Here are some gift ideas:

  • A gift card to a local restaurant or coffee shop
  • A bottle of champagne
  • A flower arrangement

By going above and beyond in ways like this, your tenants will feel reassured in their decision to choose your property. They will also view you as a friendly, thoughtful landlord from the very start. 

Get Acquainted With Your Tenants

Forming a personal connection with your tenants is wonderful for tenant retention. People are much less likely to end a lease with a landlord they’ve grown fond of than one they barely know or dislike. 

Here are some tips to bond with your tenants:

  • Say hello to them often
  • Take the time to get to know them
  • Ask them how you could improve their renting experience
  • Check-in every so often to see if they need anything

By showing this level of attentiveness, your tenants will develop a greater appreciation for you and your property. 

Be Responsive to Maintenance Requests

A surefire way to push a tenant away is to ignore their maintenance requests. 

Think about it. Would you like it if your landlord was slow to fix your garbage disposal or dishwasher? No, you’d become frustrated. You’d probably start fantasizing about packing your bags and cutting your lease short. At the very least, you’d vow to move out as soon as the lease ended. 

By responding to maintenance requests swiftly, tenants won’t have any time to ruminate about moving elsewhere. On the other hand, they’ll feel taken care of and satisfied. 

If you can’t address a maintenance request immediately, at least provide your tenant with a clear time frame they can expect to wait. This will ensure that they feel seen and heard. If you need help with managing maintenance requests, Great Jones’ mobile work request system makes it easy for your tenants to place a request and for you to put in the work order.

3. Use Marketing To Fill Vacancies Fast

Even if you provide a flawless renting experience, vacancies are inevitable. Renting is an inherently temporary experience. Even the happiest tenants move on at some point for a plethora of reasons, such as:

  • Getting a new job in another state
  • Starting a family and needing a larger home
  • Deciding to become a homeowner

As a result, you need to learn some marketing strategies for when vacancies occur.

Market The Property Before Tenants Move Out

To decrease the turnover time between tenants, start marketing your property before it’s become vacant. While you won’t be able to show the property right away, you can still get on the radar of some potential replacements.

Complete Maintenance and Cleaning Efficiently

As you wait for your tenants to move out, develop a plan for your maintenance and cleaning process. Ask tenants to give adequate notice before ending their lease. This will give you time to:

  • Schedule any required maintenance crews
  • Schedule the cleaning crews
  • List your property online

As soon as your tenants have left, start the maintenance and cleaning process immediately. Any time you waste deducts dollars from your ROI. If you can’t drop everything and tend to these tasks, hire a dedicated property management company to take care of it for you. 

List Your Property Online

95% of renters start their home search online. It’s an easy way for them to see what’s out there and develop a list of properties they want to see in person. To capture these renters’ attention, list your property on all of the major listing websites. 

Listing your property is generally free. By listing on multiple websites, your property will get seen by thousands of visitors each month. To impress these visitors, only showcase high-quality photos with good lighting. Also, make sure to include important details about your property that will help it stand out. If your online listings are well-done, you can expect an influx of inquiries in no time. 

Place “For Rent” Signs Around The Neighborhood

Despite all the fancy digital marketing techniques out there, “For Rent” signs still work like a charm. They’re cheap, easy to set up, and effective. For about $20, these signs will capture the attention of interested locals in the market. 

Another perk of “For Rent” signs is that they alert the neighborhood that new tenants are coming. These community members are just as invested in vetting newcomers as you are. They don’t want a noisy neighbor living next to them. 

Thus, these neighbors might provide some free word-of-mouth marketing for you by suggesting the property to their trustworthy friends and family.

Offer A Referral Program

Likewise, another easy way to outsource some of the marketing is by offering a referral program to your current tenants. As with neighbors, your tenants probably know people in the area. You can tap into their pre-existing social network with an incentivized referral program. 

Provide incentives to your tenants to get this program rolling, such as:

  • A certain amount of money for each referral
  • A small deduction in one month’s rent
  • Free utilities for one month

4. Respond to Inquiries ASAP

After investing in these marketing strategies, you need to stay on top of the resulting inquiries from interested renters. You should respond right away, ideally within 24 hours, to take advantage of an interested potential tenant. 

You’d be surprised how many rental property owners fail at this step. It’s these landlords that lose valuable business to those with more responsive management. Thus, being responsive is an easy way to get a leg up above the competition. 

If your schedule doesn’t permit you to respond promptly and consistently, hire someone else to handle this process for you. 

