How to Be an Ethically Minded Real Estate Investor: 13 Huge Tips

Ethically sound behavior is essential for real estate investors’ reputations, wallets, and conscience. When you keep away from illegal and otherwise harmful acts, you protect your overall success. However, it can be challenging to know exactly what to do in any given situation. Ethicality can feel impossible to navigate, but it doesn’t have to be.

Luckily, there are a few general rules you can keep handy throughout your operations. As trusted property managers in Northern Virginia, we have years of experience in the real estate industry, so we can teach you what we’ve learned about ethical values in the real estate industry.

Table of Contents

1. How Can Real Estate Investors Benefit from Ethicality?
2. How to Be an Ethically Sound Real Estate Investor

How Can Real Estate Investors Benefit from Ethicality?

Sometimes, taking the high road can feel like a hassle. However, many long-term benefits come with being ethically inclined.

Benefits of Applying Ethical Values in Real Estate

1. Client loyalty and respect: By sticking with ethical values, you can build trust and better relationships with your inner network. In turn, these relationships can give you higher retention and more referrals.
2. Smoother seller dealings: Prospective buyers of your properties will judge you based on how honest and trustworthy you are. If you do not meet these expectations, they may shy away from a sale. However, if you are transparent in all that you do, that may separate you from your competitors.
3. Avoid lawsuits: It can be extremely cost-prohibitive to endure legal troubles, and it can add an irrevocable stain to your name. After all, you can’t become an investment guru if you’re in prison. This alone is a critical reason why you should stick to ethically and legally correct behaviors.

How to Be an Ethically Sound Real Estate Investor

Applying ethical values in real estate investing is about more than isolated, single actions. It’s a process where you continually strive for greatness. This can seem intimidating at first glance, but it is achievable. Here are some concrete ways you can be a businessperson with integrity.

1. Give Your Employees Fair Working Conditions and Wages:

In your tenure as a real estate investor, there will be many times you must hire various people, like property managers and contractors, to aid you in various operations. All these people contribute invaluable services to your business and deserve to be compensated well for their efforts. So, it’s ethically sensible to give your workers safe working conditions and payment rates according to the Fair Labor Standards Act.

2. Make Your Rental Price Affordable

It’s a best practice to set your rental price at a similar rate as the price of other area properties. Furthermore, you should also check your local rent control laws before you increase it. This way, people who target your property based on the location’s average prices can access it the same way they do other homes.

3. Make Evictions Legally and Morally Sound

Landlords must follow their jurisdiction’s eviction laws and moratoriums, such as giving tenants written notices. In addition, on a moral level, they should make the eviction process as tolerable as possible for tenants. After all, it can be traumatic for anyone to involuntarily leave their home. Ethically, it’s simply the right thing to do to treat people with patience in these situations.

4. Be Transparent About Any Property Issues

When you sell a dwelling, you must offer honest information about the property’s condition, even when you provide the unit “as-is.”

With the Virginia Residential Property Disclosure Act, it is illegal to intentionally hide details about physical faults in your unit that would impact its value, and if you do so, you could be sued. Most importantly, being evasive shows poor ethicality.

5. Follow Fair Housing Laws

Under the Fair Housing Act, it is unlawful to discriminate against any potential tenants or buyers based on race, disability, and other protected classes. You should be sure to acquaint yourself with these laws so that you don’t receive any formal complaints or distressed tenants.

6. Emphasize Environmental Sustainability

A core facet of real estate ethicality is environmental sustainability. Doing this means you should recognize how real estate impacts the environment. More importantly, you should act accordingly. Don’t just talk the talk but also walk the walk. You should proactively select environmentally friendly construction materials, practices, and designs. That way, you can rest assured your process weaves in ethical values from top to bottom.

As a bonus, sustainability is seen as a trendy, modern feature nowadays, so such implementations will make your property more marketable. Furthermore, investors should consider sustainability as a long-term solution because it allows their properties to evolve as the surrounding rental market changes.

7. Build a Network of Ethical Partners

It would strengthen your social capital to build a network of business partners with ethical values and practices. This could include architects, contractors, and other investors like you who care about ethics. When you work together, you can have a stronger voice and set an example for the rest of the real estate community.

8. Promote Community Engagement

When you incorporate the greater community in plans that impact them, it doesn’t just benefit you ethically. It also saves you from trouble in the long run, because you solve conflicts before they escalate. That’s why you should listen to people’s perspectives, effectively respond to their concerns, and incorporate them into your development process.

If you give people a say in their neighborhoods, towns, and states, it creates for them a sense of control and ownership. It can decrease the misgivings or hesitance they might feel about the changes you are making. Most importantly, it helps you make sure your good intentions translate into an actionable, positive impact.

9. Ethical Landlord-Tenant Relationships

As a real estate investor, your ethical values shouldn’t stop once you get ahold of your property. As a landlord, you must develop fair, transparent landlord-tenant relationships that make people feel safe and heard. You have to keep your properties habitable and treat your residents with respect and fairness throughout every step and challenge of the rental process. All these measures make sure your properties are used ethically and your tenants are cared for.

10. Paying it Forward

If you are profiting from your property’s success, it’s only fair that the people surrounded by it do, too. You should make sure your investments benefit those impacted by them. For example, if your property stands out for its style and refinement, you should ensure that its status elevates the reputation of the surrounding neighborhood and, by proxy, its residents.

Conversely, you should always ensure that your investments don’t harm others. For instance, if there is a school right near your property, you should make sure the crosswalks from your unit to the school are designed to be safe for children. When you care for your community beyond the dollar signs, it displays your commitment to ethicality in property development.

11. Use Due Diligence

Every detail counts in real estate, so you should leave no stone unturned. For example, you should examine the history of your property, like any role it may have played in Fair Housing Act violations before. If people with disabilities, as a protected class, were refused reasonable rental accommodations in your property’s past, you could fix this for the future. You could install ramps and other accessibility features to prevent such issues from repeating themselves. This allows you to keep equal opportunity laws and ethical values at the front and center.

12. Be Transparent with Stakeholders

It’s a best practice to stay transparent during each part of your investment journey. As such, you should communicate openly with everyone involved with your property, from your community, fellow investors, and regulators. Even when difficulties pop up, people should be kept in the loop. This allows them to know what to expect and fosters mutual respect and harmony.

13. Fund Your Investments Responsibly

Your ethicality as a real estate investor begins with how you fund your properties in the first place. It’s a good idea to source your investment funds from institutions that prioritize ethical lending practices. Doing this sets your investment off on the right foot. It ensures that your property’s foundation is rooted in an ethically sound foundation.

Let Property Managers Handle the Ethical Dilemmas

If life is stressful enough, and you’re not sure you can handle the stress of the above steps on top of it all, that’s not a problem. You can simply get professionals to handle them on your behalf. Property managers’ entire jobs are to clean up moral messes as they come their way, so you don’t have to. We have years of experience handling evictions, conflicts, community relations, and so many more issues you would otherwise face. Contact us today to let us do the hard work.