A Look At Real Estate Investment Trends In New England with Nexus Property Management

INCREASED INTEREST RATES, DEFERRED MAINTENANCE, AND THE VALUE OF COMPOUND INTEREST

Nexus Property Management® offers franchise opportunities from coast to coast and has four offices right here in New England. As Worcester office owner and general manager, Jesse Mayo, recently discussed on a radio spot with the local Chamber of Commerce, there are regional similarities throughout southern New England, and with that comes a greater knowledge of market trends and increased expertise that Nexus teams throughout Massachusetts, Rhode Island, and Connecticut can tap into.

LEARN MORE: 3 REASONS IT PAYS TO HAVE AN EXPERT IN YOUR CORNER

In the interest of better serving all local landlords and real estate investors, we’ve gone ahead and fielded some frequently asked questions with responses rooted in that local expertise.

HOW HAS REAL ESTATE INVESTMENT RESPONDED TO THE SIGNIFICANT SHIFTS WE’VE SEEN IN THE MARKET IN RECENT YEARS?

To answer this question from a property management point of view, it’s important to first establish what types of investors typically seek professional property management services. Per Mayo, in a recent interview on The Voice of Business, some Nexus clients are people who live outside the market and need boots on the ground to help manage their property from afar. Case in point, the Nexus office in Natick recently signed a new client who was instantly impressed with the relationship and attention his property was receiving and within weeks he relocated to Canada. But just as often, we field inquiries from smaller landlords who start to run into issues managing their properties themselves. Whether it be tenants not paying, code violations, or general maintenance issues due to maintenance deferment (housing in our major cities dates back to the dawn of the industrial revolution), owners are overwhelmed. As Greg Rice, general manager of the Pawtucket office, points out in a recent interview with Providence Business News, most of our “clients typically have 1 or 2 multi-family houses”. They’re everyday people working a 9 to 5 who invested and expected passive income through that investment…but the passive part hasn’t been the reality.

With that in mind, those realities have not gone anywhere for those clients and those who have already committed to investing are riding out the storm, most notably in the form of interest rate hikes by the Fed that are dampening demand. On the supply side, more and more suburban clients are turning toward renting their single family homes because work is pulling them out of the area but they’re not ready to sell in these conditions. So there is some push and pull out there, but there’s no doubt traditional investors, those who typically target multi-unit apartments, are looking to save a couple bucks where they can, and client rolls are not growing at the same rate they have in the past.

LEARN MORE: FULL PBN INTERVIEW WITH VICE PRESIDENT OF FRANCHISE SALES, GREG RICE

IS IT RISKY FOR OWNERS TO MANAGE THEIR OWN RENTAL PROPERTIES?

Absolutely not. In fact, many owners do manage their own properties, especially if they have just one and are at an age where work and family are not too demanding. So risky is not the right word. It’d be more appropriate to say that those opting for self-management are typically leaving meat on the bone and failing to maximize their investment. It’s like building your retirement savings in a bank held savings account collecting .03% rather than fully contributing to your company matched 401K. Can it be done, sure? Is it the best approach, nope…but it’s not quite risky.

However, without an expert in your corner, and the compounding interest that inevitably means more money in your pocket down the line, do-it-yourself managers do leave themselves more susceptible should something major occur. For example, as Mayo describes when talking about evictions, there are certain responsibilities and deadlines owners must meet in notifying tenants who are in arrears, in addition to a backlog of about a month. So the process to evict takes a full 2-months (where no rent is coming in) and if you get before the judge and don’t have all your t’s crossed and i’s dotted, the case could be thrown out and you’re back at square one, with no resolution. Similarly, deferring damage can seem like up-front cost savings, but in the long term, having to address neglected structural or plumbing issues in a 150-year old building can suck away years of profits. Across the region, we’ve seen owners who deferred maintenance for years face bills as high as $20,000 to bring a unit to rent ready condition.

LEARN MORE: CHANGE THE WAY YOU LOOK AT MAINTENANCE AS A LANDLORD

WHAT OTHER VALUE DOES A PROFESSIONAL PROPERTY MANAGER PROVIDE THAT POTENTIAL CLIENTS MIGHT NOT THINK OF AT FIRST?

Beyond the general comfort and ability to actually collect passive income that comes with hiring a professional, there are two other significant benefits local office owners have mentioned. First, is the value and importance of tenant screening. Pawtucket’s Rice describes the tenant screening process as similar to the underwriting process a mortgage lender might go through. The importance of finding the right tenant for the right property can’t be understated. A professional property manager will have both experience with this and the software to efficiently look at relevant histories and records.

Secondly, the bookkeeping benefits that come with a professional can’t be understated. Any investor wants to know what money is coming in and where it’s going out. Find a property manager who can provide these services, especially if you own more than one property. Financial statements for rental collections are invaluable and at the click of a finger. Mayo takes pride in Nexus’ Backoffice system in claiming, “our ledger system with our bookkeeping is amazing.” It’s also worth noting, in closing, that both of these services further cement that theme of investing in the compound interest that comes with a professional rather than squirreling your profits away on your own and learning as you go.

LEARN MORE: LISTEN TO JESSE MAYO’S INTERVIEW ON ‘THE VOICE OF BUSINESS’

NEXT STEPS

It’s Nexus Property Management’s goal and responsibility to help educate property owners and prospective property owners for the sake of improving investment opportunities for all. We want more and more people to take advantage of these opportunities but we also want to see them play the game the right way. To ensure you’re making the right decisions, whether you have a single 3-family, are renting your family home out for the first time, or are a seasoned investor, reach out to a local professional property manager in your area. Nexus has franchise offices in Pawtucket, Rhode Island, Worcester and Natick, Massachusetts, North Haven, Connecticut, and Tempe, Arizona. If you live in or invest in those areas, contact our team to learn more about our services.

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Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.

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