Jul 14, 2017
Jul 11, 2017
How can landlords and property managers prepare for the end of summer rush before school starts? Late spring and summer are considered peak season for home buying and selling. This can result in a back to school rush for tenants to relocate and get into new places before school starts. When you’ve got this much action all at once, it can get really crazy. If you aren’t prepared it may become very stressful and expensive. Stay ahead of the game, and you’ll keep earning the loyalty of the best tenants, and keep your returns up. Preparing for Exiting Tenants The first step is to get ahead of the game on existing tenants. If you have leases renewing you want to touch base early and get new leases signed. You want to keep your good tenants and have a shot at talking them into staying. You also want to know if they are leaving as soon as possible. Then you can capture other movers in the market and get fresh rental property ads up before everyone is locked down for the next year. Prepare for Turnovers One of the worst blunders real estate investors make is waiting to put property management in place after a new lease is all closed, and it’s time to collect rents. Savvy investors get property management in the game before the change in tenants happens. A good property manager can help with the needs in getting the property ready, the rental process, and ensuring a smooth turnover. Bring in Extra Help With more phone calls, move-ins, and repair requests expected at this time of year, it is smart to bring in extra help. This could just be a part-time outsourced assistant. Factor in what it takes to line up additional vendors and backup vendors for landscaping, turning over units, and handling bookkeeping and tenant screening. Home Warranties Home warranty plans can be a huge help at this time of year. Between new rental units, new tenants in units with older appliances, and perhaps new appliances being setup, there can be a lot of glitches. These can be a big time and money drain. Home warranty plans can help eliminate or minimize these expenses and disruptions. Inspections and Preventative Maintenance This is a smart time of year to set up routine property inspections and tackle any maintenance issues in advance before they get more expensive or disrupt the ability to keep units occupied. Preventive inspections of the heating units and winterizing the A/C unit is good to schedule for early fall. Better Property Management Software Better software may help streamline bookkeeping, reporting to any investor partners you have, and with accurately tracking property condition. These programs are constantly being updated, with new companies offering better and better solutions. Make sure you know your options and pick the one that suits your business. Preparing ahead of time and getting the proper players in place can get you ahead of the game and help you to deal with the back to school rush. Don’t let the big yellow bus, with the flashing red lights, get in front of you and hold you up in leasing your properties!
Jul 7, 2017
Property management can be a major time drain if you do not find ways to manage your time. Doing so is a crucial part of the bigger picture, of building a highly profitable real estate portfolio. The more efficient you can be in this part of your investing, the better overall returns you can achieve while preserving time to actually enjoy the rewards of real estate investment. Check out these ten simple ways to streamline your managing your properties..... Accept Online Rental Payments One of the ways to most dramatically streamline property management is to start accepting online rental payments. It will help cut down on time spent taking payments in-house or following up with bank statements and deposit slips. This can also make it easier for tenants to stay on track with their own rent payments. Get a Bookkeeper Unless accounting was your major, and you love it, leave it to someone else. Having at least a part-time bookkeeper can really pay off in maximizing annual tax breaks, and countless hours in pulling together receipts and documents at tax filing time. Proactive Inspections & Maintenance Slash the time involved in fielding complaints and repair requests, dealing with juggling vendors and additional bookkeeping by staying on top of regular property inspections, and tackling maintenance in advance. Small fixes done early can save many weeks and thousands of dollars. Freedom to make Repairs Whether you are a rental property owner with a property management company, or you are doing the DIY thing and are directly dealing with tenants, consider giving them more leeway to make repairs. Do you really need to personally handle every time a tenant locks themselves out, a toilet gets clogged, or a fuse blows? If it is going to cost less than $150 or $250, why not just