17 Apr 10 WAYS TO REVIEW THE PERFORMANCE OF YOUR REAL ESTATE INVESTMENT
To create a high-return strategy for your real estate, you must understand the performance of your current portfolio. Reviewing your real estate portfolio and its performance every 6 months can help you identify opportunities to both save and earn more money. You’re not sure where to start? The most experienced managers or administrators recommend these ten key criteria.
1. Are you charging the correct rent?
This is critical to your success as an investor. If you charge too much, you may find it difficult to attract and retain tenants, which in turn may mean your property is vacant for longer periods of time. And if you don’t charge enough, you’re not maximizing your rental profitability.
Take a look at what similar properties are renting in the area and speak to Berkinder as they can offer expert advice. Don’t automatically seek to raise the rent at every opportunity, you don’t want to raise the rent and then lose a few good tenants. Dependable, non-confrontational tenants are worth their weight in gold, so holding on to them may be more important.
2. Study the market value of your property
Has the value of your property increased or decreased in the last year? A lot can happen in the real estate market during a 12 month period. If prices have increased, the amount of equity you have in the property has also increased, which is great news if you’re looking for additional investment opportunities. Berkinder can help you arrange a property appraisal so you can better understand the current market value of your property.
3. Review current loans
Calculate the outstanding balance on your mortgage so you can calculate how much equity you have. Also write down the interest rate it is and how much time is left until the end of the fixed term. It may be that in the last year you have reached the end of the fixed term and have moved to a different rate that is not so favorable. Given the competition in the loan market, you may be able to find a better mortgage or loan.
4. Check your insurance
Take a look at the insurance policy you have on your property and make sure you are still happy with it. If you don’t have insurance, consider taking out a policy to protect yourself against unforeseen problems that could cost you a fortune in the future. If you have multiple properties with different insurance companies or different coverages, it may be worth seeing if you can consolidate your policies with a single company or agent and get better rates (cheaper policies and better coverage).
5. How are your properties performing?
Are your tenants causing constant problems, are you having problems with any or all of your properties, or are you finding it difficult to rent? If you answered yes to all of these questions, you may have a problematic property and it may be better to put it back on the market and get your money out to invest in something else. Talk to Berkinder, your property manager about this, we can help you.
6. Check your equipment
Having a good team of experts around you can make a big difference in the success of your investment. Does your bank or mortgage broker proactively make sure you have the best home loan rate? Is your accountant responsive? Have they been proactively offering you advice? If you don’t get what you need, it may be time to look at different service providers.
Make sure there is extra budget set aside for any unforeseen repairs that come up in the next 12 months.
8. Review your tax situation
Meet with your manager or accountant and discuss your property in detail to ensure you are claiming all relevant expenses and providing them with all the necessary documentation. For example, the taxation of a long-term contract (habitual residence) is very different from a seasonal contract.
9. What is the rental yield?
As an investor, it is important that you know the rental yield of the property, or in other words, the return you get on an investment property. To calculate this, you need to calculate the difference between your overhead costs and the income you receive from renting your property. Knowing this allows you to accurately assess the performance of your property and ensures you have a good idea of the continued return you will get on your investment.
10. Review rental agreements. When do they sell? Was it agreed that the tenant would pay the Community expenses and the Property Tax? Are you paying them? Have the rent increases provided for in the contract been applied?
At BERKINDER we offer legal advice, brokerage services in the purchase and sale of real estate, market studies and the experience of more than 40 years investing and advising investors in Barcelona.