Real Estate investors have responsibilities. Lot’s of them. As an investor you want to make a profit, correction, a great profit and you should. You work hard, invest your own capital or that of other investors and take a risk. You should be well rewarded. While making a profit is paramount it doesn’t come without responsibilities. Let take a look at some.
Most real estate investors are housing providers. This is true if you offer rental property, lease options or rehab to resell. As a housing provider you have a responsibility to provide safe, clean housing. Ensuring your properties are to code and using quality materials are part of the process. Going the extra step to provide proper exterior lighting, sturdy locks for doors and windows and landscaping that doesn’t invite theft are all low cost ways to add to the safety of your properties. These extra steps can also be part of your marketing to set your property apart.
There is another major step you can take to add to the safety of your properties. Use service and repair people you have confidence aren’t criminals. This may be easier than you think with Crime Free Circle. This company provides a way for companies to ensure their employees are crime free, communicate with your tenant who will be coming into their home including a picture and an easy way for your tenant to verify the employee’s crime free status. There is also a way for the tenant to rate the service experience. I firmly believe this will significantly reduce your liability exposure. Your tenants will love you for it, too.
You’re a professional. As a professional you will be held to a higher standard even if you don’t have a real estate license. Fair dealing includes being honest, fully disclosing all material aspects about a property you are going to sell or rent and not taking advantage. Fair dealing also extends to your team. How you treat your escrow officer, attorney, tax preparer, handyman, service providers, Realtor, etc. reflects on you and your business. Being a professional means treating other professionals with the same respect you demand.
Some real estate investors use other people’s money to fund their investments. They offer a return to their investors in the way of interest, share of the profits or both. Your investors are due a fair return based on honest, straight forward negotiations. Communication with your investors is very important and should be defined up front, so there are no issues. Your investors need to understand the risks associated with investing in real estate. Properly executed contracts, business structure and operating agreements need to be in place.
Like some of the items in this article, giving back isn’t a requirement. It can be debated if it is a responsibility. I believe if real estate investing has been good to you then you should give back to the community that provided the opportunity for your success. This can be done in many ways. Think about donating time, materials or money to organizations like Habitat for Humanity, Stardust Building Supplies or other similar community organizations.
Supporting Your Trade Organizations
Okay, I know this may sound self-serving since I run AZREIA and ARPOLA, but this is true regardless of the industry you are in. Trade organizations offer unparalleled information, education, networking opportunities and support. Their government affairs programs do the heavy lifting on items critical to you that help you to prosper. As an individual, you would never want to take on or even develop the skills to adequately make an impact in government affairs. Your trade organization operates on an extremely tight budget, yet provides unselfish service to a rather demanding membership. Even if you don’t attend the trade association’s meetings, you should be part of the organization as virtually everything they do supports you. It is a small commitment on your part for a large return.
Follow the Law
Laws! Think we have enough of them in real estate investing? Let’s see, there’s fair housing, landlord tenant, property registration, sales tax, building codes, building permits, employment law, SEC, EPA just to name a few. Don’t forget there are state, county and local laws, ordinances, regulations and rules. Your responsibility is to know all the laws and regulations as it affects your business. Not knowing isn’t an excuse. My suggestion is to use professionals when possible.
This isn’t meant to be a full list of your responsibilities – just a way to get you thinking. I’m sure for most of you these are pretty easy to follow. The far majority of AZREIA members are very professional, understand their responsibilities and do a great job. They support their community and AZREIA. Keep up the good work. You can see your results in our market. The fact that our market is recovering faster than most of the country is due in a large part to your willingness to invest, take risk and provide housing for our community. You are to be commended.