If you’re new to real estate investing, you’re probably not as familiar with the concept of investment control as you should be. In the following article, Ron Cadman discusses investment controlling, and how it helps investors promote asset performance. Ron Cadman is co-founder of the real estate investment management firm, Investar USA.
If you’re considering real estate investment with the help of a real estate investment firm, I have two words for you: Investment control.
Now, if you’ve decided to pick a piece of real estate and purchase it without any intermediary asset management company, you will require a lot of time on your hands and can expect significant effort. Otherwise, you’ll probably enlist the help of a real estate investment group.
Why use a real estate investment group?
The purpose of using real estate investment groups for rental property acquisition is to make money without building, renovating, or actively managing the rental. This means that you won’t be the one to deal with all of the business of being the landlord. This also means that you won’t make as much money from the rental because the real estate investment group gets a takes a large piece of it. These factors are why investment control is so important – you have to keep an eye on your return.
Nevertheless, many investors – particularly new real estate investors – find that using a real estate investment firm delivers greater value for the cost than attempting direct rental property ownership. Investment control helps investors maximize their return, and involves managing the following:
- Measuring risk/return. Investors must monitor their accounts and measure performance against benchmarks. In other words: Are you getting back what you expect? If not, is it more or less? If it’s less, why?
- Monitoring the asset management company performance. How is the asset management company protecting or maximizing your investment? You may want to independently analyze your real estate investment group’s performance, and address any issues on a quarterly basis.
Investment management requires a fair amount of dedication, but using the right asset management firm can significantly reduce the amount of work you have to devote to your investment. Look for a real estate investment group that is wholly transparent, that handles rental concerns directly and ethically, and that you can communicate with directly and without delay. Conducting thorough investment control could save you from unfortunate surprises with your asset later on.