As far back as the 1920’s, the tricolon mantra in real estate investing to determine the desirability of a property has been: location, location, location. Could vision be even more important? Read on for more insight.
Billion Dollar Vision
It was once thought that as long as you selected a good location, you could do no wrong when purchasing a real estate property for investment. According to the Forbes article, How Billionaires Get Rich, the real estate industry produced 9% of the worldwide total of Forbes billionaires in 2016. They must know something. While location is an important component in real estate investing, knowing what you are buying and how to position that asset for the best outcome can often be more important when it comes to return on investment.
Spotting a deal in the apartment industry requires experience. We have seen many real estate investors pass over a fantastic deal because they could not see the vision of the potential transformation. To properly envision a transformation from start to finish, one needs experience. Having done multiple repositions, refinances, fix and flip projects provides insight only roll-up-your-sleeves, in-the-trenches experience can provide. They just don’t teach these skills in classrooms. A transformation is not just about picking exterior paint colors or a new sofa for the clubhouse. Experience and vision is the winning combination that catapults a real estate portfolio from a mundane single digit annual gain to repeated double digit multiples.
The Art of Due Diligence
Due diligence of the structural property itself is, of course, of paramount importance. Understanding area economic trends is valuable. Having a finger on the pulse of area demographics requires digging in deeper. Identifying transitional neighborhoods, incoming employers, local transportation planning and projected support services tells a much more in-depth story on how to position an asset for future performance. Getting to know local planning commissions and economical development councils takes time, effort and patience. Most don’t go to this level. And this is where we find gold.
The Art of Don’t Diligence
Learning what not to do often also comes from experience. The expensive fitness facility, with 12 workout stations, while it looked good on paper, turned out not to be a priority. Instead residents really wanted a much less expensive, big screen projector for movie nights out on the greenscape on cool summer nights. Paying more per door based on outdated comps puts one at a disadvantage from the get-go. Due diligence homework can be tedious. Dealing with an experienced property management company can speed up the process with much greater accuracy. Property management veterans can save you time and money on the buy, on the rehab and on the sale.
The Personality of an Apartment Community
Every apartment community has it’s own personality. Catering to the needs of the unique resident mix gives the community a tight-knit, hometown feel. Putting in a play area in the leasing center to help keep kids pleasantly occupied puts Moms at ease and feeling like they are home before they even sign the lease. Negotiating energy-saving appliances for upgrade packages is a win-win with potential rebates to owners and added savings on utilities for residents. Providing quick grab-and-go breakfast snacks for busy working millennials can create instant renewals. Knowing where to invest operating dollars for the best ROI is the art of experienced property management vision.
Positioning is part of vision. Are you looking to purchase new apartment properties in Texas? Are you considering a new construction apartment development project but not sure how to maximize your amenity package for best returns? Do you desire to create a laddered apartment portfolio and stair step your way from Class B to Class A properties? All of these strategies require focused vision. Working with a property management company that has the experience in all facets of apartment operations including process improvement, apartment property management, multifamily refinancing, deal formation, due diligence and more can shave years off of your learning curve and add thousands of dollars in profits to your returns.
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