Property Management Fees: A Necessary Investment To Cater Problems

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Giving house or a portion of the house on rent is one of the common practices followed by mankind from the years. It can also be said that giving property on rent is the source of earning extra income by sitting at home. Going through this practice lots of people either extend the portion of their existing house or construct extra houses forgiving on rent. All these activities in the beginning seem quite simple to them and they exhibit their properties proudly in front of their known ones, but their happiness is not less than a bubble that vanishes in the span of few seconds.

From vanishing I do not mean that their property vanishes or collapses, but I mean the problems which they face before and after giving property on rent smashes their dreams of earning substantial earnings from property within the short period. This is mainly because of complications related to the property giving on rent, because giving property on rent is not stagnated to allowing someone to stay in your house and pay you the asked rent to you. There are lots of formalities which being as a landlord is expected to be followed by you, with this you also have a plethora of responsibilities towards your tenants to which are expected to be accomplished by you on demand.

Anyhow, all these problems can be realized only by the person who has constructed additional property only for the purpose of giving it on rent, because generally if someone has given a portion of his house for rent he can easily look after the matters related to tenancy. But, if a person has developed some additional property, then there are chances that he will definitely realize that managing a property giving on rent is everybody’s cup of coffee.

So how to get rid of this problem is the matter of concern among such landlords or property owners. Interestingly, with an objective to provide remedy to such landlords for their problems today there are various property management firms which look after towards all the matters related to giving property on rent. These groups or firms are mainly constituted by the group of experts having knowledge in dealing with the issues related to the property given on rent.

Types of Property Management Fees: Although property management fees refer to the amount charged for looking after the property given on rent, but depending upon their requirements the property management firms charge the fees in different formats. Some of them are referred below:

1. Monthly Management Fees: It is self understanding term and refers to the payment made to property management firm every month for the services rendered by it. This payment is made for the varied services offered by the group, including receiving rent from the tenants, regular inspection of property, property maintenance, attaining the complaints received from the tenants during odd hours, etc. The amount of this fee mainly varies from 7% to 10% of the monthly rent received from the tenants.

2. Leasing Fees: This fee refers to the investment made for advertising the property, showing the property to your prospective tenants, screening tenants and checking their previous credit score, getting all the legal documents prepared accordingly and various other tasks. This is generally one time fees and mainly varies from 75% to 100% of the rent for the first month.

3. Maintenance Fee: It mainly refers to investment made by the company for maintaining the condition of your property. As a general practice this type of fee is mainly charged on terms and conditions determined between the property management company and the landlord. If the landlord takes the responsibility of looking after the maintenance of property no fees is paid to the group, but in case if the responsibility is handed on the shoulders to the group. Then, depending upon the terms, conditions and maintenance fee is paid to the group.

4. Late Fee: If the tenant is not able to pay the rent on the determined date, in that scenario the management firm might opt for collecting the full portion of rent or certain percentage of rent depending upon the mutually agreed conditions.

5. Eviction Fee: There might be circumstances when the landlord might wish to get his house vacated before the end of the contract. In that scenario the management company can help him in getting the tenants evicted from the house either through mutual agreement or via court. Depending upon the efforts and time, the property management company can charge the necessary fees for the same.

In return for their service the payment which they charge in simple words is known as property management fees. By charging these fees these experts agree to take full care of your property on your behalf and look after all matters starting from searching of tenants for renewal of their rent contract to solving their complaints and getting the property vacated from them after accomplishment of the contract.

Article Source: http://EzineArticles.com/9759003


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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Real Estate Investments – How to Be Successful

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Successful real estate Investors know they can create long term wealth through buying and holding real estate as rentals. Everyone wants to be successful, but everyone isn’t. Why? It may be because they don’t have a plan. There is an old saying, “people don’t plan to fail, they fail to plan”.

The first element of that plan has to be putting together a team of people to help you accomplish your goals. You have to remember that being a successful real estate Investor requires that you have a TEAM in place. Investing is not a solo sport.

Let’s take a look at who we will need on our TEAM. All of these people are extremely important and need to be in place before you buy your first property.

Coach/Mentor – Every successful entrepreneur needs a good coach or mentor. By training under the watchful eye of someone who is successful, you will gain valuable knowledge and reduce the risk of failure.

