Long term- think long term. I have been working with long term real estate investors for over 20 years.  These individuals and groups are not looking for a quick return.  Instead, they are looking for a viable option for a huge profit over a long period of time.  For example, a property that I sold to an investor in 1989 for $146,000 was sold by the same investor in 2005 for $1,350,000.  This long term investment required a large commitment to maintenance and periodic upgrades.   

Long term investors select properties in areas that they expect to provide long term appreciation, and where they can collect reasonable rents,   Rather than do the minimum necessary to rehabilitate a property and sell for a small quick profit, these investors create value by doing substantial upgrades and they patiently wait for appreciation to increase the underlying property value. 

However, these investors must deal with a host of issues.  First, they have to be able to deal with renters.  The investors also need to understand all the various tax implications of their investment.  They also need to have done their homework to be sure that the long term appreciation rate for the area is positive and likely to continue that way.  Finally, my investors need to have the capital and reserves to make the property cash flow, and remain in service.  A good real estate professional who is also a long term investor can help with this analysis. 

As the investment is maintained and improved over time, the investor can increase rents.  To do otherwise leads to long term vacancies, tenant dissatisfaction and a reduced property valuation.  It becomes cost efficient to repair small problems right away before they become much larger in scale with neglect.  My investors feel it is important to have a maintenance schedule for each property and a log of each repair.  The tenants appreciate a well maintained property, and they tend to remain in the property for longer periods of time than would otherwise occur. 

Appraisers, attorneys, real estate brokers, and other investors can be valuable contacts when it comes to making these investment decisions.  When it is time to sell, I am always available to my investors to advise them regarding the possibilities of a tax free exchange, or the implications of a sale and capital gains treatment of the proceeds.

Share This