The Advantages of Having a Property Management Service

December 28, 2017

Property Management

Comments Off on The Advantages of Having a Property Management Service

Property assets are good. More people are interested in acquiring their own properties be it for residential or business purposes. The real estate industry has made its mark over the years since people are starting to understand just how important it is to own a property. With the way the economy is going these times, it seems that investors are putting their tabs on real estate rather than on paper assets like stocks. It is indeed risky to venture into something that is unstable, so it is better to opt for that one that can give them leverage in the long run.

There is a report that shows evidence that the demand for rental homes continues to rise in many parts of the world. This increase is also seen on different online real estate websites. The rise in the number of interested individuals is due to the fact that real estate is proven to be a sound investment for capital appreciation and rental income. But just like any other kind of investment, real estate entails much serious and thorough consideration before an individual actually takes out his money and invest. Any interested person should know the different aspects of financing, acquiring, and renting out a piece of property. This is not a mere game of Monopoly.

Consulting a licensed investment property management professional or agency is a good step that novice real estate investors must do. The real estate experts or agencies will address anything that concerns properties in detail and this includes loan financing, tenant search, monthly rental collections, and property sale. Property managers are trained to help property owners or even prospective buyers in order for them to come up with the right choices or decisions. They can also assist the owner with legal matters. Certain issues can arise when someone is not that well-informed in this kind of investment. Be it acquiring or selling a property, property managers can help with the marketing and financing aspects. For instance, they can advise their clients which kind of property is the most ideal to invest in given the current economic conditions. Property management experts know how to negotiate with qualified contractors and designers, and come up with the best deals when the owner decides to make renovations for his property.

For those who want to rent out their properties, rental managers can draw up estimations on how much the property can earn income on different terms (10, 20, 40, or 60 years) depending on the client’s preference. They know how to find the right tenant and go through the trouble of making background checks for prospective tenants, which definitely takes the stress off the property owner.

Such services significantly help investors when it comes to real estate.

10 Property Maintenance Tips That Can Save Landlords Money

December 28, 2017

Property Management

Comments Off on 10 Property Maintenance Tips That Can Save Landlords Money

As a landlord, you will find that you are usually responsible for the majority of the costs relating to property maintenance and repairs. However, there are number of things which you can do in order to help keep these costs to a minimum. If you have bought a property as an investment, then you won’t want to spend more than your tenants are paying you in rent to carry out repair work. With this in mind, here are ten property maintenance tips which can save landlords money.

1. Electrical inspections – It is well worth having a qualified electrician carry out electrical testing at least once every ten years. This will help to make sure that wiring and circuits are safe, and help to prevent any electrical fire hazards. If you are supplying any electrical appliances, then these should be safe when tenants move in to a property.

2. Check detectors – Even after an electrical inspection, you will still want to ensure that the smoke detectors within your property are in good working order. Should a fire occur, this can be key in helping to minimise the damage by raising the alarm as quickly as possible.

3. Gas appliances – Similarly, your property maintenance responsibilities are likely to extend to the gas appliances which you supply as the landlord. A safety check carried out by a CORGI registered tradesperson should be carried out annually to provide you with a gas safety certificate (CP12).

4. External foliage – Whilst you may not be responsible for general garden upkeep, you may find that you need to prune any plants or branches which grow up or on to your property. Without regular maintenance, such greenery can cause moisture damage and invite unwanted insects into the property.

5. Grouting – Over time, grouting between kitchen and bathroom tiling can crack or decay. This may seem like a small problem, but if ignored it can lead to substantial water damage, which tends to prove costly.

6. Roofs and chimneys – Roofs should be checked for loose tiles and moss, whilst chimneys will need to be professionally cleaned once a year in order to ensure that they are kept clear of bird nests and creosote.

7. Drains – A routine inspect ion of drains and gutters doesn’t take long, but it can help to spot any debris that needs clearing. Failure to carry out this quick check can lead to water damage.

8. Pest control – Even if your property does not suffer from a rodent problem, you will want to look out for signs of damage caused by smaller pests such as ants and termites. It can prove expensive to rid your property of such pests after prolonged infestation.

9. Paint – Paint isn’t purely a cosmetic touch – it can actually help to keep a property free from rot and damp. If you’ve noticed that the paint on your property has started to peel, then don’t put off repainting until damage has occurred.

