When bad buildings happen to good people you can bet the reasons fall into one of the following categories; wrong people, wrong property, wrong paper. Real estate investing requires knowledge about making the right selection (correctly) in all three categories. Make one bad decision in any of these areas and doom is at hand.
This is one reason why self-management of property assets is seldom a good idea; people too often think that property management is “easy” failing to recognize the time, energy, effort, dedication and time involved in providing professional property management.
Following are examples that fit into each category. This is by no means an all-inclusive list, just a sample of items that impact the value of property assets.
Every business is built on relationships and the real estate business is no different. Here are just a few “everyday” events in property ownership; It’s important that management can address these in the normal course of business.
- Customer contact. Who is the public representative of your property? Who is the first person they meet when considering your property for leasing? Are they representing you well? Just recently CEO of Amazon.com called his own customer service department only to be left on hold for 4.5 minutes. You can bet that didn’t go over well and changes were made immediately.
- Maintenance. Is maintenance responsive and respectful? There is more to customer service that just fixing the issue. Along with promptness, courtesy always goes a long way. Maintenance crews who demonstrate a sense of pride in their work can raise the level of perceived safety and quality of a building.
- Vendors. Can you call a plumber at 5:01 PM and not get hit up with an after-hours charge? What is your relationship with vendors? Take the time to get to know when their slow season is and hire them during those times. This will go a long way to get you closer to the top of the list when you need a good turn.
- Banking. This industry has changed dramatically in recent times but does not discount the need to have a working relationship with your bank. Do you have a “go to” person for, not just loans but, everyday banking services? Is there more than one person at the main branch that knows your name?
What are the first impression and lasting impression your property presents to current and future customers? Are your management systems in place and being followed?
No property is ready for showing until it’s ready. No shortcuts here. You only get one chance to make a first impression. Sounds simple- but it must be accomplished before a potential tenant is on site. Some simple things to consider…
- Is the landscaping well maintained and trash picked?
- Are the common areas clean and free of strangers?
- Are the windows clear and clean?
- Is the signage bold and clean?
- Are light fixtures working and dust free?
- Do the elevators, keypad or other security measures all work with ease?
Paper represents the documents that secure your ownership position. Without it, there is no “paper trail” to prove your right to the income stream created by the asset. This step, securing the right to income, is no less important than any other and must be treated as the crowning step to assure your investment rights to income, tax benefits and participation of the proceeds of sale.
- Ownership documentation.
- Ownership structure.
- Financing. Bank loans and other financing documents.
- Insurance to protect against loss. Is insurance in order and up to date? Do tenants have emergency telephone numbers for weekend emergencies?
Folded together, people, property, and paper form the triangle, the closed loop, to knowing an investment in real estate has standing, potential future value for the investor and legal standing – a direction connecting the dots between your invested money and a piece of real estate.
How Can You Avoid these Pitfalls?
Guess what? Owning an entire building all by yourself IS a lot of work. But the good news is, now you don’t have to own and take on this entire burden by yourself. Thanks to companies like BuildingBits.com you can benefit from ownership have access to all these key and important property metrics without the hassles of having to deal with them. You can own a BIT of the company without the burden of people, property or paper. You simply get to own your share, monitor your returns and hold or sell your BIT based on your satisfaction with the long-term return.
Investing in a BIT is an easy way to begin your journey into owning your own entire building. Start by investing just a BIT and see how powerful property can be!