5 Renovations to Make Your Rental Homes More Durable

When you are renovating your residential rental properties your first goal should be to make the residence more durable so that it lasts for the duration of more than one or two tenants' stays. Investing in good, quality construction materials and making smart renovations can help you both reap the most return on your investments (you can charge more rent for renovated spaces) and to help the property last through several to many tenants' stays.

When you are making renovation upgrades to your rental units, the following are 5 things to consider when it comes to making your property durable as possible:

Choose a More Durable Flooring:

There are a few options when it comes to the most durable flooring for a rental unit, especially if it's going to endure the beatings that both children and pets can bring along with them. Choosing something relatively inexpensive will help limit your investment into the upgrade, while also making the return on your investment high as the flooring should last through several or more tenants (depending on the length of their stays). Some quality options you can choose from include laminate, vinyl, and engineered hardwood (they are made with wood veneers and snap together easily as laminate flooring and don't require nailing down like real hardwood would).

Choose Practical Lights:

Practical lighting not only is relatively inexpensive to install but it also helps light up each and every room to allow tenants to have a well-lit residence that makes it easy for them to go about their daily lives. Traditional lighting such as track lights or switched outlets are quite neutral in taste and will meet the needs of almost all of your tenants.

Choose Durable Materials For Your Doors:

Not only do doors get used on a daily basis as people open and close them (and sometimes slam them!) for privacy, they also play a vital role in blocking out excessive noise from places like bedrooms where people need the home to be quiet. Quality materials that will withstand years of use and also absorb excess noise include fiberglass, aluminum, vinyl, and sturdy woods. Tenants will also appreciate having quality locks on their doors that are in good repair and work so they can secure their privacy as they wish. 

Consider What Your Countertops Are Made Of:

Considering that the kitchen is the most-used room in most homes, you will want to ensure that you have the most durable countertops possible. All the food preparation and baking can take a toll on many sorts of countertops, especially those made of softer materials or that are easy to scratch. The best picks for durability? Try a durable material like quartz or granite for something higher end, for something more affordable and budget-friendly consider going the way of laminate or tile.

Choose Quality Appliances: 

Many tenants will prefer stainless steel appliances in their kitchens. Most are considered durable and are relatively easy to clean, however, be aware that some appliances that do not have an appropriate finish may show every single smear and fingerprint that they come in contact with. Frequent cleaning is often a most to make these appliances look their best, yet many feel it's worth it to enjoy these durable appliances both for their aesthetic look and their performance in preparing and cooking food. 

If you choose to go for other appliances, consider some of what JD Powers says are the most durable brands on the market as of 2017 including the likes of LD, Bosch, and Maytag to name a few. 

Conclusions:

These are 5 of the top upgrades that can help add durability to your residential rental units without adding a huge bottom line to your business expenses. Moreover, if you make the initial investment, many of these items will withstand years of wear and will cut your costs in future years. Investing in durable materials will not only make fewer phone calls from tenants need things fixed but it will also help you avoid additional expenses between each and every tenant you have to replace less durable items.

What to Charge? Deciding on Monthly Rental Rates

You've just purchased a rental property, but before you can start recruiting tenants, you'll need to decide how much to charge for rent. Setting a reasonable rental price is extremely important; charge too much and you won't get any rental applications. Charge too little and you'll fail to make a profit.

By taking a few factors into consideration, you'll be able to set the right rental rate with confidence.

Maintenance and Upkeep

Start by considering your immediate and long-term maintenance costs. This should include not only expenses you can plan for (such as landscaping and general maintenance), but unplanned expenses as well. This can include anything from a burst pipe with water damage to removal of a dead tree.

Lost Income Between Tenants

You'll also want to consider potential losses when you have vacancies in your rental unit(s). While a unit sits empty, you're losing money because you're not collecting rent but you're still paying to keep the unit maintained. The smaller the turnover time between tenants, the better off you'll be financially. Still, you should plan accordingly in case you end up with a gap of a couple of weeks or even a full month of vacancy.

Area Rental Prices

Make sure your rental rates are competitive with similar properties nearby. There are plenty of resources for researching area rental rates, including sites Rentometer, which will help you determine if you're charging too much or too little based on area prices.

No matter what you end up deciding to charge for rent, consider how a property management company can help you optimize your earnings. Property management companies can handle things like routine and emergency maintenance, as well as finding new tenants to fill vacancies--all for a predictable monthly cost. Could hiring a property management company be beneficial to your rental property?

6 Renovations That Make Your Rental Family-Friendly

When you are renovating your residential rental houses to rent out to tenants, you want to ensure that you are doing everything you can to ensure that everyone is as comfortable as possible. This can also be challenging given that each family will look for something different that fits their specific family's needs. Moreover, as families are increasingly diverse in who makes up the family and what they need to accommodate them individually and as a whole, it can feel like being a landlord is more challenging than ever.

