Here’s a news flash – being a landlord isn’t rocket science.
Seriously. It just ain’t all that hard to own rental properties and make money at it. With very little work on your part.
Actually – to be precise, it ain’t all that hard IF you do two simple and pretty obvious things.
And that’s to heed the Two Critical Success Factors for owning rental properties.
That’s all it takes. Seriously.
If you simply heed the two Critical Success Factors, you’ll eliminate about 90% of the headaches that can come with owning rental houses. And by headaches I primarily mean VACANCIES.
I know what you’re thinking – how do I know this?
Because when I started I was really thick headed and it took me a couple of years to figure it out. And after being beaten bloody by my initial experience I – magically – became willing to learn. (That’s sarcasm just in case you didn’t get it)
And my results bear this out.
Across my portfolio of rental houses the average length of stay right now is right at 3.5 years. If I take out the properties I bought before I figured out the two Critical Success Factors, the average stay jumps to 4.5 years. And more importantly, none of the renters in the second group have any plans to move. Ever.
The difference is striking.
So enough of the sales pitch on my approach.
Let’s talk about the Success Factors.
Actually, let’s talk about Critical Success Factor #1, and we’ll leave #2 for another post.
Critical Success Factor #1 for owning rental properties is LOCATION.
Yeah I know. Call me Captain Obvious.
But it’s not all that obvious, because right now I have two emails in my inbox from folks that bought crappy houses in Detroit and they are – in all seriousness – shocked that 1) their rental houses aren’t 100% full all the time and 2) their renters don’t pay on time every month.
Also – I’ve seen pictures of both of their houses, and the houses aren’t the problem. They’re nice 1000 square foot brick bungalows.
The problem is that they’re in Detroit.
Detroit has probably the worst school district in the state. Their city services suck when they exist at all. The crime rate is off the charts, taxes are high the highest in the state, and the cost of insurance would choke you.
Does that describe an area that you would live in? Or let your family live in?
I doubt it.
So what kind of tenants do you think Detroit attracts?
Probably not the kind that you want, right? So why buy houses there?
Most people do because the houses are a lot cheaper there than the suburbs, and they think that matters.
But it would probably surprise you to know that when I buy houses in my areas I spend almost two times the price of Detroit houses. And my ROI is higher.
Because I get higher rents and people stay longer. It’s a pretty simple formula!
So if making money with rentals is your game, then pay attention to Critical Success Factor #1. And make location your #1 priority.
What has been your experience with location?