Realtor/Wholesaler – This is the person who will find the property for you. Some people chose to work with a Realtor and some a Wholesaler, but basically they do the same thing, they find great deals!!! If you are working with a Realtor, they should be experienced in dealing with foreclosures. Banks want to unload these properties, but you need a Realtor that has had experience in negotiating deals with the banks. If you are working with a Wholesaler, they either already own the property or at least control it. Both of these people can determine the value of the property after it has been repaired. Both can advise you on improvements that should be made to get the house rent ready as soon as possible.

Lenders – Before you even think about buying a piece of investment property, you need to know ahead of time what lender you are going to use. Being able to get refinanced is crucial to the process. You do not want to buy a piece of property and then find out you can not get it refinanced. This is one of the biggest mistakes Investors make. They buy a property with their own money or use a line of credit, and then they can’t refinance and get their money back. Basically, you want to buy the property with hard money, rehab it, and then refinance to your permanent loan. Financing for investment property is very challenging, which is why it is even more important than ever to have a lender on your TEAM. This person may change, but you will always need to have a relationship with someone that you know will refinance your deals, whether it is house number one or number fifty.

Closing Attorney – A good closing attorney is invaluable. Call around and see what they charge to close a deal for you. By using hard money to buy the property, rehabbing it, and then refinancing it, you will have two closings. The first when you initially buy the property and the second when you refinance. That being said, you want to develop a relationship with a closing attorney that understands real estate investing, provides their services at a reasonable rate, and can close quickly.

Insurance Agent – You will need to shop around for a good insurance agent. It may be the person that handles your existing insurance, but a lot of companies don’t cover rentals or have limited coverage if they do. When looking for an agent, ask if their company covers vacancies. You will have vacancies!!! Don’t buy a policy that doesn’t allow for that. You may want to get a minimum of $300,000 liability. Also, look for a policy that has loss of rent. What if there is storm damage and your tenant has to move out for 3 months for the damage to be repaired, you don’t want to lose that rent money. Make sure the agent understands that you want to insure rental property, not that you are renting. One is a renter’s policy and the other is called a fire/hazard policy. Once you have accumulated several properties, you might want to consider an umbrella policy that would cover all of your properties for say $1,000,000. This policy pays in addition to the insurance on the individual property and is very cheap. It’s kind of a safety net for that “what if” scenario.

Contractor – When shopping for a contractor, be sure you find someone that is licensed and insured. If you are working with a Realtor that specializes in foreclosures they will be able to recommend several. The same goes for a wholesaler. Interview them and find out how they get paid. Most reputable contractors have lines of credit, so they don’t require as much money upfront to get the job started. Ask to look at a job they are currently working on or have just completed. This will give you an idea of the quality of work they do. Have several contractors submit bids on the job before you make an offer on the property. You have to know how much the rehab is going to be before you can make a sound offer. Go through the property and make a detailed list of what needs to be done.

Remember, you are not moving into this house, this is going to be a rental. Once the property is yours, go back and get a firm bid on completing the repairs including the time frame to get the job done. Time is of the essence. A vacant house produces no cash flow!!! If one contractor gives you a better price, but can’t start for several weeks, it may be better to pay a little more to get the job done quickly. You should have in writing exactly what will be done and the total price. Of course, there is always the unexpected, but if the rehab goes according to plan, there is no reason for there to be a change in price. You may want to negotiate to pay them one-third upfront, one-third when the job is 75% complete and the last third when the job is complete and has been inspected. This way if there are any problems or things weren’t done that were on the list, the contractor has to take care of it before receiving final payment.

Property Management Company – I wouldn’t even consider owning rental property without a property management company. Do you want the headache of dealing with tenants? I don’t!!! It is well worth the money to let someone else handle everything that goes into having tenants. Most property management companies charge 10-12% per month to manage the property for you. They collect the rent from the tenant, handle any maintenance issues, deduct their fee, and send you a check.. You don’t have to do anything, but go to the mailbox and cash the check!!!

Eviction Attorney – I know, no one wants to think about this, but if you have rental properties, sooner or later you probably will have to evict someone. It would be better to already have an attorney on your TEAM that does this than to have to start looking for someone after your tenant is behind on their rent. Also, you need for them to look over your lease to make sure it complies with state laws governing landlords and tenants. You want your lease to be landlord friendly, not tenant friendly. You need to know the time frame for an eviction as this varies widely by state.

