Management Of Your Investment Portfolio

When you make your investment in real estate, it is implied that you want to make money. The cash can come from direct income from the property or from capital gains from a sale after an increase in value. Either way, the investment must be managed, considered, and watched at all times. If the owner and manager are taking care of business, there may be ways to increase the income, and the value. There is always the possibility to make a sale for the right price and terms. Keeping aware of the market might bring an opportunity to make a tax-deferred exchange into a property with more benefits for the owner.
Real estate investors often own various kinds of properties. They may have a mix of commercial, residential income, land and groups of houses. These owners have an extensive portfolio of investment real estate.
Owners of portfolios of stocks and bonds meet with or call their broker often. Like seeing a doctor or dentist at regular intervals, it makes sense for real estate investors also to meet with their real estate investment representative or counselor at least a couple of times a year, perhaps quarterly. Exchanging ideas with the professional who has the daily pulse of the real estate market can be profitable. At each meeting, the investor can plan on finding out the current market conditions that will have an effect on equities that are now owned or that could be acquired.
In many cases, the owner’s investment representative is also the property manager. If not, perhaps the property manager should also be present at these meetings at least once a year.
Make Notes Before And During Meeting
Planning any professional meeting in advance will make it more productive. To keep any business meeting on track and save everyone time, notes should be made in advance by the property portfolio owner or the real estate investment specialist. The following are some examples of questions or subjects that might be discussed at each meeting; or some at least once a year:
1. In what ways can the management of my properties be improved? Can any current expenses be decreased?
2. How do our rent levels compare with the others in the immediate area?
3. Have there been collection problems–are all rents current at this time?
4. Is the current maintenance of the properties up to the best standards?
5. Has the planning department approved any zoning variances in the areas of my properties? Would it enhance the value of any property of mine to apply for a change in zoning?
6. Have any new construction projects been started nearby? What are they and what effect might they have on my properties or rents in the area?
7. Is the present use of my properties the highest and best use?
8. What improvements could be made that would increase the income?
9. Are we attracting the kind of tenants that should be in this type of property? Would anyone else be more desirable?
10. Are any properties of the type we own on the market at this time in this immediate area? What is the price and how is that price justified? Has there been any buyer interest in it at that price? Should we consider adding it to my portfolio of properties? If so, how can we acquire it, either by cash purchase or exchange?
11. Is my leverage position in all properties at its maximum potential? Would there be any benefit in a refinance of any of my properties at this time?
12. Are any properties in this portfolio suitable for a condo or co-op conversion? If so, should we do the conversion or sell the property to an expert in that field?
13. Can we offer any property for syndication? How would we handle it?
14. Which of my properties has the best set of benefits for me? Which has the least benefits?
15. Which of the properties in the portfolio would be the most desirable to dispose of at this time?
Setting Those Goals
When each of the points in the meeting have been covered, both the property owner and his/her representatives should have a much better picture of the property portfolio and what should be accomplished. At this time, maybe each property owned should be graded in order of the most desirable to the least desirable to continue holding. Then the answer to item #15 will be apparent.
This can now give the final result of the meeting. This also can be the “bottom line” and the reason for the meeting. The goal should be set for the sale or exchange of the least productive property (to this owner) in the list of real estate owned. This might be the property of the highest potential to someone else, but of less interest to this owner because of the increase in value already shown by current estimates of worth or appraisal. This result is very satisfying since the “weak” property is identified and the goal is set to use its equity to acquire a certain type of real estate that will fit better into this owner’s portfolio.
This gives a result for the owner that is seldom achieved by most investment real estate owners. At all times, there is a definite effort being made by a top real estate professional to improve the owner’s position.
The problem of a taxable gain from that property need not be a consideration to this owner. The broker, working with the property owner’s attorney and accountant can arrange to defer that tax by setting up a tax-deferred exchange into a more productive property.