The Passive Income Guide by Larson John

Author:Larson John
Language: eng
Format: epub
Tags: Business - Real Estate
Publisher: American Real Estate Investments
Published: 2018-08-22T00:00:00+00:00

The tenant profile consideration is simple. Lower grade properties attract a less reliable tenant regarding meeting rent obligations, whereas high-grade properties in better areas/neighborhoods attract reliable tenants who can commit long-term. Remember, when you are purchasing an income-producing property, you are also purchasing the type of tenant this property will attract. In less affluent neighborhoods, petty crime rates (for break-ins, theft, vandalism, and so forth) are higher, and properties become subject to a higher probability of such crimes. No one wants to live in an area with higher crime rates, but sometimes being able to afford anything else is out of the question. People who are stuck in a paycheck-to-paycheck cycle are likely living in these neighborhoods and could easily slip into rent delinquency, move out of the property without notifying anyone, or cause unusual wear and tear on the home. It’s more common for low-grade properties to have multiple tenants in one unit. One bad tenant can easily swallow up an entire year’s worth of cash flow from missed rent payments, vacancy due to constant tenant turnover, or tenant-induced damage to the property. You MUST consider this when investing in a managed, cash flow asset.

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