4 Signs That Your Investment Property is Underperforming

For retirees relying on investment properties for income, it’s crucial to ensure optimal performance. After all, your quality of life is entirely dependent on it. Here are four signs that your property might be underperforming from an income perspective:

Let’s say your property is valued at $1.25M or more in an expensive market like the Bay Area. High-valued properties in expensive markets often appreciate significantly over time. But often the rents do not keep up with the appreciation. A good example of this is if you take your typical rental home in San Francisco. Many homes have doubled in value the last 10-15 years but rents may have only increased 30%-40%. Remember, the more your property is worth, the more investment options you have to trade into. Investors can potentially trade into other geographic markets, Triple Net Properties, Delaware Statutory Trusts (DSTs), or other investment vehicles that may increase rental income 40% or more.

You’ve owned the property for 10+ years. Long-term ownership in expensive markets can lead investors into thinking their property is performing well purely based on appreciation. If you haven’t updated your property or rental strategy in years, you could be leaving money on the table.

Your property has significantly appreciated. While appreciation is excellent for your net worth, it can mask suboptimal rental performance. Ensure your rental income has kept pace with your property’s increased value.

You own a rental home. Most homes appreciate well but underperform from an income perspective. In fact, Bay Area rental homes tend to be some of the lowest performing income properties. Other types of properties (Triple Net, Multi-unit, Delaware Statutory Trust Funds) will usually provide much higher rental income. As a retiree, you’re likely more focused on current income than future appreciation. Cash flow today is often more valuable than potential future gains that may not materialize.

If these signs resonate with you, we invite you to contact SIFF Investment Services for a comprehensive property performance review. Our experts can help optimize your returns and maximize your investment potential.

Stay tuned for more insights in our next newsletter.

SIFF Investment Services Team

About SIFF

For over 20 years SIFF – Strategic Wealth Advisors Specializing in Real Estate Investments – has provided unbiased, fee-based real estate consulting to disrupt outdated real estate models. We are not realtors or agents. Our role is to educate and empower clients by objectively outlining all options. Our fee-only structure allows us to put client interests first. By taking an unbiased, consultative approach, SIFF aims to help clients prosper through wise real estate investments.

Call: 1 (415) 601-1051 | info@siffinvestment.com