Real Estate Investment Options
At Diversified Investment Strategies, we recommend that real estate investors consider how they think and feel about tenant turnover and raising rent prices. Your thoughts on these two topics could either make you a sufficient amount of money, or cause you to lose out on money available to you.
Every real estate investor has the fear of losing a tenant, especially if your real estate property has only one or a few residents. In that case, each renter plays a significant role and supplies you with a significant amount of your income. However, if this fear is causing you not to raise the rent as the market allows, you may be losing out on a good portion of income!
Often, real estate investors will not raise rent prices or upgrade the property in fear of losing a renter. Instead, the investor will lay low, just like the tenant, in hopes that the tenant will stay as long as possible. With the loss of a renter comes loss of revenue until you find a new renter, the cost of needed repairs, and stress for you as the investor.
However, it’s important for you realize that turnover could be a positive thing! If you use that time to make improvements that will provide a means for maximizing your rent price, these improvements are well worth the competitive advantage you’ll gain from them. Plus, you’ll have fewer repairs to make down the road if you keep up with them, and your property will have better value when you go to sell.
Another bonus is that an upgraded real estate property may attract better tenants who are looking for a property in good shape, and will therefore take care of it and keep it in good shape.
Making repairs and raising rents is important for short-term income and long-term property value. If you still have fear of raising rents, consider where the fear is coming from. Do you not have the means right now to make necessary repairs? Is the neighborhood deteriorating and values along with it?
In either of these cases, it might be time to consider selling your investment property. Perhaps you are reaching the age that maintaining the property is just too much work for you, or you want to sell before values drop further, or you just want to sell while you’re ahead! No matter what the case is, at DIS, we highly recommend a 1031 exchange.
A 1031 Tax-Deferred Exchange allows you to preserve the value of your property investment by deferring all of the taxes that you would otherwise owe at the time of selling the property. Instead, you sell your property and acquire another ‘like-kind’ property in its place, without having to pay federal capital gains taxes until later.
You could exchange your property for many properties or just one, for apartments, duplexes, single-family homes, vacation homes, land and more. You’ve got lots of options, and here at DIS, we’re ready to help you! Our team of professionals can help you choose a real estate investment property exchange that is right for your current situation and needs, and for your future.
Contact us here at Diversified Investment Strategies as soon as you’re ready to begin the process or to get your questions answered!
Bryan Hakola
Diversified Investment Strategies
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