The good news is, there are still age-old items that are generally sought after in rentals to make the unit friendly and usable as possible to everyone in the family. The following are 6 renovations to consider next time you are upgrading your rentals to meet the needs of as many family members as possible:

Consider Properties with Higher Bedroom & Bathroom Counts:

Whether you purchase the property with more bedrooms and bathrooms or build an addition onto the existing structure to add more bathrooms and bedrooms to the house, many families will need more than a couple bedrooms to consider moving in. Many of these families may have multiple children for whom they would like separate bedrooms or they may have elderly parents living with them that need additional space and privacy. Providing extra space makes the rental more attractive to larger families.

Add Bathtubs:

For many children, showers are not a family-friendly option. Ensuring that at least one bathroom in the rental has a bathtub for bath time can ease many family headaches of imagining trying to figure out how smaller children are going to use the shower. 

Consider a Fenced-In Yard: 

Fencing in properties can allow for small children to play outside more safely or for pets to romp around without their leash. Providing a safe, secure yard will be a must for many families. A quality 6-to-8-foot fence with locks on the outside that does not allow children to easily get out will do just that.

Choose Darker Colored Carpets & Harder-Surfaced Floors:

Choosing medium to dark shades of carpets for the home or hard-surfaced floors such as linoleum or vinyl will make life easier for many families. Not only are these floorings more durable in many respects they also hide spills and make cleaning up stains much easier than light-colored carpets which will show every single bit of dirt tracked through the area. Surfaces that are easier to clean up and that are harder to stain will not only endure more use but will also stand up to the messiness of family life better than beige or white carpet. 

Install Sturdy Handrails Along Staircases:

If you have a rental that is more than one story tall be sure that the stairs have sturdy railings for tenants to hold on to. If the tenants are elderly or have someone staying with them who is not so steady on their feet, steady handrails on both sides of the stairs can save them from what could otherwise be a devastating fall. Same for small children who will grab the banisters as they learn to pull themselves up the stairs when they aren't so steady on their feet, either. 

Provide Adequate Lighting:

Providing adequate lighting with different adjustment settings (i.e. low, medium, high) can provide the tenants the option to choose how bright the lights are depending on the activity they are doing. It will also allow different family members to have different levels of light based on personal preference. Some people may like brighter lights while others prefer dimmer lights. Allowing this customization will be sure that all family members are well-suited in your rental property.

One Final Word: Consider Pet Policies:

As a landlord, yes, pets can be a liability and they can cause damage to the property. However, from the tenant's viewpoint, pets are part of their family. The leading reason tenants refuse to move into a rental is because they are not allowed to bring their pets (part of their family) with them. Most rentals do allow small caged animals or animals in tanks such as goldfish, hamsters, rabbits, gerbils, guinea pigs, reptiles, etc. into the premises. Many also do let tenants have cats and dogs. 

If your rentals are "NO PETS" as a policy, you may consider this again. You can certainly feel free to charge pet deposits ($250 to $500 is common) to protect your property, even a $20 monthly pet rent is common in some rentals.  Limits of 2 non-caged pets (cats or dogs) is also very normal. Same with breed restrictions (against aggressive breeds) or weight limits depending on the size of the rental. That way your property is protected, yet you will appeal to many more renters if their furry family members can come, too.

Conclusions:

In the end, it's all about making your rental as family-friendly as possible for everyone involved. These basic safety features and amenities are what many families will look for and will keep them coming back to rent from you again and again.

5 Ways to Get Past the Third House Slump

 

The "third house slump" might sound silly to many people yet many investors know that many banks and other traditional lending agencies begin to balk when the talk of purchasing any residential investment properties past the 3rd house. There are a number of reasons that banks and other lending agencies feel this way, however, as an investor you personally know you want a lot more than just a few properties to rent ou, considering you want to make your business lucrative as possible.
So, what is a residential real estate investor to do?
Fear not, there are ways around this "third house slump" as they call it. The following are 5 ways that you as an investor can get past that slump and continue to invest in properties and grow your business:

Get Approval From a Variety of Lenders:

This may sound ridiculous at first, however, most lending companies will limit an investor at borrowing money for mortgages on 3 to 4 properties at the most. However, the good news is that there are a few lenders that are known as "investor friendly" and they may be willing to give you loans for more mortgages - up to 10 to be exact.
So, that's a great start! Using some of these "investor friendly" lending companies can help you get started with up to 10 properties (the limit allowed by law) to rent out to potential tenants. These "investor friendly banks" are not the big names you know such as Wells Fargo or Chase but are rather smaller, more local lenders who are most likely not doing business nationwide. Some research will have to be conducted to find some smaller "investor friendly" banks and lending agencies in your area but they are out there and you can find them.

