Business Model
Owning residential spaces and offering them for rent, i.e. the profession of landlord, is obviously a business. However it is a business that comes in all shapes and sizes. This is at its most fundamental an investment in real estate for profit.
One difference is whether it is a smaller closely held business or a large corporate owned affair. This can determine what kind of relationship you have with “management”. Are you dealing with a lower level employee who is the ‘property manager’ or do you routinely deal with the owner? Depending on what is important to you this may or may not matter.
The second, and more important difference, is what business model has been adopted by the owner. In theory, over time, real estate increases in value. This is called appreciation. The difference between the cost of the real estate when built or purchased and the appreciation achieved when sold is a profit.
Some landlord models try to generate income and an annual profit for the owner. Other models are based on a longer view, waiting for when it is time to sell and the profit from the appreciation to be realized . The first pushes rents harder than the second. It can also mean a difference in the level of service and maintenance.
At RDI.properties we own all of the properties we manage. Even more importantly, we have built the business from the ground up. Over the years almost all of the properties we have actually physically worked on building or rehabbing. The product and the service we provide is important to us. We do not seek to make yearly profits from our properties. We take the longer view that real estate investment is for the appreciation to be achieved in the future. Thus we strive to annually set our rents at a breakeven price.









