How to Make Money on Real Estate in High-Crime Areas
Let’s talk about how to make money in high-crime areas and rougher parts of town.
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The first thing that you need to do is go to a pawn shop and get a bulletproof vest, a gun, and a taser. Because all of these things are important when it comes to collecting rents.
Guys, I’m joking. Unless you’re investing in a C- or D-class market you can most likely avoid those items.
What You Need to Know About Real Estate Investing
Jokes aside, I think it’s very important for all the beginners who want to get into real estate to understand something. Are you looking to get into real estate because you want another job or because ultimately you want financial freedom or passive income, but you don’t necessarily want the headache associated with handling investment properties?
Look, it’s never going to be hands-off. Even if you’re buying a turnkey property where the provider is guaranteeing a completely passive and hands-off experience, it’s just not going to happen.
Your time and involvement are always going to be needed. Unless you’re investing in a syndicate or real estate investment fund, your time will be needed.
Now, what I see a lot of investors doing is supplementing time for money. I don’t think that’s the right way to go about it. They decide to self-manage, and I do not believe that you should do that. I say that because the time that you spend is definitely not worth the cost.
Get a Property Manager—It’s Worth It
We know that a lot of property managers are known to nickel and dime, so you have to be careful and select the right one. But at the end of the day, it’s something that they specialize in; it is their bread and butter. They do it day in and day out. My advice to you would be to select a property management company that has been managing for an extended period of time and understands how to successfully manage in the area you are looking to invest in.
I believe that you should hire a property manager to do the work for you instead of yourself. I don’t think it’s worth saving the fees. Even if you have a larger portfolio, you should be focused on finding deals, fixing them up, selling them, and looking at other real estate investment strategies. You should not be focused on tenants and toilets.
It’s the crappiest part of the business, guys. I own a property management company. I hated it. I only started liking it early last year. It’s not easy; it’s a thankless job, right?
You’ve got tenants hating you, landlords hating you, contractors and maintenance guys asking for money. Look, it’s just a disaster. Well, it was. I’m kind of happy with where we are now, but it took a long time to get here. So that’s my quick little two cents for you.
Now, for all of you folks who are looking to self-manage and want to know how to successfully collect the rents, there are many variables that come into play. I’m just going to give you one tip.
I think you should do your best to virtualize the entire experience. That means get property management software like Buildium, AppFolio, or Yardi. There are a lot of them out there.
Request Online Rent Payment
Make sure you plug everything into the system and make sure to try and train your tenants to pay their rent online. That’s what I mean by virtualizing property management rent collections.
Do not accept checks because a lot of them are going to bounce. Do not accept certified checks in the mail because they’re not going to get to your address. Do not accept cash because that is a recipe for disaster when it comes to the IRS. You have to keep Uncle Sam happy.
Get them to pay their rent online. It’s much easier for you from a bookkeeping standpoint and an administrative standpoint where you’re not spending more time chasing the money and collecting the rents.
It’s also easier to process an eviction because if the money isn’t in the account by a certain date, then you can post a three-day notice and file for eviction faster. That way you can get the property turned and a tenant in there as quick as possible.
So, guys, that’s kind of my two cents for you. Virtualize the entire experience and you’re going to make your life a lot easier. But ultimately, I truly think that you should leave it up to the experts and let them manage your properties. That’s pretty much it.
Do you own rental properties? Do you have a property manager or self-manage?
Let’s talk in the comment section below!