Finding The Right Property Manager

Finding-The-Right-Property-Manager

Many property investors will choose to manage their own properties, especially if they live within a short distance. However, for many investors it just may not be feasible to take on the management of their properties if they are spread out between different states and countries. In these cases they may appoint a property manager to take care of the affairs concerning the rental and management of the properties in return for a monthly fee.

The benefits of appointing a property manager can easily outweigh the reasons not to do so. A good manager will always communicate effectively with the owner under all circumstances and the tasks they perform.

The tasks and duties of a property manager are wide ranging and will vary depending on the requirements of the property owner. Here is a list of the some of them:

Advertise for and screen (credit checks, contact referees) potential tenants

Collect initial bond/security payment

Collect monthly rents

Arrange any necessary repairs

Periodic property inspections and inventories

Pay workmen, gardeners, council rates and other bills out of incoming rent

Make regular rental payments to the landlord

Contact landlord upon tenants giving notice to vacate property

Liaise with landlord to arrange for repairs over a certain value

Issue relevant notices and letters to tenants

Provide rent and expense statements to landlord

This is just a sample of the duties carried out by a property manager. Ultimately a good property manager is not the one that charges the lowest fees. Most managers in the location where your property is situated will charge similar fees however their ability to manage the property according to your requirements will differ and so it’s necessary to carry out a strict screening process.

The best way to screen a number of property managers is to ask them a series of pre-defined questions. Some owners prefer to do this in a face to face interview; others are content with perhaps a phone call and emails.

So what questions would you need to ask? There are a few different aspects of property management that need to be looked at and so I’ve categorised some possible questions accordingly.

Fees and Service

What monthly fees do you charge?

How many properties do you manage?

Do you charge letting fees?

How often do you carry out inspections?

Relationship

How often are payments to landlords made?

Under what circumstances do you contact a landlord?

Tenants

How do you find and screen prospective tenants?

How often do you collect rent?

What is the typical notice period?

How do you deal with non-payment of rent?

Maintenance

What action is taken if a tenant was to damage the property?

How do you manage minor and major repairs?

How long have you been dealing with your preferred tradespeople?

These are only sample questions and will differ according to your situation however they do provide an outline of what you may need to ask.

At the end of the day, don’t settle for less than what you expect from a property manager. After all, this is your investment, purchased with your well-earned money, which you are putting in their hands. Do whatever you need to ensure it is in the hands of someone you consider capable and trustworthy.


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

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Ten Tips For Buying Rental Properties

Ten-Tips-For-Buying-Rental-Properties

Buying rental properties is a good way to increase your assets. However, choosing the right rental property will be challenging. Here are a few things to check for prior to buying rental property.

  1. Location – Most people don’t want to live in the boon docks. The location of your rental property will determine how easy it will be to rent. If you have a lot of vehicle traffic, you may receive a greater response from a sign at the location than you will from a newspaper add.

Tenants want to live in nice neighborhoods close to all the amenities. They want to be close to the schools, stores, recreational locations, hospitals, and work.

I haven’t met anyone who wants to live in an undesirable neighborhood or drive 15 minutes for a gallon of milk.

  1. Numbers – When buying rental property you want to check the numbers. Make sure you have all the expenses associated with that property and make sure it still has a positive cash flow.

Take into consideration the maintenance issues, any utilities not covered by tenant and amortize the cost of the big projects like furnace replacement, new roofing, siding or landscaping.

These projects only happen once every 15-20 years but you may be coming in to this in the 10th year of that cycle. Remember to calculate your expenses high and your income low. This can save you some surprises down the road.

Expect the unit to be empty at least one month per year due to turn over. You will have to repaint and clean the carpets the first 2 weeks, then advertise and show the next 2 weeks. You should only count on 11 months of rent per year.

  1. Lower Maintenance Buildings – You want to avoid homes that will require expensive routine maintenance. Some examples would be homes that have cedar-shake shingles or siding, wood sided buildings, wood frame windows, brick driveways, cedar decks, etc.

Try to look down the road and determine the future maintenance needs. Remember the lower the maintenance the less headaches and larger profits.

  1. Higher Home Prices – Check in towns with higher home prices, because this increases the demand for rental property. Look for the ugly house on the block that has a lower price, enabling you to purchase within the margins.