Provide a Self-Showing Lockbox

One of the challenges of showing a property to prospective clients is aligning your schedules together. New property management technology like a self-showing lockbox solves this problem. 

With a smart lockbox, potential renters can see your property at their convenience. You simply place the key to your property in the lockbox and give them a unique access code. This way, you can show the property to more people in less time with fewer scheduling complications, enhancing convenience on all sides.

Achieve A Low Vacancy Rate Rental Property

By screening tenants properly, satisfying your current tenants, and marketing your property effectively, you will enjoy lower vacancy rates. In turn, your ROI will increase, optimizing the value of your investment property.

Great Jones: Expert Property Management For Low-Vacancy Properties

To maintain a low-vacancy property with ease, reach out to our property management experts at Great Jones. Offering services for Orlando property management and property management in Jacksonville, FL all the way to Austin property management, we will find the ideal residents for your property based on data-driven rental analysis, effective marketing, and thorough screening. 

Great Jones takes the following tasks off your hands:

  • Professional photography of your rental property
  • Listing your property on 50+ websites
  • Setting up the self-showing lockbox technology
  • Screening applicants thoroughly
  • Responding to applicant inquiries

Due to their expertise, Great Jones’ tenants have under a 1% eviction rate. By partnering with Great Jones, you will fill your vacancies quicker with quality tenants and boost your ROI. 

Noah Jeong

Noah works on the Growth Team at Great Jones. He's just as frustrated as you are with the status quo in the property management industry and is passionate about making contributions towards raising the bar for property management.

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Investing in Florida Real Estate

The sunshine state has been a goldmine for real estate investors throughout its history. From its white sandy beaches to its bustling urban centers, Florida is the place to be for any investor that wants to make a living in the real estate market. 

Home to the fourth largest economy in the US, Florida exhibits many key indicators for prime real estate growth. The state has experienced rapid expansion since the 2008 financial crisis, has a low unemployment rate, and is stocked with various attractions that make it one of the most popular tourist destinations on earth. 

Read on for a full rundown on the Florida real estate market, including the following topics:

  • The draw of the market
  • Where to invest in Florida real estate
  • Top tips for investing
  • Partnership opportunities

Florida Real Estate: The Draw

Florida has several unique characteristics that make it an ideal location for real estate investing.

  • A Growing Economy – Florida has experienced continued year-over-year economic growth, a competitive job market, and a comparatively low unemployment rate to other US states. All of these factors have resulted in a lucrative, growing real estate market—especially in residential properties.
  • Population – The state’s population is rapidly increasing. In other words? The demand for housing in Florida is increasing with its population. As more people look for homes and properties become scarcer, the value of those properties will continue to appreciate overtime. 
  • Booming Industries Many of the most profitable industries in the country call Florida their home. The state is known for its theme parks and sunny vacation destinations, but also retains major companies in the healthcare, banking, and aerospace sectors.
  • Renting is Popular – Renting is the main source of housing for Florida residents. This presents a great opportunity for real estate moguls to invest in single-family homes or multi-family properties aimed at renters. If you’re weighing out the benefits of investing in commercial vs residential real estate, the lucrative Florida rental market is the true draw to investing in residential.
  • A Multitude of Locations to Choose From – With 23 municipalities of over 100,000 residents, there are a plethora of options available when choosing to invest in Florida real estate. 
  • Tax Breaks – Florida has no income tax. That incentive alone makes this state a prime location for investment opportunities and an ideal place to call home. 

While these impressive dynamics make the entire state of Florida an attractive destination for real estate investment, each individual region has its own unique advantages. 

The Top 5 Florida Locations for Investing in Real Estate

There are specific regions within Florida that offer enhanced opportunities for real estate investment. Let’s take a look at five of the top locations. 

1. Fort Lauderdale – Average Rent $2,100 – Median Price of a Home $320,000

Not far from the famous Miami coast, Fort Lauderdale may be Florida’s biggest real estate draw. For one, there is very little space left for new developments, which has resulted in significant year-over-year price growth. 

Additionally, the city has one of the highest job growth rates in the state, making it a destination for both renters and buyers. If you are looking for a great place to invest, Fort Lauderdale is a sure bet for continued growth for years to come. 

