How To Buy A Profitable Investment Property

How To Buy A Profitable Investment Property ... It’s not a stretch to say that wanting to buy a profitable investment property is the goal of real estate investors. Do you know what you can do to ensure that you find those profitable properties? Here are some tips.

It’s not a stretch to say that wanting to buy a profitable investment property is the goal of real estate investors. Do you know what you can do to ensure that you find those profitable properties? Here are some tips.

Here is a common sense tip. Buy low.

Paying above market price for a property makes absolutely no sense when looking for investment properties. Especially if they will need updates or work done to them to make them either rentable or resalable.

Even properties in good shape should be purchased at a lower price. Keeping your expenses low is important to profitability. A higher priced property will mean higher mortgage payments. If they are so high that you can’t set rents high enough (because the local market won’t support it) to offset it, you’ll be in the red before you even start.

Another tip is to be sure to buy properties that don’t need a lot of repairs or replacements.

Again, this keeps expenses down. Typically, if a home shows with obvious repairs in sight, imagine the repairs that are out of sight, behind walls, under floors and so on. What looks like a small repair can end up costing thousands of dollars. Finding properties that are sound, especially after being inspected, is something that you should look for, and be willing to pay a bit more for. Caveat to that is the preceding paragraph.

I’m sure you’ve heard the saying “location, location, location” and it’s true.

Buy properties in locations that are in places that lend to better rents or resale of the property. Look at the type of property you are buying. If it’s a single family home, are there good schools in the area? Parks? If it’s a multi unit, what is around the area? Is there a college that will mean renting to students? Singles or younger couples needing a space close to work or entertainment? Location is key.

Buy smart and make money.

Property Management Tips For Real Estate Investors

Property Management For Real Estate Investors

Now that you have your investment property ready to rent, knowing how to properly manage your property is important. Here are some tips for the newbie real estate investor in being a landlord.

Screen and background check your prospective tenants. I can’t emphasize enough the importance of this. No matter who they are, you should definitely do the following:

Verify employment and income. Do not just take the tenant’s word for it, call the employer.

Do a credit check. Check credit scores, 700+ are great, 600-700 are good below that are ok to dismal. Also check the actual credit report to see if they are slow pay or no pay.

Do a court check. Check civil and criminal court records. Do they have judgments in civil matters? Have they committed any crimes, felonies or misdemeanors and what kind of crime?

Check with their last landlord. Were they evicted? Slow pay? Good or troublesome tenants?

You can do a thorough background check using online services, but don’t shortchange the calls and local court checks.

Don’t just use a standard lease from the internet. Your lease is the contract between you, the Landlord (also called a “Lessor”) and your Tenant (also called a “Lessee”). If you have issues and need to enforce the rules, if what you are complaining about isn’t spelled out in the “4 corners of the document” meaning within that document, not verbal promises or verbal changes.

A “standard” lease pulled off the internet could have clauses that conflict with state or local laws.

It may not have everything that you want or have more in it that you want. There are many elements of leases and they contractually obligate both parties to the terms of the lease including length, rental amount, late fee’s and a huge host of other terms from move in to move-out.

Have a local attorney draft you a standard lease and discuss all the terms with him or her so that you understand it well enough that you can explain the terms to your prospective tenants if necessary.

Seriously consider using a property management company. They can handle everything you need. They will do the vetting of prospective tenants. They will have a strong lease that covers the important things you, as a landlord, are concerned with. They will collect the rents, do necessary evictions and handle any emergency repairs. They will also do any necessary maintenance to the property. It will remove the burden from you.

If you would like to learn more about working with a great property manager, give Tena D a call today! 303-452-5853

What To Do When You Have A “Needy” Tenant – Tips For Real Estate Investors

What To Do When You Have A "Needy" Tenant - Tips For Real Estate Investors

If you’ve been a landlord for awhile, you know all about them. If you haven’t, get ready because they are coming… the NEEDY tenant. There is no way around them. It’s especially awful when they are otherwise a great tenant – pays their rent on time, keeps the property in good shape. They just constantly need that hand holding and EVERYTHING repaired… NOW!

And have you noticed that it isn’t big things they need to have fixed? Stupid stuff, like it’s -2° F outside and they are complaining that the heat is CONSTANTLY running. Well, yeah, subzero temperatures will do that! Then there is the “well I thought I saw a bug so you need to get the exterminator in here IMMEDIATELY.” Yes, you guessed it, there was no bug or they let it in and it’s one measley fly.

The problem for you as the landlord is that when you are constantly calling in professionals to check on these rather stupid issues it costs you money…sometimes a lot of money.

So in order to keep your budget within the budget, set yourself up to succeed before they even move in. How? Make sure that things like the above will be covered once, then there is a service fee. Make it clear that if there is a flood, overflowing toilet or an electrical issue, that is a serious emergency will be covered.

If you don’t have something in the lease to help you and are having issues with a current tenant, try talking with your tenant, or writing to them. Make it clear to your tenant that if you are called about a repair and it turns out to be a non-emergency, the unnecessary repair or treatment will be at their expense.

If you write to them, assure them that you are taking preventative measures to forestall any issues, but that if they insist on calling about a non-issue, they will be charged. For instance, in the bug problem call the exterminator scenario, tell them “we have a standing monthly service contract with ___ Extermination and we will be happy to call a technician if you discover any pests. However, if no issue is found then the service call charge will be your responsibility.” Then spell out what will happen if the bill is not covered immediately (i.e. it will be taken out of the rent amount first, with rent second as described in the lease or however you will be handling it.)

