Buying a Real Estate Property That Will Generate Positive Cash Flow

Buying-a-Real-Estate-Property-That-Will-Generate-Positive-Cash-Flow

When looking at real estate properties as financial investments, you will have to decide whether an appreciated value or positive cash flow is your main goal for getting properties. There are some things you need to consider before you make that decision.

Since you would more than likely be looking at single family homes and multifamily homes, there is a difference between the two.

With the former, the value of the property usually increases in value quicker. However, since more expenses are attached, you may not be looking at the kind of positive cash flow that you want.

On the other hand, multifamily units (i.e., duplexes) can generate more positive cash flow. However, they may not appreciate quickly like single-family homes do. Also, not as many expenses are attached to the latter.

Since most real estate investors look to create wealth, they will choose having a positive cash flow. In this case, you will need a reliable real estate agent that is willing to help you find real estate properties that will produce the positive cash flow you want.

Look at the balance sheets and see what you will look forward to as far as repairs, maintenance, fees and other miscellaneous expenses.

In order to maintain a steady stream of positive cash flow, you need to have the right tenants, so take your time. There are some people who will spend lots of money on real estate courses that don’t teach much of anything.

They end up being back at square one. Find a good real estate agent that is willing to genuinely help you. Sometimes, you may be fortunate enough to find one that is also an investor on the side.

Calculating Your Cash Flow

As a real estate investor, you need to be able to calculate all of the cash flow that comes from your properties. You want to make sure that you are making a profit. You will also be able to make decisions on real estate investments that you may purchase in the future.

In order to calculate your cash flow, you will need to add up how much rent you will get from your tenants. If you have more than one unit, take into consideration any vacancies you may have. Depending on how your property looks, include a small percentage of the vacancy rate into the equation.

With the total rental amount, get a figure for your losses. You will have to include property expenses, mortgage loan interest and property depreciation.

Deduct the expenses from your total rental income in order to get your losses or savings for taxes. With that, you will either add or deduct that from your expected amount from your tenants. Take your operating expenses and monthly mortgage payment(s) and deduct them for a second time. The result will be your cash flow.

When you come up with a cash flow amount, you will be able to figure out how much you will charge for rent if you decide to purchase future real estate properties. It’s important that whatever money you make, that you don’t squander it. Put it away because eventually you will need it for other things relating to your investment properties.

Changing Negative Cash Flow To Positive Cash Flow

When you have negative cash flow, you are not making a profit. You are paying out more in expenses than you are taking in as profit. That’s not how you want to operate when you’re investing in real estate properties.

Here are some ways that you can chance the negative cash flow to a positive one:

  • Implement a rent increase. Only increase it to the amount of the current market. Don’t overdo it, other wise you may not have any tenants.
  • Make the tenants pay the utilities. This would relieve a burden from you. Besides, since they are living in your property, they will be using utilities every day.
  • Go over your property taxes to see if you can find anything that may have been missed before. Who knows-you may find out that you were charged more in taxes than you should have been charged.
  • Contact your insurance company and see about paying more for your deductible. Then make inquiries about getting a better deal for coverage on the property.
Article Source: http://EzineArticles.com/1984942

Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 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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Key Attributes of a Good Property Manager

Key-Attributes-of-a-Good-Property-Manager

Property Management is a career profession. The industry allows for employment growth, continual learning experiences, and the opportunity to work with diverse people and income groups. The Property Manager can work either directly for an owner of real estate properties, or for a property management company, contracted by an owner or legal entity to care for the real estate over a specific period of time.

The Property manager has a fiduciary relationship with the management company and property owner. A fiduciary relationship is one that is based on a mutual trust and complete confidence in one another.

The Property Manager is provided an owner’s real estate portfolio to manage to its “highest and best use” in exchange for an employment contract or salary. Real estate assignments for the property manager includes apartment buildings, condominiums, hotels, storage facilities, shopping centers, office buildings, government subsidized properties, rooming houses, abandoned buildings and plots of vacant land, to name a few.