10. Heating and air-conditioning – If you have a heating or air-condition system installed in your property, then this should also be inspected at least once a year, whilst filters will need to be replaced more frequently. This will help to ensure that such systems are able to run safely, as well as efficiently.

The Benefits of Good Property Management Software

December 28, 2017

Property Management

Comments Off on The Benefits of Good Property Management Software

Computers and technology today, have the capacity to help us a great deal in almost all of our endeavors. Software solutions offer a way in which we can perform accurately at great speeds in a highly resource efficient manner. Property management software is one such solution that can be highly useful to landlords as well as property managers and agents. By automating the tasks of a landlord, it is possible to keep an accurate track on everything and thus bringing about an efficient way of handling each and every aspect. From rent arrears to accounting, these software solutions take us to the next level where we do not have to rely solely on human memory and data processing ability to get the job done. Previously, a landlord had to do everything manually which obviously was not that accurate. This gave way to a sloppy cash flow where the landlord didn’t have an accurate track on them. But with good software that is specifically developed to help address the needs of a landlord, we can get a much clearer picture as to where our incomes lie and what exactly are the expenses. With a bit of searching around, you could find great solutions that perfectly suit your requirements. Let us now talk briefly about the advantages of using a good software solution to help manage your property.

Cash Flows

One of the main reasons for the popularity of property management software is its ability to keep a track on cash flows. It shows you a detailed picture of the rent arrears and helps you notify the tenants about any dues. It can help manage your expenses to ensure that you don’t waste money on things unnecessary. Most of all, it does all of these with a great accuracy in an organized manner and hence the whole thing becomes much easy. Gone are the days when you manually had to remember when the rents are due, or create and maintain accounts of every tenant.

Data Processing and Management

As a landlord, you would have to work with a good amount of data relating to the tenants and the property itself. If not organized, all these data can pile up into a mess and you wouldn’t find what you need at the right time. But with a software solution, it would become much easier to create a document base and manage it much more efficiently. All the paper work involved in letting a property can be quite huge and hence a program that can help us organize would definitely help us a great deal.

Better Use of Your Time

This would mean that you wouldn’t have to spend time and efforts on such functions. You could use this time to concentrate on your customers and achieve this by employing a person, but that would not be such a cost-effective decision for your business.

5 Effective Real Estate Tips for the Beginners

December 28, 2017

Property Management

Comments Off on 5 Effective Real Estate Tips for the Beginners

In the past few years, people stayed away from investing in real estate. According to most of them, this is one of the toughest investment options around the world. However, experts say that the above fact is nothing, but just a myth. With the following simple tips, it is easy to break the above myth, and invest in real estate in an efficient way –

#1: Business Experience Is Not Mandatory

The fact that only the seasoned businessmen can invest in real estate property in an efficient way is wrong. Though business experience acts as an added benefit, it is not mandatory at any stage. A great deal can change the thing, and can make a person confident enough to carry on the investment process. Therefore, it is the self-confidence, which matters the most, and not earlier experience in business dealings.

#2: Information in Real Estate Is Not a Necessity

Many people find it crucial having proper experience in property related issues to emerge as an expert investor. Though a person might find it astonishing, but it is not that important knowing a lot about real estate and other related issues. It is one of the most contradictory, yet resulting things in the investment process. Everyone has to start at the same point, where no one has any relevant information. It is the knowledge that person gathers over the time, which matters the most.

#3: Having A Reliable Source Is an Advantage, Not Mandatory

People, who know someone in the field of real estate investment, start with the added benefit. The process of setting a goal and meeting it, getting a team together, and relevant tips are important to a newcomer in the field. However, there are many people around the world, who prospered as a real estate investor without any source. Therefore, though a source can act as a benefit, it is not at all a part of the overall process.

#4: Big Start Is Better Than Just a Start

People often find it confusing while choosing between a big start or just a start while investing in real estate. However, in any investment process, risk is mandatory. People, who are not ready to take up risks, should stay away from the concept of lending money. Though many have a large amount of capital in hand, most of them love playing safe, and invest only a small sum. However, without any risk, there is no chance at all to gain good amount of profit.

