2010…. The year of the tenant
My focus for 2009 was to concentrate on seller financed transactions. This would allow me to “stretch” my available capital making it possible to control more property with the funds I had available and hold them long term. Well….. It worked. Using this strategy allowed me to acquire over fifty rental “doors” in 2009. However, this success comes with its own set of challenges. In order to effectively control our inventory we had to build our own “in house” property management team. This involved recruiting staff, adopting property management software and making sure everyone was willing and able to deal with the dreaded “toilets, tenants and trash” that is so feared and hated by most investors.
What we found along the way is that most OWNERS hate property management as well. Eight out of Ten of our acquisitions in 2009 were from “tired landlords” that were raising the white flag. With property values dropping, they felt trapped and were more than willing to shift the joy of ownership and management to someone else. (I actually think some of them thought they were taking advantage of us!)
So, after developing our own brand of management, we were curious how satisfied other owners/investors were with their current property management. The answer was surprising. Most of those we contacted felt that their managers were not doing a good job and in fact hadn’t spoken to them in months. We began to offer “master leases” to these owners and were able to increase their rents while capturing revenue for ourselves as well by using our existing management infrastructure.
Our focus in 2010 will be to continue with our seller financed purchases. We will also be adding more master leasing in our business plan. These strategies do not depend on equity but rather controlling costs through effective management so that the properties can produce solid monthly income. I don’t know when the Nation will recover from housing price drops but I do know that people need housing and I want to be their first call.
Shawn Watkins