Be friendly. Be professional. Definitely be firm. Once that tenant has to held accountable for unnecessary service calls, they will most likely stop calling and being such a needy tenant.

How To Invest In Real Estate In Your 20s

How To Invest In Real Estate In Your 20s

You’re a twenty something and are pondering the wisdom in investing in real estate. Friends tell you it’s nuts. Your parents probably think it’s a good idea. Really, though, can a twenty something invest in real estate? Is it even possible?

It is possible!

Of course it is. Let’s look at why. First, while you may not have much of a credit record, it’s less likely to be bad. If you’ve kept up on student loans, paid your credit cards on time or off and paid your other bills on time, you’re doing that adulting thing well. Well enough that you would be considered a decent risk for a mortgage.

The main problem you may come up against is lack of a down payment, or one that is big enough. Saving when you first get out on your own can be hard to do, especially when you are renting. You did put a security deposit on your rental. While counting on getting all of that back isn’t a great idea, it is something that can help. Even if you can put aside a small percentage of each paycheck it will build quickly. What can you cut out? $6 lattes? Eating out as frequently? How about getting out of that gym membership you never use? You can find ways to cut back and save money. In the long run it will be a bigger benefit.

Creative financing

Again, though, there are ways to work around it. If you are getting married use your wedding money towards the down payment. Ask your parents to chip in or partner with you. Work with your bank or Realtor to find creative ways to finance the purchase.

Use roommates

Once you have the home, a great way to make it work is to live in part of the home and rent out the other bedrooms. Your roommates can be the source of your mortgage payments. If you live with your parents rent all of the property to pay the mortgage and other expenses.

Remember that where there is a will, there is a way. Investing in real estate in your twenties is a great idea and a way to build wealth for yourself and your future.

Rental Walkthrough Checklist – What To Look For When Your Renters Are Moving In and Out

If you’ve ever rented before, you know about walkthroughs. As a landlord a walkthrough is for each, and below will be a checklist to use when doing them.

Walkthrough by both landlord and tenant at lease and end of lease

A walkthrough is something done by both landlord and tenant at the time the property is leased, and when the lease is over and the tenant is moving out. It’s an inspection of the property.

At the beginning of the lease it is done to have Rental Walkthrough Checklist - What To Look For When Your Renters Are Moving In and Outboth parties on the same page about the condition of the property before it is inhabited. A checklist should be done and signed by landlord and tenant, and pictures of EVERYTHING should be taken by both parties.

At the end of the lease the landlord is looking for damage or illegal alterations to the property, (illegal meaning not approved by the landlord in writing), per the lease. Damage is considered anything in excess of normal wear and tear.

Again, a checklist should be filled out and signed by both parties and another set of pictures of EVERYTHING should be taken by both parties. Pictures are taken at both times by both parties so in case there is a need for proof in a dispute over how much of the security deposit is withheld by the landlord at the end of the lease.

The walkthrough is done so the landlord can determine if damage has been done to the unit that would allow for deductions to be taken from the tenant’s security deposit. It either allows the tenant, if done prior to move out, to fix items to keep deductions at a minimum, and/or lets the landlord know what must be fixed before the next tenant moves into the property. Not all states require it, but as a general rule, it is a good idea, required or not, so you have documentation of damages and property condition.

As a landlord a walkthrough will give you a few benefits. It will allow you to determine repairs and anticipate costs. It will actually help you avoid disputes with the tenant because both are aware of condition before and after the tenancy and also allows the tenant to do the repairs to mitigate their loss in security deposit, saving you the cost after they move out.

Now onto the checklist:

Exterior:

Is there adequate parking near the property for tenant and guests? Is it assigned or first-come, first served?
Is the exterior lighting adequate? Are common areas well lit?
Are there elevators and do they work? Are stairways well lit and secure?
Are common entrances locked and if so, how is access granted: doorbell, buzzer, security camera, call phone?
Are locks in good working order? Will they be changed out before move in?
Do doors open and shut easily? Are they heavy enough for safety, but not so heavy they are hard to open? Is there a way to look out before opening (i.e. a peephole or a way to view outside)?

Interior:

Is the property clean?
Are the ceilings and walls in good repair? Is paint fresh (i.e. no peeling or marks on walls or ceilings)? Are there nail holes in the walls? Any signs of water damage or mold? Any cracks in drywall or plaster?
Are there enough closets and are they large enough for storage? Is there any kind of organization system in closets? Is there a lockable outside storage area?
Is flooring in good repair? Are carpets frayed or dirty? Is hardwood scratched or water stained? Is tile chipped, cracked or uneven?
Are kitchen and bathroom cabinets in good repair? Do they open easily? Is all hardware there? Are they straight and installed correctly? Is interior shelving in place?
Bathroom and kitchen sinks, tubs and wall tile are in place, sturdy, grout is clean and complete? Tile isn’t chipped?
Does water drain quickly in all sinks and tubs and showers? Is water clean and has it been tested? Do water temps and pressure stay consistent even if more than one is running at a time? Does the toilet work properly and is it clean?
Do all electrical outlets and switches work? Are any buzzing, have char marks or are hot to the touch? Where is the circuit breaker and does it have any of the same issues?
Do windows open? Are glass and screens intact? Are window coverings in good shape?
Is there a washer and dryer available in the unit? Does it work?
Does the heating and air conditioning system work?
Does each room have smoke and carbon monoxide detectors, per state law?
Can you get cell reception? What about landlines? Is there hook ups for cable/satellite/internet available?
Is there overhead lighting and does it work?
Do all appliances work? Are they clean?

Be smart and cover your bases. Do walkthroughs and be thorough.