So to switch things up a little, in this property management training story I wanted to step back and take a look at some of the factors that can affect the cash flow and the possible appreciation, or heaven forbid deprecation, of your real estate investment.
Before I talk about that, though, let me share a story about one of my favorite questionable rental housing markets.
Las Vegas, Nevada.
Property Management Training In Vegas
I’m picking on Vegas because lately I’ve been hearing a lot of otherwise intelligent people suggest that now is a good time to invest there. Maybe yes, maybe no.
Here’s my story.
Years ago, before the house rental market really took off I had the opportunity to travel to Las Vegas once every month or so, for the better part of a year.
What eventually struck be about the place was how absolutely artificial it was, and what a huge – and I mean huge – impact the casino industry had on the city.
Bigger Than Some Small Towns
Most if the casinos have infrastructures larger than some small towns. And the number of people they employ is huge.
There are schools devoted strictly on training people how to work in various jobs in the casinos.
And I don’t mean casino or hospitality management. I mean blackjack dealers, waiters, car hops, jobs of that nature.
There are actually schools devoted strictly to this. One morning on the way to an appointment I drove by one, and the parking lot was jam packed.
Now you may be reading this and thinking to yourself, “No kidding Jeffrey, Vegas is all about gambling.”
And you would be right. Except I would say, it’s ALL about gambling.
How Economic Drivers Influence Real Estate Investing and Property Management
Which means if you’re investing in a rental property in Las Vegas you’re really investing in the casino industry, and how well the casino industry is doing will have a 100% impact on the success of your investment and property management efforts.
The casino industry in Vegas is what we’d call the economic driver.
If they’re driving the economy forward, if they’re employing people, paying a decent wage, and managing to keep them happy, your how to rent my house efforts will be positively impacted because there will be plenty of people who can afford to rent your house.
On the other hand, if the casino isn’t doing well, then you’d better make sure you’re applying all of the methods from the property management training you’ve received if you want your rental property to be a success.
For sure Vegas is an extreme example, but it illustrates my point well.
I’m always surprised that 9 out of 10 of the real estate investors I see focus only on price and spend little if no time thinking about the economic drivers for the area they’re investing in.
It’s Not All About Price
Naturally, if you’ve invested in some basic property management training you’re in the top 10% and understand economic drivers and the big picture.
Here are some of the top items I consider when thinking about economic drivers, real estate investments, and managing real estate:
Is the market ever going to come back?
This is true of certain neighborhoods within a city as well as certain cities or even parts of the country. If your market is dependent on politics, its probably already booming. On the other hand, if you’re hoping that the auto industry in Detroit will come back, that I’m not so sure about.
How stable are the rents?
Consider whether more rental homes will come onto the market at prices lower than what you paid. If so, your competition will have more flexibility in adjusting rental rates that you will.
Will the demand for your rental property soften?
Right now there’s a lot of activity in the apartment and multi-family market.
Common sense property management training should cover the pros and cons of different property types.
If you’re investing in multi-family property, spend some time thinking about how your rents and tenant quality might be affected if more and more single family homes come on the market at rents close to what your apartment rents are.