#5: Real Estate Investment Is Not For the Riches Only

Experts found out that most people stay away from the overall process thinking that only the rich people can invest in properties. It is nothing more than a myth. Investment is a business, and there is a fair chance for everyone to earn revenue. Therefore, stop thinking and make the move to grab the revenue to move forward.

Experts designed the above tips, which broke several investment myths on its course. People, who are on the verge of investing in real estate, should keep them in mind to make each step a fruitful one.

Property Management Tips – Top 5.5 Tenant Problems and How We Fix Them

December 28, 2017

Property Management

Comments Off on Property Management Tips – Top 5.5 Tenant Problems and How We Fix Them

In today’s real estate market the key to thriving lies in “good tenants.” Many people fear becoming property managers and for good reasons, but if you really want to succeed in real estate you need to think long term. That’s right… history has proven that real estate doubles every 10 to 14 years. The problem is that many novice investors purchased hoping to flip for a small fortune and greed led them to invest in properties that were extremely negative in cash flow production. However, if you invested wisely the most pressing problem you will have to deal with is selecting the most qualified and ultimately profitable tenants.

Because I want to empower you to succeed I am going to share with you my top 5.5 tenant problems and how our team of experts maximizes on those opportunities. There are several simple strategies that you can apply to your real estate investments to do the same. If you follow these fundamentals not only will you make money, you will avoid a ton of headaches. So let’s go over these opportunities right now.

1. Non Payment / Late Payments/ Bounced Checks:

If you “the investor” are the one paying your own rent on an already occupied property, there are severe problems with your cash flow. The same goes if your tenant is constantly paying you late or even bouncing checks. While there are a multitude of reasons for tenants not keeping their end of the bargain, the root of the problem lies in a bad screening process of tenants up front. This includes weak lease agreements. If you want to avoid these major problems you will need to…

– Verify prospect’s credit history

– Make sure to contact references

– Have a strict legal lease agreement

– Keep good communication with your tenants

– Offer rewards for paying on time (Discount a month’s rent after consistent payments)

– Don’t be afraid to go after your money legally

I’m not saying that doing things right up front is easy (or cheap) but ultimately finding the right person(s) as tenants will benefit you in the long run more than almost anything else in the buy and hold real estate game except for buying at a discount. Keep in mind that if you are not willing to collect your money, you won’t be in this business very long.

2. Illegal Activities:

Whether you own a residential property or multi-unit buildings, illegal activities can destroy your property values. Many times tenants conduct illegal activities in the properties they rent from you the landlord- leaving you the owner liable for many potential problems. This was an issue I had to deal with when we as a network purchased over 25 town houses last year. It was horrible to learn that some of the tenants were dealing or using drugs. We knew that if we did not act quickly it would affect the over all value of our investment. Because we have zero tolerance for crime we notified the local authorities with these problems and let them do their job. We also encouraged our nearby good tenants to do the same. In less than 6 months the neighborhood had a much better atmosphere- one that made people feel safe.

Can you see why you too should deal with these issues at the root?

3. Bad Maintenance:

The poor upkeep of your properties can cost you BIG in the long run. Tenants are not by nature irresponsible. However, human beings as a rule more often value that which they own. So challenge your tenants to be responsible, by not only keeping the property in good condition but also by reporting issues as they arise. Make sure your lease agreement covers this section in detail. Walk through the unit with your tenants before handing over the keys. Also, I would highly recommend you drop off a new air filter at least quarterly. Most tenants never change their filter, which can cause your central heat and air systems to break over time. By dropping off a new one it will give you an opportunity to inspect the condition of your investment without prying- but be sensitive to privacy and non-intrusive. In fact, your tenants will likely thank you for the extra service and you will be rewarded by avoiding many costly issues that are caught on time.

4. Unauthorized Residents:

Any resident that has not been screened or signed off on your strict agreement can pose a high risk to your investment because they are not bound by the standards in your contract. People tend to act differently when no one knows who they are or can hold them accountable. This normally occurs when an authorized tenant brings in a roommate without contacting you. The best way to avoid this potential liability is to charge an additional fee for roommates, keep track of vehicles and unidentified people in your properties, and be up front with your existing tenants what your policies are to bring new people into the unit.