Appraiser – You need to know before you buy a property what it is going to appraise for when the rehab is completed. The Realtor/Wholesaler will have a good idea, but you need to be as accurate as possible. Remember, the goal is to not be out of pocket any money. If when you go to refinance and you thought the property was worth $100,000, but the appraisal comes in at $90,000, you probably will have to go to closing with money. It’s a good idea, to get a verbal appraisal before you buy. Also, since you already have a lender on your TEAM, find out which appraiser they use. You can then contact them and ask if they will do a verbal appraisal on a property you are considering. If you tell them that you will ask the lender to use them for the appraisal, they usually will do a verbal for free. Even if you have to pay them something, it’s better to know the value on the front end, not after you have bought it. I do want to mention that even if you get a verbal appraisal, if it takes you 3 months or longer to get your property rehabbed and refinanced, then the appraisal may be off. Appraisers are limited as to the age of the comparables they use. So if it takes a long time to get the rehab completed and then you have to start shopping for a lender, instead of already working with someone, then the comps the appraiser used in the verbal appraisal may no longer be any good.

Accountant – Preferably, your accountant will be a CPA who has experience with real estate investments. Not only will they benefit you at tax time when it comes to write-offs, but also throughout the year in setting up your business correctly and reducing your capital gains tax if you sell a property.

These are your core TEAM members. Remember, to become a successful Real Estate Investor, you have to build a TEAM!!!

Article Source: http://EzineArticles.com/3627188


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

 

Five Basic Tips for Investing in Real Estate

Five Basic Tips for Investing in Real Estate

There are a lot of things to learn in Real Estate before you start investing. In fact, investing in Real Estate is much more complicated than the stocks investing. That is why Real Estate has become the common investing area for many people and thus have become more popular over the years. One needs to have financial and legal knowledge before investing in the Real Estate.

So, here we are providing you five basic tips which helps you to familiarize yourself with the basic concept of Real Estate.

1. Location:

Location Matters which is an old age saying perfectly suits when we think of the investing in Real Estate. The first thing you should make sure while investing in a property or proceeding forward is whether it is located in a good place or not.

If it is the best location, it can be the worst house there, but that doesn’t matter as you can just fix the issues or resell it to someone who wants a house in the best location. This is called as the Fixing and Flipping formulae by the professional Real Estate investors.

2. Wholesale properties:

Being wise is also very much important while investing. You need to follow the Warren Buffet formulae from the stock market investing which says “You need to be greedy, while everyone else is feeling fearful.” You need to look out for the wholesale properties that are being offered at great discounts and thus avoid paying full prices.

Using this technique, you can buy the property at low price and keep the selling price twice the buying price which helps you in maximizing your investment return.

3. Connect with local investors:

Hanging out with the local investors and talking with them about the local Real Estate market will help you in knowing the things better. Ask them to show their properties and take in every single bit of information they give you.

4. Reading helps a lot:

There is a tremendous amount of information available online these days. You can also gain information that you may need regarding the Property field and investing as well. Buy and read books that give you practical knowledge about buying, flipping, renting and selling the properties.

5. Find a good Realtor:

This is the best part. When you are all set and finally ready to invest in some property, then a Realtor is the person who helps you with it. And a good Realtor who understands the concept of investing returns and also have sold a number of properties can be the best choice.

Property investment can offer fabulous returns, but there are also people who are bankrupted after investing in Real Estate. It is all in your hands, so be sure and know everything involved before you invest.

Article Source: http://EzineArticles.com/9720237

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

Finding a Down Payment for Your Real Estate Investment

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In order to meet their loan to value ratios (LTVs), nearly all lenders require borrowers to have some “skin in the game” or equity in each fix and flip project. How does a real estate investor who is just starting in the business or is tied up in another project obtain the down payment necessary to qualify for a hard money loan?

Friends and Family: A Logical Start

Friends and family are a great place to start when looking for help with money down. You know them, have a track record with them, may have worked with them before on other types of projects, and you have access to them to propose your deal.

Laying out your Proposal: Risks and Rewards

Before you approach friends and family, prepare a detailed analysis about the specific investment opportunity. Research the project thoroughly, and be very clear and honest about the pros, cons, and associated risks fix and flip success.

Next, devise a business plan that clearly articulates the time line, projected milestones, and budget of the project as well as the terms of the proposed partnership, joint venture or investor relationship you wish to enter into with them. Approach the entire process like the business relationship that it is.

Real estate partnerships offer your chosen family and friends the chance to invest money into your fix and flip project(s) in exchange for a designated ownership percentage. As equity partners or investors, your family and friends will have an opportunity to receive money that the property generates at closing. So, while they will be taking an investment risk, they will also be in a position to benefit from the sale of the property.

