Bottongos.com

Committed for Better Business

Have you ever wondered why so often we see so many empty store fronts immediately next to fully occupied buildings? Why do some landlords have so many more tenants, turnover, and vacant apartments than others? For the sake of this article, we’ll assume all other things/features are similar/same, etc., so, we could fully examine, 4 basic considerations, a particular landlord’s rental philosophies often impact. Owning an investment property can be financially smart and valuable, or a potentially risky proposition. This article will briefly try to consider, examine, revise and discuss some things to consider and evaluate.

1. Prices: Some landlords decide that their best strategy is to price their rents as high as possible, while others prioritize quality of tenants, etc., and may price a bit lower. I have witnessed stores, in large locations, remain empty for extended periods due to rents, while others are rarely empty! Proponents of the first philosophy generally proclaim, they do, because of their belief that in the long run, future rents will continue to be higher by doing so. However, for example, if a store, charging $3,000 per month, sits empty for a year, how long and how much more must be charged to recoup that $36,000 per year? Residential owners also have the option of pricing, at the high end, mid-market, or low end. If one’s goal is to rip off tenants, they need to understand that it usually leads to more turnover and eventually lost rents/increased vacancies. One reality is that every time an apartment is turned over (one leaves and another starts leasing it), it becomes a significant expense for the owner!

two. Holding quality: What value does the quality of a tenant have? Wouldn’t you prefer quality tenants, who pay their rent on time, are reasonable, have good character and take care of their property? As the owner of multiple rental units, I have found that owning is much less stressful than those who only focus on getting the highest rents.

3. Occupation: When turnover is low and you maintain near full occupancy, you will generally have less stress about owning.

Four. Cash Flow: Calculate your rent, based on a combination of your known/fixed costs/expenses, plus reserves for vacant apartments, repairs, renovations, appliance replacements, etc. When this is done correctly from the start, it will protect you from having a positive and comfortable cash flow!

If you want to own commercial property, proceed with care, prudence and preparation. Consider your options, don’t be greedy and proceed accordingly.

Leave a Reply

Your email address will not be published. Required fields are marked *