Saturday, March 13, 2010

The "you can make a difference" guideline....

Guideline #17: What you do matters.

When you buy a stocks, bonds, shares in a REIT, mutual
funds, rare coins, gold, art, or collectibles you have
invested your money, which is a very good thing. However,
you have done so passively. If you have purchased wisely
you can make significant gains. If the market appreciates
you can make significant gains. But, once you have made a
passive investment there is not much you can do, except
wait.

Real estate is different. It is true that if you have
purchased wisely, or if the market appreciates, you can
make significant gains. It is also true that by inaction,
ignoring your tenants, not fixing things that need fixed,
not cleaning things that need cleaned, you can make your
property value go down. It is even more true that by action,
taking care of your tenants, fixing things that need fixed,
improving things that maybe do not need improved,
upgrading your tenants, you can make your property value
go up.

A regular periodic review of the property matters. Is the
rent appropriate for market conditions? Are the expenses in
line? Are both you and the tenant following the provisions of
the lease? Is the property in sound condition? What are the
repairs or improvements on the horizon? Is the neighborhood
around the property holding its own? What can I do to improve
this investment? These are among the questions you, as the
active investor, need to think about and answer to your own
satisfaction.

What you do, or don't do, matters.

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