Partnership Considerations

  • Legalize your arrangement. This is a business partnership and should be structured as such. The most common way to structure these partnerships are as general partnerships, limited liability companies (LLC), limited partnerships or corporations. Consulting with an attorney who specializes in real estate partnerships can provide valuable information about the process and the best type of agreement for your situation.
  • Clearly establish the role of each partner or investor. For example, your friend or family member might contribute the cash needed to make the initial down payment and closing costs, while you will be responsible for securing the remaining funding, buying the property, and managing all of the construction. Alternatively, your partner may want to take a more active role in the day to day operations of the renovation. Spell this out clearly ahead of time.
  • If you choose to set up a partnership, determine the aspects of the deal that will be included in the partnership and split. As partners, your family and friends will be able to participate in all aspects of real estate property ownership. This will allow them to receive a designated ROI percentage that might include: property appreciation, loan paydown, cash flow, and monies from the sale of the property. Remember that the addition of your partner’s funds reduces the amount of your construction loans so that should be taken into account as well when determining what is included in the profit split.
  • Decide how the NET (profit or loss) will be split. Remember to include all costs when determining the profit (or loss): fees, refinancing costs and any appreciation. There are many different ways to split the profits, and not one right way. It all depends on how much money each party brings to the deal, how the work is divided, who takes the most risk, etc. Splits range from 50/50 to 80/20 based on the above factors and what the two parties agree to. The key is to decide and formalize the split ahead of time.
  • Outline terms for reporting the income (or loss) for tax purposes for each party.

Following the steps above gives your partnership the highest chance of success, which can be a foundation for many future successful real estate deals.

Article Source: http://EzineArticles.com/9621762

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

Factors to Consider Before Buying a Property

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Everybody dreams of owning a house at one point of time. But possessing a house is no joke. It requires careful consideration and planning to make such a heavy investment. A lot many things have to be kept in mind before buying any property. The main concern is finance but there are so many other things that are directly related to it.

Here are some factors that should be considered before buying a property:

1) Stability of income: Doing well in your work and earning good money may excite you to buy property at the moment. But it is very important to analyze your financial condition before making any big purchase. How stable your job is at the moment, will your salary increase in some time, what are your other expenses and how safe is it to invest in an asset are some of the most important questions to answer. If you’re uncertain of your future income situation, then picking up a mortgage isn’t a really good idea at the moment. Wait for some time and save more money for down payment.

2) Credit Score: A credit score is a statistical number that depicts a person’s creditworthiness. Lenders use a credit score to evaluate the possibility of a person to repay his debts. It also determines the rate of interest at which the mortgage will be given if it gets approved by the bank or creditors.

3) Personal commitments: What are your personal goals? What expenses do you see in the near future? Are you getting married or planning a baby? What are the expenses that may delay your mortgage buying? All these events will incur heavy expenses and may delay your property buying task. Ask these questions to yourself and consult your dear ones before planning to take such a major step.

4) Real Estate scenario: What is the real estate trend in your area? Are the property prices going upwards or are in a stable state. If the prices have gone up, will your finances allow you to make that purchase? Some area of your city may be attracting a lot many builders hence the rate of property might be on an upsurge. If the prices are going down, you may be lucky in buying your desired property at affordable rate.

5) Expectations from the property: Buying a home may be for different purposes- it could be for your own use or may be your second home i.e. investment. Since investing in real estate is considered to be the safest bet, a lot many people buy homes and put it on rent to get returns. If you are buying it for your own purpose, you may prefer a specific locality or a specific area, but if buying for investment, you may overlook such points and just concentrate on buying a property that may suit your budget.

We are sure that once you have considered all these points, you will make the best deal. Property related issues are critical and sensitive and should be dealt with great concern.

Article Source: http://EzineArticles.com/9707601

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

Tips For Better Real Estate Management

Tips-For-Better-Real-Estate-Management

Managing rental properties can be a tedious process sometimes landing you into legal issues. As a property manager or owner, you should think about preventing problems even before they occur to have an easier time maintaining order. Apart from making your tenants feel worthy, you should also find ways of making the management process easy for you especially when handling large properties or multiple properties. When you are organized in how you handle your property, it becomes easier to keep everything in check and a few tips can help you put in the best measures into the management process.

Tip 1 – Get a professional property manager

If you are a property owner with little knowledge of how to go about management, you should consider getting a professional property manager to ease out the process for you. Professional managers with some knowledge and experience in the real estate industry will know exactly how to go about the process and find organizational solutions to ease everything out. When there is a manager in place, you will feel more at peace and have fewer issues to deal with.

