The Rental Property Investment Model
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
Figure 1 Rental Property Controls
The Rental Property Investment Model
Successful rental businesses require a competent team to support your operation where each members knows their responsibilities. Rental operations are largely controlled by the management company ' s business rules as well as the goals of the investor. Sometimes the investor may not communicate his requirements well nor does he monitor current operations closely. Therefore the information provided by the property manager on a monthly basis must be of sufficient detail to gage the property ' s performance.
The diagram in Figure 1 shows the controls that can be exerted on rental property- external expenses you have little control over or those expenses you can control with good financial practices. External expenses are usually the hardest to predict and therefore the hardest to control, but these costs must be factored into the investor ' s business model when deciding to buy the property. The smart investor acquires special tools to aid in this process to prevent him from buying a " Money Pit ". Solid financial controls over the day-to-day operations are critical to making consistent cash flow each month.