# Entrepreneur this week post number 4 long term rental deals. Hello to all forum members. After examining the ...
# Initiated week Post number 4
Long-term rental deals.
Hello to all forum members. After examining the feasibility of a rental deal, in this post I will detail a little about managing a rental deal.
In the previous post we listed the factors that affect the profits from a rental transaction. Today I will discuss the question, are there any red lines / guidelines for a rental deal? Many times I have heard from investors statements such as "I am not approaching a rental deal that is less than 800 $", "I am not approaching a rental deal in Area C (low or no income).", I am not approaching a rental deal with HOA.
Well, I can understand where these statements come from. For, investing in a rental deal depends heavily on its main customer - the tenant. Who will be the tenant? How long will the property remain and how will it be maintained? These concerns are legitimate and it is important to note that renting to C areas requires unique operational and operational knowledge for these areas. Because, this is not a tenant who works for an insurance company and is married to + 2 children and has lived in the 6 property for years and pays the rent on time. Sometimes it is a tenant who works a casual job, receives a weekly salary, and has no long-term plans.
In these areas, we will see a lot of the Section 8 program with which we have a broad activity and which I will elaborate on in the next post. In a big way, this program solves many of the concerns and concerns that there are for rent in these areas, but not only. Careful examination of the quality of the tenant can certainly help. Of course, note that in these areas, we will not accept an application from a tenant with a credit score of 800. Therefore, expectations should be adjusted accordingly and investment determined accordingly.
So why invest in these areas? Well, the double-digit returns are definitely winking. I can tell you about a first deal I made in this area. This year was 2017 and the property cost no more than $ 18,000. And rents? $ 650 from Section 8. Anyone who loves numbers will want to calculate the gross return on this deal and will see that it is over 40%! True, not everything is pink and there are high vacancy & repairs in these areas. Yes, there are many payment issues in these areas. But between us, the job of dealing with these tenants rests with the management company and not us, thank God.
In these areas, statistics are very important. For, it has a pivotal role. We can see 4 Monthly Vacancy trying to find a suitable tenant. We can see Eviction once a year. We can see partner maintenance costing about 3-4 monthly rentals. In my past, I worked as a salesman at a major communications company. And my manager always told me "the big numbers rule will always win" so, I didn't understand what he wanted from my life. But today, when we manage dozens of C-area properties, I can say with great confidence that, in terms of the viability of renting those areas, over the years and the amount of assets, the bottom line performance in the income statement still shows high returns to justify the investment adventure in those areas. Furthermore, I know a fair number of examples of investments in hard-to-reach areas that worked perfectly smoothly, with no payment problems and tenant evictions, and for several years, we have seen very nice double-digit returns.
To sum up this post, I would like to recommend 2 recommendations to those looking to invest in a rental deal.
The first - Never foreclose on a threshold condition. Give each transaction a chance and take it seriously.
The second - Carefully choose the management company you work with. Working with a long-standing, reputable management company, reputations and hundreds of assets under management can sound like a safe but not necessarily low-income flexibility and creativity. Always keep in mind that the management company is in constant communication with the tenant, she is the one who knows the tenants in the area and is the one who can recommend how to manage the property most properly.
See you in the next post!

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