I have talked about hiring experts in the past. It’s your responsibility to manage your experts. But in the end, having the right team can make the difference between a moderately successful wealth building plan and a superior one.
Many people think about financial advisors, CPAs, and lawyers when they hear the term “expert”. It’s valuable to have the right people. For one thing, I don’t have a financial advisor. I hold that role. Regarding CPA, it has taken me awhile, but I have found one in California who knows what cost segregation studies are, how to handle K-1s, and even spotted a loss that was never credited to me from a previous statement. I haven’t needed a lawyer yet, but I have contacts should the need arise. Finally, I have a superb mortgage broker. Those are hard to come by, because most are used to handling primary residence financing, not your fifth rental property.
But that isn’t the only reason we need a team of experts. Recently I had opportunity to raise the rents on our units. My management company recommended we stay where we are. Of course they would! They want to ensure we maintain 100% occupancy without having to work too hard.
The first person I called was Jeff Brown. We talked for about a half-an-hour. The benefit of this is the fact that he has his fingers in all kinds of deals in that area. He can tell me about rent rates in all kinds of other developments. To top it off, we also have a leasing agent that works in the area, and I also contacted her for an opinion. This type of information is gold. If I didn’t have either of them, I would probably defer to the management company, and not enjoy a rent increase for some time, perhaps when everyone has raised theirs and its unavoidable.
I can tell you this: I don’t want to be the last one to the party on rents. The sooner they go up, the better. That is the beauty of financing with fixed debt. The payments stay the same, but the profits increase.
Naturally I offer a lower rate to tenants that want to renew. I like to reward them for staying on and not forcing them to move up to the full market rate. But costs of living rise regardless. I’m on the hook for paying rising insurance and property taxes.