After some interior and exterior paint, a little light landscaping and new curtains, viola’, a house that will get premium rent because of the class of neighborhood.

If people can not afford to buy a home in this class they will have to rent. This will create a demand for rental property.

  1. Below Market Rent prices – When buying rental property, look for rental property which has rent prices that are below current market rents. This will allow you to raise the rent and increase the value of the property. As per above, this may just need a little fluff to enable raising the rental price.

Rental property market value is determined by the amount of income received by the rental property. However keep in mind, if the rental property has renters when you purchase it, they may not like it when you raise the rent. Also check to see what type of lease is in place. The lease goes with the sale.

If the current renter is paying a substandard price and has 1 1/2 years left on the lease it could turn out to be a losing proposition.

There is only one way to cut a lease short as a new owner. You must remodel the place. Check with the local housing commission to see what the minimum cost requirements of remodeling are for immediate eviction of current lease holders. It is usually as little as $10,000.00 in remodeling cost to get a remodeling eviction. By the way, you didn’t hear this from me!

  1. Good Rental History – Whenever buying rental properties, you must check the rental history. Check to see on average how long tenants are staying and do they pay their rent on time. Some areas of town are naturally quick turnover times. Near airports, loud bars or nightclubs, near military bases, etc.

  2. Complies with Zoning and Fire Codes – Make sure you check to see if there are inspections required by local officials for rental properties and does this property pass those inspections. You never know the real reason the current owner is selling the property.

It may need extensive repairs to pass the inspections. A quick red flag would be if the electricity has been turned off for over 90 days. They will usually require an inspection before restoring power, especially if it is a known rental.

  1. Less Than Twenty Years Old – This is self explanatory, if you restrict your selection to buildings that are less than twenty years old, you will limit the chances that the building will have any building code or maintenance problems.

The building could be near the maintenance cycle for roof, paint and possibly furnace but the structure will be sound and not needing upgraded windows, siding or cement repair.

  1. Out of State Owners or Managers – When buying rental property, look for properties that are owned by out of state owners. It is hard to manage rental property from out of state and when these come up for sale, the owners are usually more concerned with selling quickly than getting top dollar.

In order to rent a place quickly you must live near by so you can show it at the caller’s request. Often times they will ask to see it in the next 20 minutes or so. Cater to their requests and show it quick. Most renters need a place within the next week or so and will not wait to see your place until next week because you are busy.

Most times they will make a decision before tomarrow when it would be more convenient for you to show it. This has happen to us to many times.

Never give out the address for drive bys. Prospective renters will ask for the address to do a drive by and just look at the place. Don’t waste your time with these folks. Insist on showing it in the next 30 minutes or you will not give out the address as a courtesy to the neighbors.

  1. Neighborhood is stable or improving – obviously avoid neighborhoods that are declining, look at the writing on the walls and stay out. Although these may look good due to the low purchase price, they are very difficult to collect the rents.

By finding neighborhoods that are stable or improving, it will be easier to rent the property and you will be able to increase the rent. The general consensus is, the better the neighborhood the higher the purchase price and the higher the rent prices, therefore the margin for profit is greater. The poorer the neighborhood the lower the purchase price and lower the rent prices reducing the profit margins.

Do not be afraid to buy nicer places for rental properties. The people that can afford $1000.00 a month are more likely to be able to come up with the rent on time versus someone that can only afford $350.00 a month. One little upset in the latter case and you will not get your rent on time, if at all. There is far greater stability in renting high end places versus being a slumlord!

Article Source: http://EzineArticles.com/571664


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Rules For Buying Rental Properties

Rules-For-Buying-Rental-Properties

According to experienced landlords, the difference between a rental property being a profitable investment and being a disaster is how much work an investor is willing to do. Anyone buying rental properties must choose properties that generate a positive cash flow, and this involves more than the rent covering the mortgage payment. It is a mistake for someone buying rental properties to think they can deal with negative cash flow by waiting a while for the property to go up in value and then “flipping” the property for profit. Just ask the people who bought property in 2007 and tried to flip it in 2008 or 2009. The three big mistakes people buying rental properties make are underestimating expenses, expecting to put no money down and get instant riches, and not screening prospective tenants.