Here are some crucial skills must be accepted as required attributes and learned skills in order to be a good property manager.

1. Must Know and Stay Current on Local Ordinances and State Laws

Managers are required to perform their work according to the laws of the land. The government (city, state, and federal) dictates how real estate is to be managed, from requiring a real estate license (depending on the state), to the use of the real estate (such as rent control laws). From proper trash removal to how and where we must keep security deposits, the manager has to keep abreast of the many legal requirements of managing real estate. If a mistake is made or a task is forgotten, it could cost the owner his or her property, and/or a management company’s reputation, loss of the account, or even the loss of real estate licenses.

2. Must Be Highly Ethical and Honest

Property Managers work on the Honor Code when they handle other people’s money. By collecting rent, security deposits, laundry machine money et al, the property manager holds a fiduciary relationship with the property owner and/or management company. The owner entrusts the property with thousands of dollars each month, plus the value of the real estate itself. The manager is hired to perform at his or her highest level of integrity. On a daily basis, the property manager’s good judgment and sense of what is right and wrong is called into play.

3. Must be Detail Oriented and Organized

Managers collect the rent daily, and must ensure that each rent is paid and posted to the tenants’ account as received. Financial records detailing each and every rent transaction are kept, either by rent cards, or on the computer. Lease expirations and renewals, rent increase letters, and rent invoices must be mailed on time. lines for court appearances must be kept, and clients must receive their written monthly report of operations. A skilled property manager is able to multi-task, keep site files organized, and prioritize repairs and assignments.

4. Must Have Good Communication Skills

Managers must be able to communicate with people from all walks of life, cultures, ethnicities, and personalities. Managers must be able to articulate their cases in front of judges, talk to the owner, negotiate with vendors as well as speak appropriately with tenants, who are often frustrated, upset, or angry. A good manager must be able to stay calm, and communicate in a professional manner. Familiarity speaking in other languages is always a plus.

5. Must have Good Computer Skills

Computer competency is a technical skill, like driving, typing, etc. The use of email, mail merge, and faxing through the computer is at the heart of property management today. This is especially true if the property is on one part of the city or state, and the home office is a distance away from the site. If a manager does not have a solid command of the computer and its basic programs, such as Microsoft Word and the spreadsheet Excel, you may be hard pressed to find an administrative position in this field.

6. Should Like Working with the Public

If everyone paid the rent on time by the fifth day of each month, the manager would not have rent collection work to do. If a property never had problems, such as toilet overflows, lost keys, or defective smoke detectors, a property manager would have little to do. Therefore, it is important that a manager enjoy dealing with people with problems. A manager should at least like helping tenants with dignity, and in a responsible manager. If you do not like being interrupted several times a day with a dilemma to solve, this type of job may not be for you.

7. Must Be Patient and Have a Sense of Humor

There is some pressure involved working with the public. There are days when nothing seems to go right, and if you happen to have a headache that day, it could be a long 9 to 5. A calm personality or a good sense of humor will take you a long way in property management. If you tend to be high-strung, anxious, or become angry or impatient while working with tight deadlines or with people with problems, you may want to re-consider taking on this profession.

8. Must Like to Read and Conduct Research

There are many types of leases, agreements, forms, and other legal documents that must be signed between tenants, the manager, government agencies, the site attorney, and/or the owner. Real estate and governmental regulations change; the manager must be willing to read up on them and stay current. Documentation must be read and checked before submitted to tenants, agencies, the owner, etc. If you do not like to read in order to keep up with the latest trends, legal and industry changes and terminology used, you will not be able to properly do your job.

