The ABC of Real Estate

By: berg0101a


Real estate like all other assets needs to be managed well to ensure that it generates the maximum return for the investor. While the easiest thing to do would be to lock it up in the hope that its value will appreciate, this option is also probably the thing most likely to erode the value of the property. Locking up a good piece of real estate is like leaving a large sum of money unused in a checking account where it won’t earn anything.

There are a number of things that owners need to do to ensure that they get a good return from their property. The most obvious of these is to let it out. Renting ensures a steady and often handsome stream of income for the owner but it also involves an element of risk. Renting to the wrong tenant can lead to a lot of headache. Not only can the rent get delayed, it might not get paid at all. Worse still, a bad tenant can seriously reduce the value of a house by not maintaining it well or even damaging it. This is why it is essential that when renting out one’s house, one should have a well drafted legal contract which protects the rights of both the landlord and the tenant. More importantly, the landlord should check the credit history of the tenant and her references with previous landlords. This is the best way to ensure that one is not saddled with a bad tenant.

Maintenance also plays an important part in maximizing the return generated by real estate either through rent or by way of a sale. A shabbily maintained property in even the swankiest neighborhood will go at a discount to the rate prevailing in that neighborhood. Conversely, a well maintained one in a bad neighborhood will fetch a premium over the going rate in that neighborhood. Absentee landlords or even ones who are present might want to consider the option of outsourcing the job of maintaining their house to a professional management service. While this involves an expense, it takes away the significant inconvenience involved in routine maintenance. In fact, the expense is an investment because it generates a return in the form of enhanced value over a period of time.

Another important factor determining the value of a real estate is the quality of the finish and the amenities. While the location is the single most important factor that decides the value of a piece of land, owners can contribute to increasing the value of a house by customizing it and beautifying it. For example, one could remodel a property to have all glass doors to give it a luxurious and airy feel. Or, one could install a Jacuzzi in the bathroom or have large walk-in wardrobes. These embellishments to a house would do a great deal to enhance the value of the house.

Regardless of what one chooses to do, good management will be critical in ensuring the long term health of your real estate. It is therefore worthwhile to outsource the job to professionals if you are unable to do it yourself.

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