Challenges That Real Estate Investors Face
Wednesday Apr 18th, 2018
Investing in rental properties can be very profitable but you have to be prepared to put the work in. Below are some of the challenges that property investors have to deal with on a daily basis.
Dealing with Tenants:
Perhaps the biggest challenge of being a property investor is that you need to deal with tenants. The more successful you become as an investor, the more tenants you have to deal with. Don’t get me wrong, most tenants are good people and most experienced investors will tell you that a good tenant is like money in the bank.
There are some tenants who can be challenging. Some because of constant late payments, loud music, messiness, etc., others because they expect to be treated like a hotel guest rather than a tenant. Whatever the challenge, the landlord must be quick to “nip the problem in the bud”. The longer you take to address a problem, the worse it will become.
Handling Property Maintenance
A property investor has to be quick to respond to maintenance issues, especially if they involve leaks, flooding, lack of heat, etc. A property investor should have some level of skills to do a variety of repair work. If a specialist is called in for every small repair, maintenance costs can become quite high, even more so for older properties.
The collection of rent can be a hassle if you don’t have a system. Most tenants prefer to make it easy and will gladly provide post-dated cheques or set-up for direct deposit. Whatever the method the property investor should check their bank account early each month to ensure the payments arrived and if they haven’t, take the necessary steps immediately.
Finding the Right Tenants
As a property investor your main income source is your tenants, so it makes sense to be diligent in selecting them. Prospective tenants should be screened thoroughly - check credit reports, call previous landlords and verify employment. When tenants leave, it’s important to find a new tenant as quickly as possible in order to avoid vacancy costs. As soon as a tenant gives their notice to vacate (in Ontario its 60 days) the replacement process should begin. Start by making arrangements with the current tenant to show the property. Choose the appropriate advertising method based on the type of tenant you want to attract. Once a prospective tenant is found, start the screening process.
If property investing was easy, everyone would do it! There are challenges, but there can be great rewards too. One way to minimize the operational challenges is to develop a relationship with a team of professionals who are experienced with investment properties.
We have been helping our clients buy, sell, lease and manage investment properties for more than 14 years. We can help guide you in your investment goals and can refer you to other professionals to help make your property investment experience a positive one.