give them the discretion to fix it? Renew Leases Early Ideally, you’ll know whether tenants are staying or leaving at least 60 days before their lease expires. This way you can work with tenants who are on the fence, which can save an enormous amount of time in turnover work. Or at least you know, and can minimize any vacancy periods. Release Deposits on Time Not handling potentially explosive legal issues fast can quickly create a lot of work and expense. That inevitably snowballs and impacts your finances in many ways over time. Deposits are a great example. If you delay mailing deposits back to exiting renters, that can lead to all types of problems, versus just handing them a check on the day of your move out inspection. Deliver Default Notices on Time The same as above applies to late notices. Train your tenants that if they are late you will start the eviction process. If they can come up with the money, that’s great. It’s also less likely they’ll let it go that far, and create a new turnover situation. Pay Vendors Fast When you drag your feet paying vendors, they drag their feet. It’s going to cost a whole lot more dealing with late penalties, digging up old invoices, and in time on the phone. You may even wind up being limited to only being able to work with the worst local vendors who can’t get employed by anyone else. Streamline Tenant Selection Process In your tenant screening process, go beyond the credit score or background check and choose who you think will maintain your property the best. The tenant selection criteria and screening process have to be process oriented and very cut and dry with no gray areas. By treating all applicants the same and completing the same process for each person it will help avoid fair housing and/or discriminatory issues. Passive Income Investments One alternative to cut out the need for virtually all the above is simply choosing passive income options, like turnkey rental properties, or investment models like Holdfolio which come with full-service property management. When looking at the time expenditure for managing properties, it is wise to take into consideration all of the factors that eat up the most time for you. Where can you cut, who can you outsource, and how can you ensure that you aren’t a slave to your properties?
Jul 6, 2017
Which type of property is right for your first investment? One of the most common questions new investors ask is, “What types of homes should I look for as a beginning investor?” So, what’s the answer? What You Need to Know The first step to deciding on which type of homes you should be looking for is to know what you really want out of it. What are your financial goals? What real estate strategies are you planning to use? What resources do you have? What talents do you have? What types of properties do you understand? What’s Important as a New Investor As a new investor, the important factors you should probably be focusing on include: Affordability Simplicity Exit strategies Ease of property management Low maintenance costs Beginner investors should be looking to test the waters, and keep their risk low in their first investments. Err, on the side of this being a springboard investment to launch you forward as you learn and get results. The last thing you want is to bite off more than you can handle, and get stuck. The ‘Bread & Butter’ House For all of the reasons above, most investors trend towards the common ‘bread and butter’ house. That is your standard 3 bedroom, 2 bath, single family home. It’s what will typically be the easiest to finance, rent and resell, and where most of your money will come from. This is the standard, neighborhood home which appeals to the most people. There are exceptions, however. If you are in an area where there are mostly 2 bedroom, 1 bath homes, or almost all condos, then those may be your best choice vs. the 3 bed 2 bath home. It all comes down to what banks will be most comfortable financing, and which properties will fit the largest number of renters and end buyers. Your first property is about maintaining flexibility and keeping risk low. It is about going for the homes that are going to deliver real, consistent results. You may aspire to live in a mansion next to LeBron James’ home, but that doesn’t necessarily mean it is a profitable investment. Leave the quirky homes and ultra-high-end speculation to others. Then you’ll be the one with the best investments making the most consistent cash flow at the end of the day. Summary Beginner investors should start by getting clarity on what they have, and what they want. They should be ready to take bold action and get going. Yet, to start smart, with properties that are going to give them the lowest risk, most options, and best flexibility. Once you get a few under your belt you can always expand to taking on more adventurous projects.
