Signs of a Good Property Management Company

Though most people only buy rental properties in their town, others prefer to buy them in areas where they are really popular. However, you aren't going to be around to take care of the property, so it is really important to find a property management company to do it for you.

So, how can you find the right property management company? Here are some things that you should consider.

Ask around. If you have an apartment or two in a popular vacation spot, there are going to be a lot of property management companies that are used to dealing with landlords who don't live nearby. If you end up staying somewhere when you are visiting, ask the owner who they use. You may also be able to ask the locals about any companies that they may have heard of.

Look online. Most people look online when they need to find out something, and this is no different. Once you find a few companies in the right location, it is important to read the reviews. That being said, everyone is going to get some negative reviews so you shouldn't worry too much about a few bad reviews.

Interview the company. Once you settle on one or two, it is important to set up a meeting. At that time, you can meet the property managers. You should also be able to get a list of the things that they could do for you and what it is going to cost.

It is important that you make sure that they offer everything that you need. There is no use in hiring someone if you are going to get called in the middle of the night for an emergency. You are going to be too far away to deal with it, so you are going to need someone to take care of everything for you.

Look at the properties that they are caring for. You may also want to look at some of the other properties that they are taking care of. This allows you to see how good of a job that they do. Is the outside well taken care of? If you are able to walk in, does everything look clean? Do the visitors look happy as they walk out?

Though it can be hard to find the right company, it is definitely worth it. By doing your homework, both in person and online, you can find someone to take the stress out of being a landlord!

Finding Loss Leader Investments

Looking to invest in real estate but unsure where to start? Many people look toward residential real estate but have a hard time finding the right investment. As a new or even seasoned investor, it may seem counter intuitive to invest in a loss leader but these types of homes can pay big dividends in the long run. In new residential developments, loss leaders are those homes that cost more to operate on an average monthly basis than you can bring in with rental income but they are solid investments for the savvy buyer since over the long haul the renters will be paying the bulk of the investment. Here are 3 ways you can find the right loss leader investment in new developments.

Decide on the Right Type of Property 

Like any home purchase, finding a home in a well sought after area makes for a solid investment. If it is a stand alone home or townhouse you are investing in, look for a home near good schools, green space and other areas that are family friendly. If you are looking to invest in a condo, finding one that is near a walkable city like atmosphere is essential. Finally, if it is vacation home you are looking to purchase, be sure the infrastructure is there to support your purchase with things like a well respected property management firm and other vacation amenities. 

Determine Your Risk Tolerance

When purchasing a loss leader, you need to keep in mind that the property may not be profitable for some time. In this case, you need to determine if you are able to support the purchase of the home until it does become profitable, keeping in mind that you may not recoup your costs until the property sells. If you can see the long term viability of the property as an investment when you sell it then you have made a good investment.

Network with Real Estate Agents

Talk with professionals in the area especially a neighborhood specialist. They can give you the inside information about the neighborhood including infrastructure developments and other proposed building in the area that can affect housing prices in the short and long term. 

As with most investments, you will have determine how long you are willing to tie up your money. The longer you are willing to maintain your investment, the more profitable it will be in the long run.

How to Protect Your Assets

If you have not previously thought about protecting your assets while investing in real estate, then now is a great time to do it. Protecting your assets is vital to keeping your assets safe from real-estate-related damages if that should ever come about. Your assets are what you use to take care of your family and how you ensure that everyone is taken care of for the rest of their lives. Your finances may support not only yourself, but also your spouse/significant other, children, and other "dependents" who rely on you for financial stability.

The following are some ways that you can protect your assets from damage that could otherwise get done if they are not protected:

Get Your Assets Insured:

Whether you're talking about your family's home or your rental properties, one of the easiest ways to ensure that your properties and assets are always protected. Moreover, not just getting insurance but ensuring that your insurance is adequate assures you that your assets and rental properties are safe from both damages or harm that may come to the property from any variety of events.