Big Mistake Number 1 is underestimating the expense. To be safe you should estimate that on a monthly basis, 40 to 60% (depending on whether you hire someone to manage the property) of the rental income will be spent on things like insurance, taxes, vacancies, and damages. Why such a high percentage? A major repair such as a roof or new furnace can really set you back. One way to figure out how much you should pay for a rental property is to find out what rents go for near your property, and divide that by 0.01. That would mean that for a house that rents for $1,000, you should spend no more than $100,000 on the purchase of the property.

Big Mistake Number 2 is believing those infomercials about “no money down and instant riches.” Those people on the commercials who live on a yacht within months of buying rental properties for no money down have nothing to do with the real world. Owning and operating rental property is more of a business than it is an investment that you sit back and watch grow. If you plan to manage the property yourself, be prepared for your phone to ring at any time, and be prepared to take care of the burst pipe or broken window that your tenants report. If you hire someone to manage the property for you, expect this to cost around 10% of the gross monthly rent.

Big Mistake Number 3 is failing to screen new tenants. If you’re in a hurry to rent a place out, or if you feel sorry for someone, prepare to pay big for it. Credit checks can be done for as little as $10 to $20. Verifying references may seem like a pain, but you should do it anyway. Contacting previous landlords to ask about their rent payment history, cleanliness, and damage to rental units is time well spent. Even if you hire someone to manage the property for you, take the time to learn the landlord-tenant laws where you live. You can bet that the “professional bad tenants” know the law forwards and backwards. Just remember that legal forms may cost a few dollars and getting them signed will take some time, but the time and money spent on an eviction is far more expensive and time consuming.

Buying rental properties can be a good or bad investment just like anything else. There are a number of rules of thumb for calculating expenses and cash flow. You also need to know how to analyze rents in the area you have in mind beyond just what the rents are at a given address. You will need to learn how to consider capital investments and determine whether a big repair on a property you are considering buying is a dealbreaker or not. Buying rental properties can be a satisfying way to make a side income or even a primary income as long as you go into it with your eyes open and don’t believe the infomercial hype about no money down and instant wealth.

Article Source: http://EzineArticles.com/3476137


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Property Management Advice for Landlords

Property-Management-Advice-for-Landlords

Discover what every landlord should know about finding tenants and why picking the best person is not always as easy as it sounds.

The most important decision any landlord makes is deciding who can live in their property. Who will you, as the owner, allow to live in your investment? This decision is so vital to the profitability of any property investment business and affects the business on so many levels that it’s amazing that some landlord don’t have a formalised procedure to protect themselves from making bad decision.

Let’s think about what we’re actually doing when we rent a property. Instead of thinking of the property as a monthly income generator think of it as a pile of cash. Cash you have tied up in the deposit and purchasing costs. Cash you hope to gain a regular income from through renting and more cash that you’ll receive if you sell the property and realise your capital gains. (Assuming house prices have risen since you purchased). If you include in this the value you place on your time spend finding the property, buying and arranging the rental then we have a very serious investment on our hands indeed.

Now, imagine all that money in real, tangible terms, stacked up in a room in the house and then consider we hand over the keys to someone and say, “See you next year”. Now we can begin to see how important it is to select the right tenant. Of course, I’m being dramatic and we do have legal safe guards but I hope that by considering your investment in terms of hard cash (like a professional investor) then you’ll treat the question of occupancy very seriously.

There’s more to it than just financials. Not only are we trusting the tenant to look after our investment but we’re also investing our free time with them. What do I mean? If we are managing the property ourselves and not using a letting agent then we have made a serious commitment in time to look after that tenant. If you have a tenant who does not appreciate your property or does not treat it with care and respect then you run the risk of losing your evening and weekends in maintenance and management tasks. What about rent collection? An unreliable tenant who does not pay on time creates stress and worry. Legal protection lets us all sleep better at night but the practicalities of recouping money and legal costs are a headache we do not need and one that’s very avoidable.

Once we know how seriously we need to take the task of finding the correct tenant we can start looking for the very best people. In this case ‘best’ has two simple criteria. 1) They pay on time and in full 2) They look after the property as if it were their own.