5. Noise Violation:

Loud music and screaming tenants can annoy your other paying customers in a multi-unit building. In a neighborhood where your unit or house is one among many it can rouse bad sentiment among other resident homeowners or landlords who own rental properties. No one likes when loud annoyances shatter the night, or prompt neighbors to bring in the police. The best way to deal with this situation is to call them on it and if they do not respond to your call, get the authorities involved. There are many regulations that the government has put in place to stop noise violations. Again, your lease agreement should cover this area. Be respectful, but be firm. After all, you have money tied up in an investment that loses perceived value when those types of goings-on are prevalent.

5.5 Bad Management:

Many investors suffer because they do not have an efficient property manager. If you are the problem, don’t let your pride keep you from thriving in real estate. Just interview professional property management companies in your area and make sure they cover all and more of these topics. The number one thing I would recommend you do when you sit with a manager is have them give you a copy of the agreement they use and have your attorney read through it. For example, when we invest in bulk properties- whether they be residential or commercial- we like to already have a solid manager signed up to complete the task that is ahead. Should you do the same?

If you just apply these few principles I can assure you that you will save thousands of dollars in mistakes and you will be re-positioned to increase your monthly returns. So keep building your long-term wealth and stay connected for more resources.

Purchasing Residential Income Property

December 28, 2017

Property Management

Comments Off on Purchasing Residential Income Property

Purchasing Residential income properties is an excellent method to increasing your passive income portfolio and preparing for your retirement. The methodology is not complex and is very exciting. Each month I plan to have an article on each of the following areas to assist with the understanding of real estate investment.

The “I CAN DO” Goal Setting Mindset and Property Management

Real estate investing is only difficult if the property is not managed well. Constant communication (weekly) with your property management company is vital to your profitability in this arena. Begin to intermingle with people that want to build an empire and think like you do. Surround yourself with like minded people, like myself whom are interested in becoming more and more successful. Short, medium and long term goal setting is important and vital to making money in this business of real estate investing.

Establishing a Cohesive Team

Establishing numerous professionals to assist you along the way in your real estate career is of vital importance. Research their credentials to locate the individuals that will help you the best. The team mentality is vitally important and professionals that work in their chosen field daily are an excellent source.

How to Locate Investment Property

As a realtor and investment property owner, I understand the various directions the realtor and investor targets. More often then not, the directions are not identical. Realtors typically sell homes to clients planning to occupy the home they are buying. The typical realtor may not even know what a Cap Rate is or your average returns on investment or (ROI) that you should target as an investor. The

Various areas to address when purchasing a 4-unit residential income property;

o Job Market Expansion

o Population Growth

o Vacation/retirement area

o Vacancy Factor/rent amount

o Management availability

o Appreciation

o Insurance and Taxes

o Cash Flow

o Repairs

o Exit Strategy

These are some of the areas that are of vital importance but not all. You should educate your self first and foremost before you begin to buy.

Top Ten Real Estate Performance Metrics For Your Property Scorecard

December 28, 2017

Property Management

Comments Off on Top Ten Real Estate Performance Metrics For Your Property Scorecard

Today we are in an enviable position with the technology resources available to us that allow collection and almost instantaneous data manipulation and presentation for management. We are now in a position of tracking metrics for our property scorecard that a few short years ago were simply not possible. Unfortunately this massive information collection capacity leads to other problems such as information overload and developing a true understanding of what the metrics are telling us. Ensuring that real estate managers are developing real skill to unleash the potential that metrics and a property scorecard gives them is still an issue, not only using the scorecard to track performance but to use the KPI’s to forecast business health and prescribe solutions for problems diagnosed.

So, without any further ado, here are the top ten real estate metrics for your property scorecard:

1. Net Advertising Expense – this measures the total advertising expense less fees from vendors and this metric should always be negative i.e vendor fees are greater than the expense. Good agents tend to spend more on advertising and earn more back than poorer performing agents.