Title & Entity Selections:

When you choose your title & entity selections out there that will determine who is responsible for the property in a variety of different situations. In some states, having all of your investments under your name is safer than it is in others. Understanding the laws in your state and determining how life events would affect your assets is key to protecting both your assets and

In some states, you will need entities like Limited Liability Corporations (LLCs) to help limit your liability due to your various investments and that help protect your property. Otherwise, certain states can have events like divorces, the death of a spouse, bankruptcy, etc. damage all of your assets and cause you to suffer devastating losses that can get protected in other ways (such as using LLCs to invest). Understanding the laws in your state will help you avoid risking all of your assets if one of them were to fail.

Asset Protections By Debt:

Protecting your assets by debt may be one of the least expensive forms of protection that are available to real estate investors. Protecting these assets is especially true if you have properties that have a lot of equity in them, which means that you have something to lose if the property assets you have been to get taken away then your other assets would still get protected.

Trusts/Entity Structures:

For larger real estate investments, once you hit the millions of dollars, you will need a more elaborate setup to protect your assets. Putting things such as trusts/entity structures/etc. into place can help you protect your assets and investments. When real estate portfolios get to this level, it can get complex as to how to protect and structure your entities to ensure that they are always all protected.

Entity structures such as limited family partnerships or can also help reduce both income and property taxes that you owe on the properties. Through these entities, you can manage your assets and also deny creditors complete access to them. Fines getting charged to any creditor whoever charges an order against your assets, which provides further deterrents for any creditors who wish to prod into your finances, investments, and business.

Conclusions:

In the end, it's up to you to protect your assets. No one else can do that for you. It's up to you to protect those assets and your portfolio to ensure that your properties and investments are safe moving forward. If your assets are protected and your properties are protected, then you will be set to continue owning properties and making investments for years to come.

Before You Invest - Protect

Unless you want to risk losing everything, it's crucial that you take steps to protect yourself before investing in real estate. In today's sue-happy society, you never know when someone will decide to bring you to court. If a lawsuit is filed against you, all your personal assets, like your house, car and bank accounts are at risk. If the other party wins the suit, you would personally be responsible for paying and for many people, this could mean bankruptcy. However, if you plan ahead, there are some steps you can take to protect yourself. Here are four key ways to ensure your property and assets are secure.

Set Up A LLC

The single, most important step to protect yourself from litigations is to form an LLC or Limited Liability Company, before you purchase property. This works by legally separating yourself from the investment. If someone does decide to sue and they win, they would only have access to assets in the LLC, not your private assets.

Maintain The LLC

There are several things you need to do to maintain your LLC and these vary by state, so be sure to check your local regulations. If these are not done, the LLC will lose it's good standing and if that happens, then it can no longer protect you from litigations. Here are some examples of things you may need to do to maintain the LLC:

• Pay taxes and the annual state fee
• Maintain records and file annual reports
• Keep a registered agent- the agent receives legal notices for the LLC

Think About Creating Multiple LLCs

If you have more than one property or many properties, you may want to have multiple LLCs. This is because, in the event someone wins against you in court, they will have access to all the assets of the LLC they won against (up until the amount owed). If all of your properties are in one LLC, you could risk losing them all in one swoop. It would be much better to lose just one LLC and still have the others to keep you afloat.

Liability Insurance

Insurance is what most people think of for asset protection and it will probably be your first line of defense. Unfortunately, it doesn't always cover everything. They may end up winning more than your coverage or because there are so many loopholes in coverage, they may not end up paying out. That's why we mentioned above, that an LLC is so important. If you rely solely on insurance coverage, you may end up paying for it.

These are just a few of the basic ways to protect yourself and your assets when investing in real estate. It's important to consider your strategy for asset protection before you invest in real estate. Acquiring your first property is exciting, but talk to a professional about your individual situation, because there may be more you can do or more you need to consider. You'll be glad you planned ahead, if you ever find yourself sitting in a court bench. 