9. Must Have a Strong Sense of Duty and Commitment

Ensuring that the tenants under your control are treated with respect, have heat and hot water, are not subjected to or committing illegal activities or disruptive behavior of their neighbors, are some of the managers’ duties. Tenants depend on the manager’s sense of obligation to the property and the families or professionals who live in it. The manager may not always have the funds to do everything all the time, but what can and should be done, such as keeping the building clean, and having a sense of urgency to get work completed in a timely manner.

10. Should be Flexible-Minded

Property Management is a fluid profession, in that it follows economic, governmental, industry, and societal changes that impacts how a property is managed. Managers who still like the “good old days” of mistreating tenants and making rental applicants jump through unnecessary hoops to get an apartment (or the opposite, by not checking anything), will find him or herself out of touch, and maybe out of a job. The ability to accept changes of law, obey fair housing laws, have a positive, or at least a neutral, attitude about people who are different, and above all, to be open-minded, is a key element of a successful manager.

11. Must Be an Excellent Follow-Up Person

A manager can never assume that a repair or rent payment plan will happen on its own. Our mantra is: “Follow Up, Follow Up, Follow Up!” This is one of the most critical skills of a good property manager. The ability to multi-task, keeping several balls in the air without dropping any of them is challenging, and difficult at times. The ability to successfully multi-task is often rewarded both financially and in promotion decisions.


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Property Management and Rental Terms Glossary

Rental-Property-Management

Moderate Housing: This sort of lodging is that of which a government or state office oversees with an end goal to offer help and control the rent to the individuals who meet a specific foreordained criteria.

Luxuries: Intangible and unmistakable elements that are incorporated into or on a property that improve the allure or estimation of the property.

Flat: A multi-family assembling that is intended to house separate people or gatherings of families inside the same building.

Expedite: A land proficient that buys and offers property for others with a specific end goal to get a commission. This expert must be authorized and qualified to rehearse in the state he lives in.

Apartment suite/Condominium: A multi-unit fabricating that takes into consideration singular units to be claimed by its inhabitants. The normal components of this kind of building are possessed by all proprietors inside the townhouse.

Routine Housing: This kind of lodging sticks or complies with the business sector rate, or satisfactory benchmarks, of the territory’s lodging.

Co-Signer: An extra endorser on a lease or home loan that is utilized as a part of request to check the personality of the guideline proprietor or to give a specific level of surety to the moneylender or landowner.

Duplex (House): A house that was intended to house two separate people or families inside the same house. Case in point, a house that has an upstairs for one family and a down the stairs for another family is viewed as a duplex.

Square with Housing Opportunity: The open door for all subjects in America to have the capacity to live in different lodging groups paying little mind to race, sexual orientation, age, nationality, familial status or incapacity.

Morals/Professionalism: An arrangement of standards and good rule that become possibly the most important factor when directing proficient conduct.

Expulsion: A procedure through legitimate means with an end goal to expel a man from their home because of an infringement of the assertion, whether the occupant has not paid rent/contract or on the off chance that they have abused another type of the understanding, for example, commotion unsettling influences.

Reasonable Housing Act: This law is of a government status and was placed in actuality to stop the separation that happens in lodging in view of race, age, shading, handicap, sex, religion, national starting point and familial status.

Lodging Assistance Payments (HAP) Contracts (PDF): The HAP contract is utilized so that those under the voucher project can get area 8.

House: A living arrangement in which individuals live.

Lodging and Urban Development (HUD): The mission of HUD is to build the entrance to lodging that is moderate without separation; bolster the improvement of the group; and expand the homeownership rates.

Pay Levels: These are points of confinement as characterized by the administration that are utilized to set up expense credit limits and different sorts of moderate lodging.

Toxic Paint Disclosure: Requirements that got to be powerful starting 1996 to guarantee that families and people are made mindful of homes that contain toxic paint.

Lease: An oral or composed contract that is created between a landowner and his inhabitant that furnishes the occupant with the privilege of select ownership of the home for a particular measure of time. By and large talking, for leases that are longer than one year, the assertion must be in composing.