Consider Blanket Mortgages:

Blanket mortgages cover mortgages for multiple properties in the same loan. Consider getting a loan that may cover more than one property. That way you have fewer loans yet more properties to rent out under those loans, especially since many commercial banks will limit you to a few (maybe up to 10) mortgages being taken out at any one given time. This way you get more properties to invest in out of the deal without needing individual mortgages for each one.

Consider Private Lenders:

Sometimes private lenders may not have the big, impressive name of a Wells Fargo or Chase but these smaller lenders can make great alternatives to borrowing more money when you want to acquire more properties to grow your investments. This may require some research on your part, however, talking to other investors in your area may help you find other private lenders that you never even knew about as well.

Pay Off Some of the Properties You Have Current Mortgages On:

Paying off some properties that you already have a mortgage on is another great option you have as an investor. Once some of the mortgages are paid up, you open up more capital to spend on new properties as you will have fewer expenses once the mortgages on your existing homes are already paid off. Then you will be able to get mortgage loans out for a new property, even if it's from a private or specialized lender.

Save Up To Pay Cash:

If you are a fairly large investor that generates $10,000's or more of revenue per month, consider saving up cash to pay outright for properties. That way there is no mortgage company or loan required. If you can acquire properties for cash, the sky is the limit on how many properties you can own. This process may take longer to acquire each property but the trade-off of owning them 100% and not owing on a mortgage can make it worth it.

Conclusions:

These are just some of the ways that you can invest in more properties so that you have more residences to rent out and more chances to bring in money and grow your business. It may take some strategic planning on your part and possibly even a partnership with someone else who has experience in the industry to get things off the ground. However, one you get the first few properties in and are making a good quantity of money, saving to invest in more properties will help you grow your investment further.

5 Ways to Limit Your Liability As an Investor:

When you are the investor who is putting money up to purchase residential rental properties that people are staying in, you are putting yourself on the line in terms of liability. However, the good news is that there are measures that you can take to ensure that you are protecting yourself from liabilities and limit what you yourself are responsible for.

The following are 5 ways that you can maximize your profit and protect your investments while minimizing the liability you on you as an individual at the same time:

Create Paper Trails & Document Everything - Preferably Through A Property Management Company:

Documenting everything you do and dating the documents helps you provide a "paper trail" to provide evidence that you have followed the required steps and done everything "by the book" in the case of an issue arising.

Even smarter?

Hiring a property management company to manage your residential real estate investments for you. These companies are professionals trained to know the laws by which you must operate and are able to guide you on your way through all the laws and the "red tape" surrounding everything from purchasing properties to filing taxes to filing for evictions when tenants simply do not obey the rules or pay the rent on time.

Using one of these companies ensures that you are less likely to have an issue with the law. It also gives you the assurance that you are following the laws in place to protect tenants from illegal actions and ensures that you are not doing something wrong without even knowing it. These companies oftentimes have years of experience in the industry and can help teach you the right way to do things while handling the nuances of day-to-day operations for you while you focus on increasing your wealth and engineering further business growth.

Utilize A Land Trust When Purchasing Properties:

The problem with using your actual name on the properties that you invest in is that these records are visible and open for the entire world to read. If you use your own name on the properties you invest in you are making yourself a very easy target for anyone who wishes to come after you such as (past or present) tenants, lawyers, and attorneys.

The way around this?

Use a land trust: a land trust is an effective and simple way to keep your ownership of all of your residential rental properties private and to keep your ownership of these properties. This trust is a form of revocable, living trust that is used to take the title on a piece of real estate. This helps the investor who doesn't want to be seen by the public to keep a very low profile and allows them to make it so that their properties and wealth as well as investments are not as easily discovered.

Determine Which Type of Corporation Gives You a Tax Advantage:

Considering your investments as a corporation will be an effective tool to help you with the buying and selling (also known as "flipping" of properties. If you do indeed do this sort of business then having your business set up as a corporation so that the it can be the beneficiary of your trust, which will help limit your liability. However, if you are labeled by the IRS as a "dealer" there will be a 15% tax rate on your profits to cover what is known as a "self-employment tax" which is paid by anyone work works for themselves in any sort of business dealings.

Understand If An "S" or "C" Corporation Suit Your Needs Better:

If you are filing as a corporation, you will need to know if you are going to file as either an "S" or "C" corporation, it will largely depend in your business's needs. One is not largely "better" for residential real estate investors than the other. It's a matter of doing the research on the IRS website and determining which class of corporation will better meet your residential real estate investment needs.

Consider Joining a LLC:

A Limited Liability Corporation (LLC) is another tool that you can use to help limit your liability as an individual investor through a statute that is passed by each individual state. Each state will have different rules as to how their LLC's will operate, however, the most states do not restrict ownership and participation so this allows investors and corporations to participate in the LLC and to file for LLC status and protection.

