If you’re just starting out in your real estate investment career and you aren’t quite sure where you are going to find your first property then you should consider working with a wholesaler. Boston has a highly competitive market and real estate prices are among the highest in the country. It can be hard to buy a foreclosure and going to an auction with a bag full of cash may not even be possible. A wholesaler can be the quickest and easiest way to get your hands on your next great deal.
What is a Wholesaler?
In the real estate market and wholesaler is someone that finds great deals and then sells that property to other investors below market value. They take care of all of the legwork so that you don’t have to. There are a number of different methods that a wholesaler will use to line up investors with motivated sellers in return they get a finder’s fee. They never actually own the property, they effectively find it for you. In many cases that is how someone gets their foot in the door in the real estate market, by becoming a wholesaler themselves. The finder’s fee can range anywhere from a couple of thousand dollars to $15,000 or more. Ask any investor and they are more than happy to give a commission or finder’s fee to someone that brings them a good deal. Here is a look at how wholesalers work.
Finding a Bargain
One of the ways that wholesalers find bargains is by chasing down distressed property owners who are motivated to sell. Real estate is a cut throat industry and finding leads on potentially good deals is hard enough that is why wholesalers can be a valuable resource. The whole process of “driving for dollars” and qualifying leads takes a lot of time and it can cost you money. Let someone else do the work for you.
Crunching the Numbers
At the end of the day you have to crunch the numbers and see if a deal works for you. It is easy to overpay for a foreclosure or REO that a wholesaler brings to you. The small fee that you are paying the wholesaler may be your only profit if you’re not careful. Even here in Boston where prices are high there are still a lot of decent investment properties to be had. Connecting with wholesalers is a good strategy but it shouldn’t be your only strategy, you should still look for deals on your own.
If you own rental property in Boston then one of the things that you have to deal with is finding good tenants. Turnover can kill your cashflow and no landlord wants empty apartments. Reducing tenant turnover starts with screening and renting to good tenants. The onus is also on you to have a well maintained property so that people want to live there. Here are some tips for reducing tenant turnover.
Find Good Tenants
You want good tenants that pay the rent on time and plan to live there long term. Tenants who move in the middle of the night or damage your property cost you money, more than just lost rent. You need to screen all potential tenants and do a thorough background check. You want to check their credit history, past eviction history and a criminal background check. You need to avoid red flags but still adhere to Federal Fair Housing Laws
Charge Market Rent
Pricing to low takes money out of your pocket and pricing too high leads to turnover. Raising rents is something you should do cautiously, pay attention to the market. Boston has some of the most expensive real estate in the country so when it comes to raising the rent make sure that you have followed all of the guidelines put forth by the state. Keep your prices comparable to the neighborhood and your apartments will stay occupied.
Keep Your Property Well Maintained
If you want to have good tenants then you need to give them a good place to live. When a tenant contacts you about a maintenance problem then you need to deal with it as soon as possible. It benefits you as well by avoiding more expensive problems down the road. Do routine inspections so your tenants feel you care about the property. Make yourself or your property management company available to tenants 24 hours a day so that when something goes wrong they know you are ready to step in and fix the problem. If a tenant is considering moving out see if upgrades like new paint or something else will convince them to stay.
Reducing your tenant turnover starts with building good landlord-tenant relationships. The better you treat your tenants the more likely they are to stay long term. Be approachable and attentive to their needs, you need to be more than just the guy who collects a check every month. Respond to repair requests right away and make them feel important. It benefits both of you in the long run.