Jun 27, 2017
What type of insurance coverage do you need for your rental properties? Rental property owners need insurance coverage. You may not love making premium payments, but you’ll be glad you’ve got it when something happens. If you plan to finance real estate investments you’ll often also find that insurance is mandatory. Here are five types of insurance coverage you need to know about… 1. Title Insurance Title insurance covers your rights to ownership and use of the property and helps cover legal defense if issues arise. You do not want to buy property without this. Every dollar of your investment and future income can be on the line. There is a lot of fraud out there today, and without title insurance, you are at risk. 2. Hazard Insurance This is your basic property insurance. It typically covers fires and other common forms of damage. This is usually based upon the amount of the loan you have on a property, or the cost to rebuild the property. Make sure you keep the amount of coverage updated as your property value increases. 3. Special Disaster Insurances Basic hazard insurance is very limited coverage. It typically does not cover a wide variety of other natural disasters which can destroy your property. If you are in a flood zone you will typically need special flood insurance. This is normally very inexpensive. Those in coastal zones may need windstorm or hurricane insurance which also can be very expensive. 4. Renters Insurance Hazard insurance doesn’t cover tenant belongings. You don’t want to be on the hook for your tenants’ furniture and personal items if there is a fire, flood, or break-in. Typically, landlords will require that renters obtain their own renter’s insurance, at their own expense. This should be laid out in your lease. 5. Umbrella Policy Insurance Coverage There is generally a discount when you group all of the properties together and this also provides ease of management. If you do enough deals, and own properties long enough you’ll run into something. Often loopholes in the above policies will mean you aren’t covered by them, or they may not provide enough coverage. An umbrella insurance policy can be used to cover you and act as a second layer of protection across all of your real estate business and assets. This can help cover issues like “dog bite” lawsuits. Keeping in mind the need for all types of insurance coverage and this will make your property management experience a smoother and less risky endeavor.
Jun 23, 2017
Who are the essential professionals you need in your camp before you start investing in real estate? It is important to keep up your momentum when getting started in real estate investing. Yet, you also want to make sure you are investing wisely and can enjoy a smooth process which delivers the best possible real estate success. Here are the first five professionals you need to connect with before you invest: CPA Your actual investment returns will depend a lot on taxes. There can easily be a double digit difference in what you get to keep, depending on how you set yourself up, and how you file taxes. A good tax professional can help you strategize and get it right before you wind up with a big income tax bill. Attorney Sooner or later you will want or need an attorney. It is just smart to have one already pre-screened and on call for when that time comes. You may want a specialist real estate attorney who can help negotiate contracts, and aid you in defending against lawsuits. It might also be helpful to have a family law or asset protection lawyer who can help you personally set up the right structures to grow and pass on your legacy. Insurance Agent Part of real estate success is the reduction of risk. Even if you don’t need direct property insurance to cover individual real estate assets, you will probably need an umbrella policy, life insurance, and other types of insurance to cover your assets in various areas. Capital Partners Even if you don’t plan on needing credit or extra cash to invest, it can be wise to have relationships with these sources in advance. It will help you avoid any cash crunches or missing out on any great opportunities. This may be private lenders, mortgage brokers, or angel investors. You will also want to build relationships with bankers to make your transactions go more smoothly. Experienced Mentor Having someone you can pick up the phone and call or shoot an email to for urgent help or an experienced second opinion can make all the difference in your business decision making. Find someone who is experienced in what you are doing and who shares your values. If you plan to be an active real estate investor, make this a full-time thing, or to start a real estate business, you will also want these five people in your camp before you get going. Contractor Having a trusted contractor on call can be invaluable for fast property inspections, repair estimates, timely turnovers and getting work done quickly. Real Estate Agent Whether or not you actually use a Realtor to help buy, sell, and rent real estate, investors can find them very useful for making sense of the market, and keeping on top of evolving trends. Marketing Expert You simply can’t do it all as an investor. Even if you have a strong marketing background, the most profitable use of your time is probably inking new deals. Still, with 90% of your success relying on your marketing to secure deals, fill them with renters, and resell them, make sure you have an expert on your team. Virtual Assistant An assistant can be used to protect and free up your time so that you are getting the best ROI on every hour of the day. A good assistant can handle a wide variety of time-consuming tasks, including finding the other people on this list. Project Manager As you grow your real estate business, taking on a big multifamily property, or are building new homes to rent out, a project manager can save you time, and help things go smoothly. This could be a true project manager for a specific mission, a property manager, or a general manager for your organization. Putting some thought into what and who you need to have in your camp to be savvy and efficient will help direct you towards the path of success!