Lease Option: An assertion that permits the inhabitant the choice to buy the property they are renting toward the end of the lease term, or some time amid the term of the lease.

Lease Renewal: The restoration of a lease once the term of the lease has terminated.

Lease Term: The measure of time that is settled upon between the landowner and inhabitant in which the occupant will possess the property.

Tenant: The occupant who has concurred for the term of the lease.

Lessor: The proprietor who has concurred for the term of the lease.

Low Income Tax Credit (LITC) Properties (PDF): These sorts of properties give the proprietor a specific measure of expense credits in return for leasing to qualified occupants as assigned by the Justice office, HUD and the IRS.

Support: The upkeep and consideration of a property.

Persons With Disabilities Act: A demonstration that insurances rise to open door for those with inabilities.

Pre-Qualification – This is the main stage in the offering procedure where the most extreme advance sum for the candidate is resolved.

Property: A bit of land and additionally the perpetual apparatuses, for example, structures, that is joined.


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Rental Property Management – Is It Really Worth It To Hire This Service?

rental-property-management

Why should I hire the services of the rental property management organization to look after my property given on rent? It would be the first question from every landlord who has given his property on rent, if you ask them to use the services of any such group existing in your city. You will agree that when a person lets his house or any part of his house for rent, his main goal is to earn profits from it to enjoy a better life and make payment of his various bills.

Giving a house on rent is one of the oldest practices carried across the world. If there are any used parts at home, people give it on rent to earn extra income from that part. To a certain extent, this practice seems possible to earn more income in short span of time without investing a single penny from the pocket. But, when a person has a huge amount of properties under his possession and he has given all of them on rent, then looking after all those properties at the same time could be complicated for him, until unless he has enough time to look after them or has someone to take the care of those properties in his absence. However, for that it is imperative that either you or the other person taking care of your property should have proper knowledge of handling the property given on rent.

This is mainly because of lots of legal formalities associated with it, moreover, there are certain conditions where being a landlord you have to sort out any issue arising from your property to your tenant. Let us, for instance, say, while giving your house on rent you told your tenant that the house is equipped with an electrical converter to lighten the house during the power cut. But, during power cuts if that electrical converter did not work, then at that time it is obvious that your tenant will call you and complain about that issue. In such situation if he is residing in your house then it will be easier for you to rectify his problem, but if your rented house is quite away from your residence, at that time going out of home to solve the issue of an electrical converter will be laborious and irritating for you. Therefore, to cope with all these issues it will be better for you to acquire the service, property management group to look after all such complicated issues.

The above mentioned illustration of an electrical converter is just an example to understand the relevance of the services offered by a property management group. There is a plethora of services offered by the expert working in these groups. These experts are well-versed with all legal activities which are expected to be performed by the landlord. Do you know, that before allowing someone to live in your house as a tenant it is imperatively expected from the landlord to cross check the background of your prospective tenant? May be your answer is yes, but do you know what to do if your tenant makes excuses in paying the rent on time, or starts making improper use of your prospective tenant. Hiring the services of experts working in property groups will help in overcoming all these problems.

These experts will properly advertise about the availability of your property to rent, conduct their interviews and cross check their credit from the local police station. Will collect rent from them on time. Make regular inspection of your property that it is not being damaged or improperly used by the tenants. Look after their phone calls during odd hours and reach at the site to solve those issues. These experts will also help you in getting your house vacated from the tenants before the expiry of the agreement, in case if you wish to use the house for some personal work. Not only this, if at the end of tenancy agreement your tenants wish to continue the agreement, in that scenario, these experts will get all the paper work done strictly according to the rules and regulations, prescribing the new terms and conditions related to the rent and use of the house.

In the current scenario, many different property groups which offer the quality services in the rental property market and take care of your whole property given on rent. In simple words, it can be said that the services of the rental property management group will offer you peace of mind by making a little investment in their services.

Article Source: http://EzineArticles.com/9606963

Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com