It’s often said that it takes money to make money, and for most people, that’s a true statement. Once in a while, you’ll find crafty people like Kyle MacDonald, who traded a giant red paperclip for a two-story house. However, those people are rare.
If you’re a property investor you need to spend some money to become profitable. The following expenses are essentially a required component in your profitability.
Property management services
Being a profitable property investor requires that you have as much free time as possible to acquire additional investments. You might make a little money with one or two investments, but you’ll never become profitable that way.
Hiring a property management company is like handing off all of your landlord duties to a dream team. Most property management teams have decades of experience selecting tenants, collecting rent, and handling evictions.
Before committing to any services, a reputable property management company will assess your properties at no cost and let you know what service fees you can expect. For example, Green Residential will perform a free rental analysis for Austin property owners before they sign up for any services.
As an investor, your time is worth far more than a little bit of cash. If you’re managing your own properties, consider paying a professional team to take over so you can expand your investment portfolio.
Software and mobile apps
They say time is money, but actually, productivity is money. Time won’t pay your bills.
Managing your time, tasks, and priorities with digital tools will make a huge difference in your productivity. If you’re still using to-do lists written on pieces of paper or yellow sticky notes, digital tools will greatly improve your ability to complete your daily tasks and reach your investment goals.
While some digital tools are free, others cost money. However, don’t hesitate to pay for software that will keep you organized and on track. Invest a little money in your own productivity and profitability with the following tools:
Fundrise. Plenty of experienced and new investors are turning to real estate crowdfunding investment opportunities. As an investor, Fundrise is a great way to find new investments that won’t require your physical effort to manage.
Rentometer. If you own single-family home investment properties, this app will help you determine the market rate for rent in a given area, which may not match what current tenants are paying.
Personal Capital. If you’re not tracking your finances, how will you know when you become profitable? This app makes it easy to track both your personal and investment finances, including income, cash flow, and net worth. You can also link your investment properties to get estimated current values calculated by Zillow. Personal Capital is free, so it will only cost you a few minutes of your time.
Landlord Studio. An app that lives up to its name, Landlord Studio will automate a large portion of your landlord responsibilities. For instance, you can import financial transactions, track rental payments and expenses, generate organized financial reports for your tax professional, and more.
There are additional real estate investor apps on the market so check out all your options. Chances are, you’ll find what you need.
Invest in a professional CRM
Customer relationship management software is critical for managing leads if you flip your properties. It’s no longer acceptable to keep track of leads in a standard email account. You need the ability to segment your leads as they come in so you know what marketing emails to send people. Some leads need to be nurtured, while you can be direct with others.
A good CRM will cost you a monthly fee and it’s worth every penny. You’ll maximize your profitability by segmenting leads and automating your email marketing efforts.
Presentable properties get more interest than properties that look as if they are falling apart or haven’t been maintained. Any improvements you can make to your investment properties will contribute to long-term profitability. For instance, you’ll get a higher number of interested buyers or renters, and your vacancies won’t last long.
Becoming a profitable real estate investor costs money
Being successful in the real estate industry requires investing money to some degree. This isn’t surprising, since most industries are the same. However, these expenses are just part of doing business, and ultimately, these investments directly contribute to your success.
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