Jun 14, 2017
How and where can real estate investors network to find private capital? Private capital continues to be a crucial part of real estate and investing today. Private money can be far more desirable than conventional bank financing in many ways, and sometimes easier to obtain if you can make the right connections. So, where can you meet and network with potential private investors? Social Events Networking with those that have the capital to invest, doesn’t have to be limited to stuffy organized networking arenas. It’s really about getting out and putting yourself in the right place, at the right time. So, where might these individuals hang out near you? The golf club? Charity fundraisers? Antique and luxury car shows? Get out there, mingle, and have fun at the same time. Meetups Meetup.com has become an incredible hub for connecting with targeted groups of people. You can attend local meetups on just about any subject. Or host your own, and cultivate a group of private investors yourself. Local Real Estate Investor Association (REIA) Local real estate investment associations and clubs are an easy way to get right to meeting active investors. No matter where you are in the country you are bound to have a few of these types of networking gatherings each month. You can also expand to Realtor, mortgage broker, and Chamber of Commerce networking nights. Live Industry Events Live events can put you right in the middle of hundreds or thousands of potential private money lenders. Your city or region probably has regular mortgage and real estate industry tradeshows and home related expos. Then there are investor pitch nights and seminars. Or check out national events which focus on bringing together financiers, private investors, and entrepreneurs like the Midwest Multifamily Conference. Investors from across the nation will be in attendance at that event. Online Groups Joining groups online can connect you with active investors across the country too. This might include BiggerPockets, Angel List, and the Angel Capital Association. Or you can hone in right to platforms where investors are taking action, and invest alongside them, like you’ll find at Holdfolio. Summary Private capital is very valuable and needed today to fund deals. It is also plentiful. Fortunately, it doesn’t have to be that difficult to connect with investors and potential capital partners. No matter where you are, and whether you like meeting people in person, online, at professional networking events, or more casual affairs, you have a whole menu of choices. Always remember, it is wise to make sure and not lose your money partners capital or it will be difficult to obtain it a second time around. If you make people money they will invest and reinvest.
Jun 13, 2017
How can you find real estate comps in your area to determine the potential appraised value of a property? Knowing your property value is essential to making smart and profitable investment choices. Investors can get a better handle on this by knowing their ‘comps’. Those are comparable property sales. So, where do you find them? 3rd Party Online estimators Zillow is one of the most commonly used online home value tools. It is fast and easy to use. It is also one of the most flawed. In fact, Zillow has finally been hit with a major class action lawsuit over its faulty Zestimate tool. Online home value estimators can help to give a fast, rough estimate of value, but are frequently wrong. Zillow or other sourcing websites can be a good first step in qualifying a potential property, but should not be relied on when actually putting your money on the line. Realtors Real estate agents can be a great source of comparable information. They can save investors a lot of time, by pulling quality comps. Some brokers will provide ‘BPOs’ (Broker Price Opinion) for a few hundred dollars, or less. Agents will typically help by providing free CMAs (Comparative Market Analysis). Just note that they do this often in hopes of winning your business, and aren’t going to work for free forever. Their findings can also be biased. The MLS Another option is to go right to the Realtors’ MLS (Multiple Listing Service) yourself. This can provide a lot of data on listed, sold, expired, and pending real estate comps. If you don’t have a real estate license and MLS membership, you can also use consumer-facing versions like Realtor.com. Title Companies One of the most important things to remember in finding comps is that asking prices are almost irrelevant. Sellers and agents aggressively overprice properties for sale every day. What you want are actual sold comps. County public records can provide this data, and often online. Title companies will also have details on comps that have actually sold, and what concessions or special terms may be artificially influencing prices. They also know what transactions are in the pipeline to close soon. Appraisers Professional real estate appraisers are go-to if you really want a solid figure you can bank on. You won’t typically want to splurge on the cost of a full appraisal for a property unless you are 100% sure you are buying it. However, appraisers and other data providers can also provide drive-by appraisals or an Automated Valuation Model (AVM). AVM’s usually include tax assessor's, sales history of a property and how other properties in the area are stacking up. Drive By Whenever you can, you want to drive through the neighborhood for yourself. See what properties are for sale, and especially FSBOs (For Sale By Owner) which may not be on the MLS. This will also help in assessing rent comps as you can see how many properties are up for rent, and call on signs. Summary Remember it is best not to rely on just one source for figuring comparables. Pooling many of these sources together can assist you in coming up with the best comps for your properties.
Jun 12, 2017