Minimize Risk in Rental Homes
October 3, 2018
No investment strategy is without risk. The axiom “the greater the risk, the greater the reward” may be true for some, but not for all. When we’re talking about rental property investment and management, what are the major risks involved? Austin Fleck Property Management has years of experience in the Phoenix Valley in managing rental properties—giving us a good understanding of how to make a rental property work for you. In light of our experience, let’s examine some of the risk factors.
Market values are always fluctuating, sometimes rising and sometimes falling. Stock markets and currency trading are especially volatile investment strategies. With real estate property values, the broad nationwide trends have historically been rising, even with several setbacks over the past forty years. The Savings and Loan crisis of the 1980s and the Subprime Mortgage crisis of 2008 were temporary setbacks in real estate values. As difficult as those times were for those who lost homes and savings due to irresponsible lending practices, housing prices soon rebounded, and they continued to rise.
These risk factors are more dependent on how the local economy is faring. In boom times, the market value of homes can increase dramatically, making real estate investment a profitable strategy. In a contracting economy, the opposite is true. For example, with high-tech aircraft construction and television industry production beginning in the 1950s, Los Angeles experienced a boom in population growth following World War Two. New home construction exploded to accommodate the demand, and house prices shot through the roof. Even today, small bungalows in LA are selling for eye-watering prices. On the other hand, with the deregulation and offshore outsourcing of certain industries in the 1980s, whole towns and cities in the industrial rust belt areas of the Northeast and Midwest experienced massive layoffs and prolonged unemployment. Housing prices plummeted as foreclosures increased. It pays to know the territory.
Property Management: Minimizing Risk
Once a property is acquired as a rental investment, how the property is managed becomes hugely important in the increase or decrease of a home’s value. Factors such as tenant screening and relations, rent collection, repairs, maintenance, and upgrades will often determine the profitability of a real estate investment. As professionals in managing rental properties, Austin Fleck Property Management has the tools and expertise to navigate these shark-infested waters and help make your investment successful. Our business is managing your property to see that you get the maximum return. Honesty, Integrity, Trust. Please don’t bank your business on anything else. We want your risk to be minimized and to pay off with the greatest reward possible. And with experienced rental property management skills and know-how, we’re here to help make that happen.