2. Jacksonville – Average Rent $1,100 – Median Price of a Home $165,000

Sitting peacefully on the Northeast coast of Florida, Jacksonville is a great city for both investors and residents alike. Not only is it considered one of the fastest-growing Florida cities, but it also has the metrics to support lucrative real estate returns, including:

  • Over 5% annual population growth since 2016
  • Over 4% year-on-year job growth
  • More than 9% annual increase in house prices

If those numbers continue, investors who capitalize on purchasing property in Jacksonville will be happy they jumped into the market early. And to get the most out of an investment in this city, consider seeking out property management in Jacksonville, FL to help you run your rental property smoothly and keep tenants happy.

3. Tampa/St. Pete – Average Rent $1,800 – Median Price of a Home $175,000

The Tampa Bay and Saint Petersburg area boasts a bustling population center with a major sports franchise and a booming economy. The majority of the population resides in single-family properties. This metropolis is a growing real estate hub, in fact, it’s considered one of the best places to buy rental property.

Anyone looking for a high-growth urban center that has an economy suited for rental investments should put Tampa and St. Pete at the top of their list. And if you’re looking for property management in Tampa, you have Great Jones to help with that.

4. Orlando – Average Rent $1,300 – Median Price of a Home $185,000

The home of Disneyworld and an array of other tourist attractions, Orlando is yet another Florida real estate investment center. While you would be forgiven to assume that tourism is the bread and butter of this Central Florida community, that’s actually not the case. 

Thanks to various companies moving into the city in recent years, Orlando has experienced a remarkable tech boom. This has only increased its real estate potential, making it an attractive location for further investment. Due to the increased interest in this city’s potential, professional Orlando property management is a must for keeping your rental property in tip-top shape and running smoothly against other competing rental properties.

5. West Palm Beach – Average Rent $2,600 – Median Price of a Home $250,000

You can find some of the most beautiful beaches in the entire state (or even in the entire country) in West Palm Beach. You’ll also find some incredible prime rental investment opportunities. Whether you are looking for long-term renters or vacation potential, this relatively small (110,000 residents) urban center has it all. 

Despite a low rate of population growth in the area, average income has risen more than 5% a year. This has created a lucrative real estate market, even without considering vacation rentals. All of these intriguing factors mark this beautiful seaside city a unique place to invest, leading to an increased demand for West Palm Beach property management to help maintain a smooth-running rental property.

Tips for Investing in Florida Real Estate

While there are always commonalities between locations, there are some important criteria worth considering prior to making an investment in Florida. Here are four tips to consider before entering the Florida real estate market. 

1. Know Your Regions

Each region within Florida has its own real estate dynamics worth contemplating. So before making the leap toward investing in the state, think about the following variations between each region.

  • Northwest Florida – Far from the tourism centers that make the state famous, the Northwest is perfect for investors looking to flip homes or invest long-term in affordable properties. Renting here is less common than other parts of the state. Keep that in mind if renting is a part of your long term investment plan.
  • Northeast & Central Florida – Tourism is the major business in Central and Northeast Florida, creating an ideal location for investing in vacation and rental properties. But you won’t be limited to the renter’s market. Thanks to the various industries based in Northeast and Central Florida, there are plenty of options to diversify your real estate portfolio.
  • Southeast Florida – From Miami and Fort Lauderdale to West Palm Beach, Southeast Florida has it all. The area is home to some of the state’s most luxurious properties, but also holds a wide range of investment options. Competition is high in this part of Florida, so be sure to conduct your due diligence before springing for a big purchase. 
  • Southwest Florida – The Gulf Coast offers similar potential as the Southeast in a more reserved, laid back atmosphere. Vacation rentals and retirement houses are popular in this part of the state, with a large number of wealthy individuals residing in the region. 

2. Try to Combine Affordability with Growth

Just like any other entrepreneurs, real estate investors look for high-growth potential combined with limited risk. Florida real estate is driven by this factor. 

When determining where, when, and how to invest in Florida real estate, look for locations that have yet to experience price hikes and have a solid renting population. This will enable you to receive maximum returns while capitalizing on Florida’s high-growth economy.

3. Know Your Rent Prices

The costs of renting a single-family property in Florida differ widely across regions and even within single communities. For this reason, it’s essential to know your rental prices before committing to a rental investment. 

While this consideration might be a given, it’s crucial for investors to understand the reasonable monthly returns before committing to a major deal. 

4. Understand the Demographics and What They Want Out of a Property

Everyone knows that Florida is a retiree’s paradise. However, don’t assume you should tailor your real estate investments to meet the needs of an older demographic. Florida is a diverse state with an array of consumers looking for homes. 

Make sure that you carry-out the proper market research before modifying your properties—you may discover some surprising opportunities.