I’m going to discuss three tools we can use to help find good tenants. The first is a long and very comprehensive application form. I ask for as much detail as possible from the tenant. I need all their contact details, ID, proof of current address such as telephone or electric bills, previous addresses and, perhaps most importantly, references from their employer, previous landlord (if they’re moving out of home I’ll ask for their parents’ contact details) and a character reference from a recognised member of the community such as a Doctor or Teacher. Importantly, I always act on these references. I will check with whomever they have given to make sure the details are correct and they can vouch for the applicant.

Secondly, I ask for a larger deposit than the usual 4 weeks rent. Typically I ask for 6 weeks rent (UK law give the tenant an automatic option to sublet if the deposit is too excessive, say more than 8 weeks rent). Paying more upfront is usually a good sign that they are serious.

Finally, I have to feel comfortable about the people. If I can get along with them when the property is viewed and when we talk on the telephone and if I don’t have any intuitive alarm bells going off then I trust my own judgement.

At this point you might be wondering about a credit check? Yes this is a great tool depending on the affluence of your potential tenants. Some of my properties are let to people on social security benefits, many of whom I’ve had to help set up a bank account even. In these cases a credit check would not be beneficial but for better off tenants it can be a worth while exercise.

Once we know how to approach the subject of finding great tenants we can consider why people make poor letting decisions. In my experience the worst decisions about tenants are made in pressure situations. An empty property is very damaging to the bottom line of a landlord. If a property is unoccupied it’s very tempting to let the first person who comes along have the tenancy. I know, I’ve made the mistake myself (several times I’m reluctant to admit). This situation is exacerbated if you find your property is not in demand. If you only get one phone call from your advert in the local paper then you’re putting pressure on yourself and your business.

Therefore, the best way to make a good decision is to have a lot of people to choose from. Creating a big list of possible tenants comes from good advertising with good descriptions of you property and its selling points, realistic pricing (even undercutting competition in a renter market) and building a solid reputation as a landlord.

Article Source: http://EzineArticles.com/172938


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Turnkey Real Estate Investment and the Art of Evaluation

Turnkey-Real-Estate-Investment-and-the-Art-of-Evaluation

Picture this scenario – A seller creates the picture of a wonderful property, perhaps it’s a true turnkey and freshly renovated with a tenant just moving in. The cash flow appears reasonable, the renovation looks thorough and the price is acceptable. What the seller didn’t present was the skimping on a much needed plumbing upgrade, a roof with 3 years left on it or the fact that the tenant has been in 5 houses in 5 years. These hidden expenses can take you from positive to negative cash flow in a hurry.

Don’t risk the stability of your portfolio on just the word of a seller; use some of these tips to develop a solid risk mitigation plan:

Real References: Get more than the references of investors who have purchased from the seller in the past. The easiest way to do so is by using the internet. By entering the name of the seller or the company name, you can quickly find complaints. Use sites like BiggerPockets and LoopNet to see if anyone has heard of the company. Ask competitors, of course keeping in mind there will be a bias.

Proof of Success: Ask for a few real world examples of investor purchases. These examples should span over a year period. They should include vacancy rate, maintenance charges, management expenses, etc. that were outside those expected Asking to see such reports will help to verify that they are selling properties that actually perform as expected… and secondly they actually have the information.

After-Sale Commitment: Turnkey has traditionally followed a pretty straight forward process; sell property to investor and from that point on the investor is the “problem” of the property manager. This design creates many issues as the property manager may not be aware of all the details of the deal. Ask the seller to explain the process of purchasing a property, see if they discuss post-sale processes. If they have a true “account management” program in place, you will know it. You won’t have to ask, they will simply demonstrate it in their explanation of what they do. Make sure that they are willing to act as your advocate and monitor your investment by working along with the property manager for the life of your investment.

Knowledge to the Extreme on the Market: Experienced sellers in a market will have a mental library on the market. From demographics to future revitalization, a seller that understands their market can position you perfectly based on your unique goals. Don’t get too focused on flashy presentations and marketing materials, these are great and show a group is committed to exhibiting professionalism but if they can’t back it by speaking directly with you on the phone about the market they may simply be “copy & paste” experts.

Scope of Work: If the property is a turnkey with a tenant residing in the residence you will have a difficult time visiting the property or getting current interior photos. Ask for a scope of work and the contractors that provided the work. Review the renovations to make sure that you are comfortable with the scope of work. Ask about service life left on HVAC, Roof, Electrical & Plumbing. These are the items that will cost you heavily when repairs are required.

