Need to consider in real estate investing...

[Dan Wynn]

Buying a suitable property or real estate project as an investment is an art. But the investor needs to equally pay attention to the management and maintenance of that property, contractors, budget, and tenants. In the case of real estate, where the management is poor, the returns may deplete. Any thoughts on this?

[Nathan Gesner]

I agree. If you don't maintain the property and keep it at market rates, it can dramatically reduce your returns. I know an investor locally that "saved money" by only doing major maintenance on his properties. He required tenants to handle smaller stuff. He also didn't clean or paint or do anything to improve his properties between tenants. He took the first person to hand him cash (no screening) and told them to clean the property or improve it as they saw fit. 

The problems are:

1. He had a lot of bad tenants, lost rent, and heavy turnover;
2. His properties looked like crap so they never rented at market rate and they only attracted more bad tenants;
3. When he went to sell the properties, they were in bad shape and sold for tens of thousands below what they should have.

Maintaining the home well attracts good renters that stay longer and pay more. When it's time to sell the property, it will sell easier and for a higher price.