Great Jones – Your Property Management Partner

Due to the diverse nature of Florida real estate, many property investors opt to go with a property management company to facilitate the process of renting and leasing homes to vacationers, families, and individuals across the state. 

At Great Jones, we are your ultimate property management partner. Not only do we have a complete understanding of the varying dynamics of each regional real estate investment market within Florida, but we also have an on-the-ground team ready to meet your needs in every corner of the state. For more valuable information to keep in mind for a rental property in Florida, check out our step-by-step guide on the Florida eviction process and the latest news on rent control in Florida.

Laura Fayer

Laura works on the Finance & Analytics Team at Great Jones. She's eager to help Great Jones scale as a business and make our services readily available to more investment property owners across the country.

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Real Investing During a Recession: A Complete Guide

As the global economy continues on a downward path, people of all walks of life are looking for investment safe havens to protect their capital. 

It is common to hear that residential real estate investing is safe regardless of economic swings. While this can be true in many cases, those who fail to carry out their strategy within the context of a recession could put their investments at risk. 

To help guide investors with real estate strategic planning during periods of economic unrest, the experts here at Great Jones have put together a quick rundown of the top considerations for residential real estate investing during recession times. At Great Jones, we have experience in a number of markets from Florida to Texas so we know all that needs to be considered during an economic downturn. If you’re looking to invest or need Orlando property management or Austin property management for your new investment, we’re here to help. Read on for our top tips on real estate investment during a recession.

Real Estate Investment Risks During Economic Recessions

While real estate typically doesn’t experience the same exposure to economic downturn as other types of investments, there are certain risks worth considering before making any major decisions in the market condition. 

Four major investment risks stand out for real estate investors and landlords during these periods. 

  1. A limited number of buyers 
  2. Higher risk of tenancy defaults
  3. Government intervention (eviction suspensions)
  4. Shifting competition among certain stakeholders

Let’s take a look at each major risk in more detail. 

1. Limited Buyers

With recessions come a decrease in buying power for the majority of the population. This can pose an opportunity for many real estate investors, but also a risk. 

Simply put, limited demand for real estate means lower prices. While lower real estate prices are a good thing for those that want to enter the market, they pose risks for those that already own real estate assets. 

Luckily, real estate is less exposed to depreciation than other assets, so most current property owners should be safe long-term. However, short-term investors and so-called “flippers” might be stuck holding assets longer than they would during a more fluid market. 

2. Tenancy Defaults

Recessions almost always mean defaults and foreclosures—a major culprit of the 2008 financial crisis. While this again could present an opportunity for a real estate investor looking to capitalize on low-cost property, it puts landlords and rental investors in a tough position. 

No one wants to kick a tenant out of their home, but recessions make the action unavoidable. Any investor that operates in the rental market during recession would be well-advised to prepare for defaults and evictions. Also, keep in mind that eviction may lead to a vacant property that would be difficult to fill during a recession.

To minimize exposure to this risk, consider taking the following steps to prepare for the inevitable:

  1. Make an action plan for rental collections and notices to avoid delinquent rent
  2. Hire a property management company to help deal with defaults and complaints
  3. Provide your tenants with fair warning that you will not accept defaults that exceed lease terms
  4. Be sympathetic and try to maintain good relationships with tenants until action is needed

The last point is of the utmost importance. Tenants are more likely to pay their rent on time if they have a good relationship with the landlord. This applies even in a recession. 

You can limit your risk by knowing how to be a good landlord and that includes being transparent and compassionate towards your tenants.  

3. Suspended Evictions

Government intervention during a recession is a foregone conclusion. Many states recently suspended evictions to help combat the economic effects of COVID-19 on renters. 

While this was a welcome action for the majority of the public, many landlords were justifiably concerned. Eviction moratoriums present one of the most blatant risks for rental property investors during recessions and are generally unavoidable. 

The good news—eviction halts typically only last a month or two and you may be able to recoup your losses once the period ends. Again, maintaining good relations with your tenants will go a long way in guaranteeing repayment. 

Luckily, there are ways to offset your potential losses

  1. Instead of threatening evictions, offer tenants a payment plan if they can prove they are suffering from economic hardship due to the recession.
  1. Monitor news and announcements regarding evictions and foreclosures closely, as regulations can shift rapidly during times of uncertainty.
  1. Consult with lawyers and property managers to determine how long you must put up with default payments before evictions need to be carried out.

When eviction halts end, rental property owners have two options: work with their tenants to keep them in their homes or proceed with evictions. Obviously, the former is the preferable option, but recessions, unfortunately, will result in some evictions. 

