A Property Investor’s New Year Resolutions

Starting a new exercise regimen? Swearing off sugary snacks? Aiming to focus more on family?

At the start of a new year, resolutions in every aspect of our lives start to appear. Resolutions about our physical, mental, intellectual, and spiritual health abound as we try to start off the new year on a new foot.  One area often overlooked are your investment properties.

Investment properties may be part of your plan to achieve a peaceful retirement or to grow excess income. Waiting until closer to retirement or when you are ready to sell does not ensure the biggest bang for your investment buck.  Now is the time of year to put thought into how you will capitalize on making this year a success for your investment properties.   Small goals, or “resolutions”, each year will ensure a higher ROI for whatever goals you hope to achieve in the future with your investment!

Below are some areas to focus on in order to make this year a success for your investment property portfolio and to ensure higher returns for years to come.

1. Budget! It is best to get this item out of the way first since it is probably the least glamorous part of being a property investor.  As 1099s come in and you sit down to do taxes, you can easily take time to look over your income and expenses over the past year.  Maintenance is going to be the big area to examine as you budget for this year. Taking the time to budget now will prevent surprises later.  It is wise to reinvest some profit back into the home to ensure it continues to stay updated. Small improvements now will save money when it is time to sell.  It will prevent you from having the sell the property below market value because the property is outdated or poorly maintained. Ask yourself some of these questions:
   • What large maintenance projects may need to be done this coming year?
   • What percentage of your profit will you reinvest in the home to complete upgrades?
   • If the current tenant doesn’t renew, what expenses will I incur during the turnover (vacancy time, painting, etc.)?
2. Goals: Now that you know how your property performed this past year, it is time to re-evaluate what your long term goals are.  Write out why you are investing in this property. Seeing your goal for the property in writing will help determine if the property is performing well.  Ask yourself some of these questions:
   • Why am I renting this property?
   • If your goal is to make a certain amount of profit, is your property producing your target amount?
   • Due to major life events, has your long term goal changed this past year?
   • What do I hope this property will produce in 5, 10, 15 years?
   • How much would I like to sell this property for?
3. Market: Put your feelers out to see how the rental and sales market is doing.  Contact your property manager, real estate agent, fellow property investors, and any one else in the industry that you trust.  Ask them where they think the market (sales and rental) is headed.  Gather information that relates to the goals you just wrote.  For example, if you plan to sell the property, determine how much it is worth and when the ideal time may be to sell.  If you wish to rent, talk to your property manager about upgrades that may increase rent.  Knowing what the market is like will help determine what your property’s future may be.
4. Take Action: You have all the information you need to take action.  Resolve to follow through on what you have decided this year.  Contact your property manager to share your budget and planned property improvements.  Put a reminder on your phone to review your property’s goals each month.  Make a final decision about renting or selling this year and contact the necessary people.

Starting the new year with a little planning will ensure 2017 is a successful year for you and your property!