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Wondering how investing in property compares to investing in the markets ? And what about the upkeep? Money

Investing in property requires knowledge, care, and attention.
Just as investing in mutual funds or the markets requires a knowledge of the markets, either by you, as the investor, or by your investment advisor, property management also requires specialized knowledge.

And while your financial advisor pays attention to worldwide market trends, your risk tolerance , and other factors to keep your money on track, property managers must also pay attention to the details that can affect the value of your investment.

Like unforeseen market events that affect an investment portfolio, unpredictable life events occur that affect your property . Unexpected repairs may be needed despite ongoing maintenance. Appliances can suddenly quit working. The most stable of tenants can lose their jobs and be forced to move out. These events are an ongoing part of property ownership.

Have you taken a beating in the markets lately? Tired of watching the internet day in and day out?
Real Estate ownership is the one of the most stable forms of wealth building, if it is done in an educated manner.

In our experience, we have learned a few key concepts. As a property owner and investor, we are always faced with options/choices. For instance: when acquiring an investment property we could either keep it in its current condition, or upgrade it.

The only benefit of keeping the property in its current state (assuming that it is well-worn and outdated) is the minimal requirement of cash needed to initially run the property. However, it is always the case that there will be very high and consistent maintenance expenditures from such a strategy. Inversely, one can choose to improve the property (plumbing, heating, electrical, windows, roof, and cosmetics).

Such a strategy has many advantages:

· increase the property value (and your equity)
· tax advantages
· increase longevity of the property (economic life)
· minimize maintenance expenditures
· decreased utility costs
· increased profits due to higher rents
· decreased vacancy rates due to tenant retention
· potentially a more responsible tenant
· increase re-saleability
· increased money in your pocket when refinancing

As an analogy – if you made a living driving a taxi, you would change the oil, upgrade the tires and perform regular preventative maintenance. We think of our properties as machines that build wealth. Why wouldn’t you want to keep them well maintained and efficient? Doesn’t that make good sense (cents)?

We believe that the price of the Investment Property you purchase is a function of the initial condition (disrepair) of the property . In such a case it is not “bad luck” or poor investment choices when seemingly huge maintenance costs appear (windows need replacing 6 months after you purchased the property).

If all of these things were already in place when you bought the property , you wouldn’t have had the opportunity to purchase the Real Estate for a reduced price and benefit from the “sweat” equity gained by upgrading the property yourself.

Take your time, educate yourself about the pitfalls, and find a good property manager. Success in real estate investing is sure to follow.

Garret Wong has been successfully investing in real estate since 1997 and is one of the directors of GaraMark Property Management Inc., a property management company specializing in management of single/multifamily homes, condos and apartments in Winnipeg, Manitoba, Canada (www.ownershelpingowners.ca). Property management

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