Tip 2 – Embrace technology

There are very effective real estate management solutions available thanks to technological advancements. Real estate management software is among the best solutions you can find to make the process easy and organized. Such a solution can improve communications and payments and data maintenance for the property. With the right system you will have an easy time collecting, returning and holding security deposits, as well as inspecting and documenting rental unit conditions before move-outs. There is just so much you can do with real estate management software to streamline processes so look for the best solution.

Tip 3 – Handle tenants appropriately

First of all you should consider screening tenants before allowing them into your property. It is a simple way of keeping troublesome characters off your property. It is also important that you put tenant landlord agreement in writing to keep things clear and ensure that you treat all tenants equally and without any discrimination. Discriminating prospective tenants based on sex, race, origin, disability or even familial status can land you into trouble. It is also important to respect their personal privacy even if the property is yours by notifying them prior to entering their rental units. Handling tenants appropriately will save you from a lot of trouble especially legally.

Tip 4 – Keep the property in top shape

Regular inspections are very important so you can make any improvements and changes where need be. Recklessness on your part leading to safety and security issues can lead to hefty losses in terms of compensations. You should therefore make a point of making prompt repairs and consider having a security system in place to give your tenants the sense of security they deserve as well as ensure that their safety is not compromised in any way.

Tip 5 – Oversee managers

They should be competent enough to keep your property in check. It is therefore important that as a landlord you choose and supervise property managers. Background checks and clearly spelling out their duties will prevent issues cropping out later.


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

Why You Should Never See Your Investment Property

Why-You-Should-Never-See-Your-Investment-PropertyWhenever I give this piece of advice, I often get blank stares. It is a very different approach to what most property investors take. But it is actually a smart strategy when you start to understand the reasons why.

But so what if you visit your investment properties?

Sure, if you’re okay with getting the results most investors get, feel free to ignore my advice and do what most investors do. But if you want to go further than most investors, I strongly recommend you stick to this rule.

Never see or inspect your own investment property.

A good investor never visits their property, as a general rule. In fact, you don’t even need to live in the same state as your property.*

* Side note: this is actually very exciting as it means you are FREE to invest anywhere in the country, opening up way more options for awesome locations. But that’s another topic entirely.

Why You Should Never Inspect Your Property

  • Before you finalize your purchase of the property, you’ll get a good building inspector to check it. They’ll do a far better job than you could ever manage, so checking the property yourself is a waste of your precious time.
  • Once the property is in your hands, you’ll get a good rental manager. It is their job to routinely inspect the property. As a professional, they will do a far better job than you could.
  • You should have full confidence in the professionals you hire to take care of your property for you. If not, you have the wrong people.
  • Inspecting the property in person will result in emotional attachment, which is bad for financial-based decision making.
  • Your time is worth more than that.
  • The real money is made in capital growth, something which you can’t see at an inspection.

So get the professionals in and get them to do it. It’s their job! Stay emotionally detached from the property and focus on making money – YOUR job as the investor.

Just because you shouldn’t visit the property in person, doesn’t mean you should ignore it. You should be looking ahead to see what the market is doing and anticipating what your capital growth is likely to do in the future. This will help you with growing your portfolio, which is how you really make money.

The exciting part is that you can do all of this online.

How to Inspect for Capital Growth

  • Check online sources for evidence of infrastructure projects and investment in the area
  • Is the population growth trending upwards?
  • Are more jobs being created?
  • What notable changes are happening in the area that might attract more people?

Inspecting Your Property is a Waste of Time

And sure, you could stop by your property and have a look. But what are you going to see? A house? Yep.

If you actually happen to notice any problems while you are there, you’re very unlikely to be able to solve them, unless you’re a qualified builder. And because you lack the qualifications and experience of a rental manager, you probably won’t understand the laws that govern how you should deal with your tenants. It’s best to avoid wasting your time and effort and let the professionals handle it.

Even though it sounds counterintuitive at first, it makes sense to never inspect your own property.

If you feel that you need to inspect your property, something isn’t right.

Perhaps you’re in a situation where things aren’t going as smoothly as they should. Or perhaps your team aren’t doing their jobs right.

If you’re struggling to find a good building inspector or rental manager, or your properties are causing you problems that you feel need your personal attention, find a good property investment coach to help you solve these problems as soon as possible.


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