To compliment a discussion on financial analysis, a "management fixer-upper" is perhaps the ideal income property investment. When the owner of an income property finds they cannot achieve an after-tax return that surpasses a one-year CD, they may decide the best solution is to sell the property. These properties may be priced based on comparables,

but the owner has recognized they are in a loosing situation, and may be receptive to a well-documented offer that reflects the true investment value based on the existing rents and expense structureThe management fixer is characterized by below-market rents, high expenses, and perhaps some deferred cosmetic maintenance. Often, the tenants are ruling the property, threatening to move out if rents increase, complaining about poor conditions, which results in a reluctance to increase rentsProviding a financial analysis with the purchase offer demonstrates to the seller how the reduced offer price is needed to provide a reasonable return. Filling the property with tenants who are paying market rents turns the management fixer into a real prize. Below is a quick comparison of the return before and after a management fix-up:

Being a turn-around manager is the best way to maximize equity!