Plano Landlord Advice: Top 3 Reasons Why Landlords Fail
Last Modified on 09/09/2020
If you’re planning to invest in Plano, Texas, you probably want to make sure you have successful investment experience.
It’s more complicated than finding a great property, renting it to tenants, and collecting rent.
We have talked previously about what’s required in order to succeed as a real estate investor. Today, we’re covering a topic that’s just as important: how do you avoid failure?
We’re exploring some of the most common reasons that owners will fail if they don’t invest correctly in the Plano real estate market.
1. Failures Occur Without Investment Criteria
Successful investors acquire properties that fit their investment criteria. Failed investors often don’t have any investment criteria at all.
You can’t look to someone else to establish that criteria for you. Your Plano property manager can help you evaluate the rental properties you’re considering and a real estate agent can help you negotiate a great price for the home you’ve identified, but only you can establish your own investment criteria.
What are your investment goals?
Why are you buying rental property in Plano?
If you can’t answer those questions, and you cannot create a set of investment goals and criteria, there’s a very good chance that you may fail.
Many investors are focused on cash flow. That’s going to give you a specific set of options when it comes to choosing a rental property in Plano to buy.
Other investors have goals and strategies that focus on appreciation and the growth of their asset’s value. Those buyers are going to be looking at different properties.
Plano is a hot market for nearly every type of investor. You’ll find something that fits your goals, but you have to know what those goals are. Don’t make the mistake of buying something just for the sake of buying it.
Revisit Your Investing Goals
Part of understanding your investment goals is revisiting them from time to time. If you were investing three or five years ago, you’d find that Plano is a much different market today than it was then. In five years from now, who knows what we’ll find when it comes to Plano real estate. You have to revisit your investment goals and you have to adjust them.
In Plano, home values have risen dramatically in recent years, and they are moving faster than the rents are. Many school districts have changed, and there’s a surge in the tech industry presence.
Rents will likely start to keep pace with the growth of home values, but it’s something you’re dealing with in this market today that you weren’t dealing with five years ago.
Make sure your investment goals are consistent, but also flexible.
Consider the Pandemic’s Impact
Currently, we’re in the middle of a pandemic, and that’s going to do weird things to the real estate and financial markets. To avoid failing with your Plano investment property, make sure you’re able to update your criteria and be honest about your expectations and challenges.
There is no right or wrong answer to how and when you invest. It has to fit your goals.
2. Failures Occur Without Due Diligence
Another reason that investors will fail in Plano is that they’re not doing their due diligence. You have to get to know the market if you’re going to invest successfully here.
Know the School Districts
Explore the various schools within the district and get to understand the property taxes. In Texas, there is no state income tax, but we do have property taxes that will affect your real estate assets.
Understand and Anticipate Maintenance Costs
You also have to do your due diligence when it comes to maintenance. This is a major area that can cause investors to fail. The deferred maintenance on your property can really come back and bite you where it hurts.
You might be having positive cash flow during a tenancy with a great resident in place, but if that resident moves out and you’re thinking about moving a new resident in, you might find that there’s a lot of unreported and deferred maintenance.
That’s going to be a problem.
The city may not certify your property because there’s a foundation issue or a roof problem or something wrong with the plumbing. Deferred maintenance is a huge source of failure, so stay on top of it.
3. Failures Occur When Emotions Take Over
Finally, one of the most common reasons an investor will fail in Plano is that emotions take over. Your rental property is a business, and it has to be treated that way. Be consistent and don’t relax your criteria because you’ll regret it.
Focus on the Numbers
When you’re an investor, the numbers matter more than your emotions. Sometimes we choose to ignore what the numbers are telling us because we have an emotional tie to a home or a personal belief.
The data is the data.
It’s not our job to push the data so it means something else. Listen to what it’s telling you.
Leverage the Data
Plano is a fast-moving market, and you want to make sure that your numbers are dictating the deals. Your past experience doesn’t matter, and how you feel doesn’t matter. Have a data-driven strategy and make sure it aligns with your goals before you purchase.
Trust but verify and make sure you’re cognizant of what the numbers are telling you. Don’t make this mistake of comparing your Plano numbers to other areas in North Texas or other markets across the state or the country. Focus on what Plano is doing now.
If you have any questions about investing in Plano rental properties or you’d like some help avoiding some of these things that lead to investment failures, please contact us at Mynd Property Management.
To keep your education going, we’d invite you to join us online. You can learn more about real estate investing through several other opportunities to connect with us.
Visit our Facebook group of investors, which is called Master Mynd. It’s a real estate investors’ club, where you can exchange ideas with other owners.
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