Recently I penned this paragraph in response to a request for information from one of my clients. Keep in mind this was written specifically in regards to the student rental investment for the London market specific to the University of Western Ontario.
However the core theme of these rules I believe it can be applied to different investment scenarios .
Let me know what you think!
Before my children were born I had student rentals, I sold them shortly after the birth of my children i.e. my twins as time did not allow for proper management . If I had been able to stay with my plan for purchasing rentals I would be in a position of semiretirement at present if I so chose.
I had a number of rules for investment which served me well at the time and I believe are still very valid today. Over the past 19 years having watched numerous people come and go in the student rental investment endeavor, I am more convinced than ever that these following rules will keep any investor out of trouble and on the road to making money over the long term with minimal aggravation.
Firstly, familiarize yourself with the geographic location that will allow you to charge the higher end of the market rents and which will allow you to keep the units rented year-round minimizing vacancy. As well, units that are in more difficult areas to rent will incur higher management costs as well as greater periods of negative cash flow due to vacancy.
Secondly, have a plan in terms of how long you're going to hold these properties and stick to it as money is made in this game over time, the more time in, the more money you make. An old Chinese saying is that it is never wrong time to buy property only a wrong time to sell .
Third and perhaps most important of all work with an agent or realtor\property manager who you can trust in terms of knowledge, experience and professionalism.
Fourth and final rule, do not break rule number 1, 2, 3 or 4, there is no point in having a plan if you do not execute it !