4. Shifts in Competition

Lastly, recessions create shifts in the competitive dynamics of the residential real estate market. 

  • Buyers – Competition among buyers decreases as the general public avoids large purchases.
  • Sellers – The number of forced sales goes up, but the level of strategic sales goes down, decreasing real estate prices and negatively impacting sellers.
  • Flippers – With fewer buyers and strategic sellers, flipping becomes less profitable.
  • Real estate agents – With fewer buyers and sellers, competition among real estate agents goes up, making the business less profitable and more cutthroat.

But what do these dynamic shifts mean for the majority of residential real estate investors? 

Fewer buyers enable investors to buy investment property at a lower price but extends the amount of time that properties must be held to realize returns on investments. This means that residential real estate assets must retain some liquidity and cash on hand to offset the effects of being forced to hold assets longer. 

Real Estate Recession Investment Opportunities

Despite the risks associated with investing in real estate during recessions, risky housing market conditions can present major opportunities for investors to enhance their wealth through real estate. 

Real estate assets hold their value even during recessions, making it an ideal market to turn to during widespread economic strife. Some of the major opportunities that make investing in real estate a good idea are as follows:

  1. Distressed sellers and lower property prices
  2. Cash investing opportunities
  3. Generation of stable income through rentals
  4. Lack of volatility

Let’s take a closer look at each factor to shed light on why real estate investing in a recession works. 

1. Distressed Sellers and Lower Property Prices

One opportunity for investors in residential real estate is lower prices. While this presents a risk to many investors due to the need to hold assets longer, lower prices also always mean more profit potential. 

Economic downturn will force various groups to sell properties at lower prices. Recessions, for example, come with foreclosures and distressed selling. 

Investors that can capitalize on these sales can make a ton of money in the long run. However, expect to hold the assets long-term and sell once market conditions have improved. 

2. Cash Investing

Recessions love cash. Real estate investors typically work with cash much more often than the general public, so this is good for them. 

Any investor that offers cash for properties will be able to garner reduced prices, especially during recessions. This will enhance your ability to get a higher rate of return on real estate investments long-term. 

To ensure that you have the ability to compete in the cash market, it is always a good idea to try to stay ahead of a recession. 

  • Consider liquidating some of your assets when you expect a looming recession to hit
  • Leverage your cash to get better deals on properties, contractors, and labor
  • Try to maintain cash levels and not over-leverage your funds

If you can maintain liquidity during a recession, you will be able to counteract the competition and uncover lower prices that would not be available during economic booms. 

3. Rental Income Streams

While the risk of defaults and eviction moratoriums do exist within the rental market during a recession, the stable income that is generated by investing in this industry cannot be ignored. 

Few investment opportunities produce stable monthly cash flows like rental investments, making it an ideal segment to consider during a recession. To avoid the risk of losses due to defaults, take a specific approach to new rental investments:

  • Avoid investing in rental properties with a high risk of default such as low-income housing.
  • Sign longer leases to keep residents in the property throughout the term of the recession.
  • Make sure you employ credit checks and screen tenants carefully before signing leases.
  • Set fair rent prices to keep your tenants happy and ensure monthly payments are made in a timely manner.
  • Contract a property management partner, like Great Jones, to handle rental collections, tenant queries, and service appointments for you—this is guaranteed to increase tenant satisfaction and protect your monthly cash flows.

Rental properties are by no means recession proof, but if investors choose their tenants carefully, they can avoid the pitfalls that produce risk. 

4. Lack of Volatility

What makes investing during recessions so risky? Volatility. 

Volatility plagues almost every other type of security during recessions, enhancing risk. A great example is the stock market, which witnesses violent surges during times of economic uncertainty.

This just isn’t the case with real estate. Yes, prices do go down, which can be bad news for investors trying to offload some of their assets. 

But generally speaking, the residential real estate market remains stable even during a recession. This makes it the ideal market for making strategic, low-risk investments to weather the storm of economic uncertainty. 

Is Now a Good Time to Invest? – The Bottom Line

Residential real estate investments provide safe havens to investors during an economic recession. As long as investors are aware of the risks, enhanced opportunities available in the market make it an ideal time to invest in real estate. 

Due to stable returns and a lack of major volatility in the market, smart real estate investors should see their wealth grow even when economic strife hits the market. And with a property management partner like Great Jones, you can sit back and watch the returns roll in as we take care of everything else from tenant screening and placement, managing work orders, and handling rent collection. 

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