2. Salary Cost per Employee – this will track your team cost and highlight poor return on investment teams for attention

3. Operating Surplus – typically measured as the surplus funds after all capital and operating expenses that are available for return to the owner

4. Operating Surplus per Principal – this is a good indicator of the relative performance of one branch or team against another

5. Sales Revenue per Sales Person – tracks the relative success of a sales person

6. Sales per Sales Person – tracks the work rate of a sales agent

7. Average Fee per Sale – helpful for tracking the direction of your business in terms of the market sector you are targeting, ideally you want to see an upward trend in this metric

8. Management Fees per Property Manager – a metric to track and compare letting and /or property managers against each other

9. Tenancies Managed per Property Manager – indicates the work rate of each property manager

10. Average Management fees per Tenancy – again helpful for tracking property management direction and you will want to see an upward trend in this metric

Looking at real estate metrics beyond these tends to be an exercise that can quickly descend into nit-picking. The majority of management information that can be used to really make a difference for managers in making effective and optimal decisions is contained within these 10 metrics.

Real estate managers and owners should make sure that they truly understand what these metrics are measuring while individual team members should be trained and counseled to understand what is being measured and why. If the metric is being linked to bonus and commission payments then educating staff on the use of the property scorecard will help to get them to take ownership of their responsibility for their own performance and the contribution they must make for team and business performance.

Real Estate Management Processes

December 28, 2017

Property Management

Comments Off on Real Estate Management Processes

No matter what particular type of real estate your business has evolved ? residential, commercial or industrial ? a successful business model primarily focuses on real estate performance metrics, which help to streamline financial and operations processes. Monitoring the factors that affect the business particularly enhances the ability to improve the whole portfolio performance.

Appropriate performance measures can include calculation of rates of return, space quality and comparison to market, unresolved transactions, monthly feedback by staff, accuracy and completeness of property records, quality assessment of properties, client surveys on staff performance and occupancy patterns.

Occupancy rates can be increased on condition of the availability of the right amount of space at the right time ? that’s what prospective customers usually await. Meeting their expectations is key to customer retention and consequently to higher performance level.

In addition to other information, the occupancy rates can be viewed by property, lease changes, rent roll, operating statements and accounts receivable information. If the company gets the actual data, from accounts payable and receivable to lease origination and occupancy patterns it manages the entire portfolio cost effectively.

Building up value oriented real estate management, property companies look forward to the optimization of the portfolio and the relevant services seeking to measure strategic orientation, structures, processes, qualifications, performances together with the costs and resources by certain benchmarks.

Benchmarking is a continuous learning process targeted at creating advantages by means of identifying the problem, whether it is realization in profit or cost reduction potential, and finding the right solution. The latter can be the result of a profound analysis of the company’s own experience as compared with others’. The points of the comparison may be standardization of properties information, a uniform performance measurement, identification of performance gaps and others.

To find the best solution to future development problems the benchmarking system known as the Balanced Scorecard (BSC) is used for measuring and monitoring business performance. Designed as an early warning system it is based on the assumption that a future-oriented consideration of value influencing factors contributes to the optimized evaluation of the company’s future progress. The benchmarks provided by the system enhance detailed controlling necessary for the further promotion of corporate processes and enable the company to evaluate the future ability of the property. The Balanced Scorecard goals may include several strategies. For instance, customer orientation means achieving client satisfaction. Financial perspective concerns providing financial management of real estate assets as well as managing and minimizing risk. Internal processes involve standardizing and organizing the tools to estimate usage efficiency. Growth projection is connected with management efficiency.

In other words the company can employ the effective instrument to measure the performance of the portfolio with regard to real estate controlling. Relevant evaluation gives information of present risks of investment and use as well as corporate rating resulting thereof. Identifying risk areas is a prerequisite for building up an effective real estate and services controlling.

Does performance measurement tools worth investing in? Actually, the question is do you realty want to measure and control real estate performance? I’m sure you will find performance measure tools to be must have to this business.

Types of Investment Property

December 28, 2017

Property Management

Comments Off on Types of Investment Property

Since real estate investing encompasses so many types of investment properties, its essential to classify them and pick the one which they are most passionate about. This would greatly enhance the probability of being successful in real estate investing.