Generally, the only types of entities that cannot be LLC's are entities such as banks or insurance companies. LLC's help by providing businesses with perks such pass-through taxes while most have no residency requirements. You are offered legal protections and limits the liability you personally have by owning the business (in this case rental properties) that you own, which in turn will protect your financial assets. LLC's also give your company or corporation increased credibility so that suppliers and other business partners are more likely to wish to work with your company knowing that you are authentic and real (not a scam).

Conclusions:

These are 5 of the actions that you can take or consider to help limit your liability as a residential real estate investor while still helping yourself grow your business and increase profitability without saddling yourself with additional liability.

In the end, working with industry professional who can help guide you also ensures that you are doing things properly, without causing issues for yourself that may come back to you in the future.

3 Levels/Tiers of Property Management: What Level of Property Management Fits Your Investment Style?

Every landlord needs something different from their property management company depending on a variety of factors. These factors include things such as how many residential rental properties they own to their management and investing style. Having said that, property management companies need to be different things to each investor that they work with.

Some investors will want the property management company to handle everything from repairs to inspections to resident complaints, while others will only want the property management company to handle certain key aspects of their residential rental units.

This is why most property management companies have developed something of a tiered system to provide different levels of support to investors based on their investment styles and their needs.

The following is a brief glimpse at what those levels are and what each one will usually cover:

Tenant Finder:

This first level or tier of assistance simply helps the landlord find appropriate tenants to fill their residential rental properties. The property management company uses their backgrounds, connections, and background check systems to thoroughly screen tenants before they approve them to begin to the actual rental process. After the tenant's initial screening, they are turned over to the landlord who finally decides if they are going to allow them to rent one of their properties or not, giving the landlord some say in the tenants that they rent to as well.

Landlord-Involved Plans:

The second level or tier of assistance is a landlord-involved tier. The arrangement of this tier allows the landlord to be involved with the management of his properties and allows him to do certain tasks if he wishes. These tasks include items such as finding & approving tenants, collecting rent payments, personally following up with tenants who have late payments, and being the main contact when repairs are needed. At this level, the company is also required to provide information to the landlord (investor) directly including a monthly report of rents collected, expenses paid, and overall profit levels.

Complete Property Management:

The third and final tier of management and provides the landlord with a complete property management experience. In these situations, the company takes over all day-to-day operations that are related to the day-to-day operations of the properties. This means that the company will do everything from finding you appropriate tenants to ensuring that all tenants are screened and that the issues/problems/complaints/questions/etc. of existing tenants are promptly taken care of at all times.

This level or tier of management also allows companies to handle the financial aspect of the investments for the landlord as well. This will include keeping all payments up-to-date and current including mortgage payments on the properties, paying HOA fees, filing taxes, etc.. This is the level of property management most often used by established landlords who are more interested in focusing their time on making new investments and growing their business and profitability, while leaving the property management company to handle any periphery issues that may arise in the meantime.

Conclusions:

Property management companies can be different things to different landlords. There is no right or wrong way to utilize the services that a property management company offers. It's all about the size of your investment and the goals you have as an investor. Property management companies are here to help, so allow them to utilize the tools and services they offer to best meet your needs.

2 WAYS PROPERTY MANAGEMENT COMPANIES REDUCE TURNOVER TIME

If you are a property owner who rents out their property, there are many good reasons to consider using a property management company to handle the business of renting for you. Here are two ways these companies ensure properties do not sit vacant for long periods of time.

PROPERTY MANAGEMENT COMPANIES FIND LONG-TERM, RELIABLE TENANTS

Part of a property management company’s job is to find the right tenants for the rental properties they manage. They put processes in place to vet potential occupants based on a variety of factors, including ones important to the property owner. The process typically includes an application, reference checks, and background checks to verify the information that has been provided.

In this way, they make sure whoever rents the unit will be able to pay rent on time, properly care for, and uses it in the ways it was intended to be used while the tenant lives there.

After the occupant moves in, the company is usually responsible for maintenance and upkeep on the property as well as collecting rent. So long as they communicate well with the renter and make sure any upkeep or maintenance issues are addressed in a timely fashion, the chances of the occupant renewing their lease is very high indeed.

THEY REDUCE THE WINDOW OF TIME BETWEEN OCCUPANTS

One of the things a property management company does, besides finding the right tenant for a unit, is make sure the unit sits vacant for as little time as possible. As soon as they know the current tenant is planning to move out, they start the process of finding a new occupant for the space. Doing this ensures the unit is vacant for a minimal amount of time, especially if the new applicant is approved by the time the current tenant is ready to leave.

IS IT WORTH IT?

While finding long-term, reliable tenants and reducing the time between occupants are important considerations, they are not the only things to keep in mind. In the end, there are many factors to weigh before hiring a company to manage rental properties. Do your research, take your time, and find the property management company that best suits your needs before you sign a contract.