How can real estate investors make their buy and hold properties even more profitable?
Buy and hold real estate continues to be a popular investment strategy amongst savvy NY investors and families. However, there are many factors which can impact the profitability of those financial moves along the journey. Here are some quick tips to get the most out of your assets.
One of the problems that plague long term hold investors is putting off maintenance and repairs. The longer you leave an issue unchecked, or poorly patched, the more expensive it can become. A small roof leak can become a toxic mold problem. A drainage issue can become a major foundation problem. Tackle these things early to maximize long term cash flow and value.
Taxes will likely make the biggest difference in your real net returns. Some may pay as much as 40% more in taxes when restructuring portfolios and trading up properties than others. Fortunately, there are legal tools, like the 1031 exchange which can be used to minimize tax liability. IRA investing may even offer tax free gains. Make sure to talk to tax experts to avoid leaving more money on the table than you need to.
Smart Tenant Selection
Who your tenants are will largely dictate your cash flow and overall returns. Some get too bogged down in metrics like credit scores and debt-to-income calculations, or vetting backgrounds. These things can be important, but often how your tenants treat your property is even more important. Select those that will take care of it, and maybe even improve it, versus causing damage.
Efficiency in Property Management
There are so many new tech tools to be used in property management today. They offer increased efficiency in daily property management. They make delivering great service easier, help streamline receiving and processing tenant requests, and provide better clarity and organization in bookkeeping. Use them to drive down operating costs, and to increase your net cash flow, and future resale value.
Right Legal Structures
Profiting from real estate investments is equally about protecting yourself from risk, as it is about driving up income and value. Make sure to put the right legal structures in place to protect you from lawsuits, issues in passing on your legacy to your heirs, and to avoid appearing an easy victim to fraudsters.