Is this an all encompassing list of vetting tools? Nope. But that’s what future articles are for.

Remember, find someone you can trust and stick with them. Using them together can create an excellent risk mitigation tool that shields you from hidden problems. You may not always get that “killer” deal but “killer” deals can sometimes lead to significant blood loss in your bank account.

Article Source: http://EzineArticles.com/5665695


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Rental Investing – How to Keep Your Tenants and Maximize Your Rents

Rental-Investing---How-to-Keep-Your-Tenants-and-Maximize-Your-Rents

In a perfect world of rental investing, every landlord would like to charge the highest possible rent and yet have happy tenants willing to pay. Course we all know this is not possible. But there is a way to maximize your rents without losing your tenants.

First you need to have tenants that are happy or content to live in your rental units. That means they must be in good repair and condition to attract the kind of tenants who will pay top rental rates. There is no way you are going to be able to charge high rents when you’re building need repairs. A little paint does wonders for both the exterior and interior.

Once you have your units looking nice, talk to your current tenants about any concerns they may have with there unit. Maybe they need more storage. A simple solution would be to buy or build a small storage shed in the rear and charge extra for the use of it. Most tenants would be delighted to pay a little extra for the convenience of having an extra storage space so close. Depending on your building of course, but sometimes and especially in the sun-belt states, adding a simple carport can greatly attractive higher paying tenants.

Anytime a tenant moves out, find out the real reason they are moving. Whether it’s a job transfer or maybe it a loud tenant, you need to know in order to prevent any other tenants moving out. Correct any problems you discover or changes you need to make. For example I had two tenants who had a hard a time paying by the first each month. After talking to them (as they were in the process of giving me their 30 day notice) I simply move the due date to the 5th of each month, which fit into their finances better. They were happy and I got to keep two tenants from moving out.

Once you decide to raise your rents, inform the tenants with data about the surrounding rents of other places. Simply put in your letter (notice of rent increase) the amount of your increase and it compares to other buildings in the area. Course it works better if you use only the properties that charge more than you do. Your Tenant will be more informed of the local area rents and be content to remain in your units.

Also another way to keep good tenants is when you first interview them. If they have a tendency to move every year (after the 1 year lease is up). The chances are very good they will move out on you also after the lease expires. Try and get people who have long residency at their last address, as these people have more of a tendency to stay in one place longer.

Article Source: http://EzineArticles.com/2955794


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Different Investment Opportunities in Property Markets

Different-Investment-Opportunities-in-Property-Markets

The real estate market thrives with many opportunities that give chance to people to earn. The portfolio is diverse such that there are also many investments to try.

Rental properties are among the most common of the real estate property investments. This is as simple as buying out the property and letting someone (tenant) rent it for some period as determined by a contract. While the landlord (property owner) is responsible for maintenance and tax dues, the tenant has the obligation to pay for the monthly rent.

The downside to this investment is if the landlord will have to deal with irresponsible tenants. These people do not care at all and can end up damaging the property.

If you’re not keen with this property investment, you can try the real estate investment group. It will let you buy apartment blocks, condo units or even townhouses with a single company acting as the property manager. You keep ownership, usually documented in block and white. The investment company collects payments for you whole keeping some portion of what the tenants pay for the monthly rent. In some cases, there is a portion allotted to cover for units which are left vacant for short periods.

Another property investment is called flipping. In this method, you buy a property and flips it to the next owner. It’s like buy and sell. Usually, flipping a property takes three to four months. You just have to be keen on eyeing properties that can be sold without having to alter them at all.

However, there are new flippers who also shell out small amount of money to make the properties they buy more attractive. Few renovations and improvements are done before they look for the next buyer. This buyer may be someone who just looks for his new house or someone who is also a property flipper.

There are also property investors who take risks on financing people who have mortgage dues. Some do these in exchange for collaterals like cars. Some take the property titles and return them to the owner when the debt has been repayed.

Real estate is truly diverse. Many forms of investments are now available for those who do not only seek shelter but also seek shield from financial crisis.

If you are looking for real estate investments within your place, seeking the help of a real estate professional is a big leap towards this realization.

Article Source: http://EzineArticles.com/9942265


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com