The following are the main types of real estate investment properties that are suitable for beginner investors:

  • Preconstruction Investment Property: These types of investment properties are acquired directly from a developer before the construction or renovation is completed. In return for commitment to buy even before the construction is completed the developer will give you a price discount and/or other financial incentives.
  • Fixer Upper Investment Property: These types of investment properties are the ones which are in ugly condition and need renovation. These properties are acquired by real estate investors to flip them after fixing-up. In majority of the cases these properties are in foreclosure, or are bank owned properties (called REO which stands for Real Estate Owned). Some beginner investors also wholesale distressed properties to other investors without fixing them up. Real Estate Investors who wholesale make a smaller profit but are able to exit the deal fast and with low risk.
  • Foreclosure Investment Property: These types of investment properties are the ones which you buy from sellers who are behind in their payments and may lose their property to the bank via foreclosure.
  • Income or Cashflow Investment Property: These types of investment properties are the ones which generate rental income for the real estate investor. These are mainly apartments buildings and rental houses. This type of investment property is sometimes also called Income property, Rental Investment property or Cash Flow Property.
  • Investment Property with Flexible Terms: These types of investment properties are the ones which can be bought with no money down or with very little money down. Seller of such properties are very flexible with their contract terms and are willing to make the sale easy for the buyer. Land Contract (also called Contract for Deed), Owner Financing, Lease Option (also called Rent to Own, Lease Purchase, Lease to Own, Lease to Buy etc) and other similar strategies fall under this category.

Most other types of real estate investment property deals are not suited for beginner investors. They are too risky or too complicated for beginners. My recommendation is to choose the type of deals beginners want to do and become very good at it. Master all the steps from finding the deal to exiting it, and become the best. If starters can follow this simple principle I definitely see them more likely to be successful in real estate investing.

Property Advertising – Making it Attractive to the Right Tenants

December 28, 2017

Property Management

Comments Off on Property Advertising – Making it Attractive to the Right Tenants

Finding any tenants for rental properties is not as easy as it seems, let alone good, reliable tenants that will keep the property in a good state of repair. However, there are plenty of ways to attract people to your property through the medium of advertisement.

Property advertising needn’t be a hassle once you know what you’re getting into. A property investment forum is a great place to find information on just how to attract tenants and get advice on ad campaigns and just what you should look for when setting them up.

In the Papers

Common sense says that if you’re going to put out an advertisement, you should do it in the newspaper. The newspaper is where people look for property advertising, so be sure to include every selling point. Placing an ad can be costly, but it is a good idea that you let it run a few weeks in order to reel in just the right tenant. Advertising in the Sunday newspaper is usually enough, for despite the rates being higher than the daily advertisements, the readership is quite greater. Also, upon deciding to use your local newspaper for property advertising, you will want to find out if you can advertise on their website too.

On the Internet

Many people looking for property advertising will not be from your area, so its wise to take advantage of the Internet’s low-cost and sometimes free advertising sites. Internet ads allow for a great deal more description than newspaper ads as well. Property advertising like this gives the owner the opportunity to include colour photos to attract tenants, providing them with most of the answers they might be having. Also, you can change your information at any time from any computer to update your advertisement instantaneously.

Apartment guides

Another cheap means to property advertising is to use apartment guides. Not only do they allow for more description than a newspaper ad, but they are more likely to be read than newspapers, seeing as apartment guides are free and they target specifically prospective tenants. Many guides will offer to help you with ad design, and allow you to change advertisements after you’ve submitted them.

‘For Rent’ signs

For Rent signs are also an easy and effective means of property advertising. All you need to do is buy the sign, and put it on the property with the phone number or other means of contact. You can even make the sign yourself thus making it the cheapest way of how to attract tenants. The only drawback is that For Rent signs will only attract those in the immediate area. However it does mean that if tenants are scoping out an area of their choice that your property is situated in, and they see that your property is available, they are more likely to contact you above someone else.

Estate Agents

If none of the above examples seem good enough, you may want to consider seeing a Real Estate Agent. They can advertise via both newspaper and Internet, at a lower price, plus they will bring in tenants of a higher quality. The catch here is that agents require commission, so you may want to check and make sure you can afford their services.

Helpful hints

You may be wondering where to find a newspaper, Internet advertiser, or real estate agent that’s right for you. All you need to do is contact your local newspaper’s classified contact for a paper ad. For Internet ads, just use a common online search engine for property advertising along with your local area. To find a real estate agent, check your phone book. Even the yellow pages can find you a nice sign maker if that’s all you’re going for.