Increase return on investment – Although we sometimes use Internal Rate of Return (IRR) and Net present value (NPV) for investment analysis, we normally just look at net revenue (income minus costs) and divide it by the capital investment. So, let’s take for example, a house costing $100,000. And let’s assume that it rents for $800 a month, equivalent to an annual income of $9,600. With 10% for the management fee and 10% for maintenance, that means the net income is $7,680. In other words, a return of 7.7% on an investment of 100K. If there is a mortgage on the property, we can also analyze it further, not forgetting that part of each mortgage payment is in effect increasing the amount of the property that we own.

Minimize purchase price – When you don’t have to live in a property, you can be more flexible in what to buy. A house that is a good rental investment may not necessarily sell quickly as it doesn’t meet the criteria of a typical home buyer – and that gives the investor an opportunity. Particularly in Moore County, we find that buyers have a reasonable choice of property and very much favor properties that are move-in ready and require few repairs. In contrast, if you are prepared to spend a month refreshing a house, you can often get a better deal.

Maximize rental income – Choosing a property in an area where a lot of people are renting is highly desirable. You know then that if you are having problems renting your property, reducing the price should solve the problem. Obviously we know which are the desirable rental areas. To maximize income, it is important to have systems that help your tenants pay rent easily, and to watch payments closely to make sure they are on time. Paying close attention to when tenants are coming to the end of the lease is also essential to minimize lost rent during the change-over.

Control management costs – Obviously we would recommend that you use a property manager, wouldn’t we. But it also makes sense. As an individual investor, it is very difficult to get the economies of scale for maintenance and administration. If you have the means to buy investment properties, you probably have the means to do it properly and don't want it to eat up all your spare time. Either way, if you do decide to manage your properties yourself, don’t forget to account for your time. We also know how important it is to keep costs to a minimum.

Minimize maintenance costs– The maintenance required when you buy a property to live in is quite important. But when you buy a property for rental, it becomes very important. So don’t take on old appliances, prefer hardwood floors to carpet, check windows are double-glazed and so on.