3 Property Management Tasks You Shouldn't Handle for Your First Investment Property

Getting into commercial real estate and rental properties can be a great way to make some extra money. However, it can also be a lot of work, especially in the beginning as you are just getting started.

Here are some property management tasks that you shouldn't handle for your first investment property.

Finding tenants. Finding the right tenants can be the difference between enjoying rental properties and hating them. If you don't find good tenants who are going to pay the rent on time, take care of their home, and respect others, you may end up spending a lot of time chasing them down.

Taking care of the lease. The lease is one of the most important parts of being a landlord. First, you have to decide what rules you want followed and what you will allow and won't allow in your building. Then, you have to write it up so that it is fully legal. Once the tenants sign it, you have to enforce it.

It really helps to have someone who knows what they are doing to help with the lease.

Eviction. If you have to evict a tenant, you need to make sure that you do it correctly. Legally, you have to follow certain rules and do things the right way so that you don't have a lawsuit from it. For this reason, it is best to let someone else handle it.

If you have just bought a property that you want to rent out, you should contact a property management company to help you get started. Even if you end up taking over these tasks as you learn more, their experience will be priceless in helping you set everything up the right way!

That being said, a property management company can do as little or as much as you want. However, you may want to let them handle finding tenants, dealing with the lease, and any evictions so that everything is handled correctly.

Three Ways Property Management Teams Extend the Lives of Your Properties

Running a rental property can be a full-time job, especially when you have more than one property to manage. Not only do you have to keep them filled with tenants, but you also have to maintain the building so that it lasts for a very long time.

Because of this work, many people hire property management teams to help. Even better, it can extend the lives of your properties. Here are some ways that we can help.

Fast repairs. When things break, it can cause a lot of damage. If left untreated, it can get even worse. If you have a water leak because of a faulty roof, water can get in and destroy the attic, ceilings, walls, and much more. If you were unable to fix it for a few days, the amount of damage would continue to grow. A property management team should be able to come in that day to access the damage and start on the repairs.

Regular maintenance. Regular maintenance is essential to keep any home and building running smoothly. HVAC systems need to be checked every few months and filters changed so that they work like they should. Property management teams often have systems in place to make sure that your building is getting the maintenance that it deserves.

Standardized processes for repairing and cleaning up between tenants. Vacant homes and apartment buildings aren't good for the buildings themselves and your wallet. For this reason, most property management teams have systems to get in and out so that the unit is ready within a few days or weeks. They won't allow your building to sit empty while waiting to fix it up.

The only way to succeed in rental properties is to hire a property management team. They will help with repairs, maintenance, and even fixing up the units between tenants. They will be a life-saver (and a money-saver) for you!

Duplexes vs. Single-Family Homes

When you are beginning to invest in properties, you will likely be considering a variety of different types of investments such as condos, apartments, townhouses, villas, duplexes, or single family homes. In this post, we will be discussing duplexes and single family homes and the differences between investing in the two. Both are attractive first-time investments for many individuals who choose to begin investing in real estate and want a return on their profit. However, there are pros and cons to investing in both.

Throughout this post, we explore both the pros and cons of investing in each, and we help provide you with facts and information to help you decide which investment will work best for you.

Pros & Cons of Investing in Duplexes:

Duplexes are two homes that are attached to the same building. Generally, one family will live in each unit of the duplex. The following are some pros and cons to investing in duplex properties:

Pros of Investing in Duplex Properties:

• Duplexes are less challenging to manage and require less hands-on management than a multi-apartment unit with say 4+ apartments up into buildings that hold 10s or 100s of units.
• Vacancies will have less of an effect on your bottom line (you still get revenue to help you cover your expenses of owning the duplex from the other half of your duplex if it's inhabited).
• Property insurance rates are about 15 to 25% lower for these properties.
• Generate more cash-flow over time as you have two tenants paying rent rather than just one.
• Most duplexes only cost about 25% more to purchase than a single family home (you get to rent to two tenants rather than just one, you make this money back over time).

Cons of Investing in Duplexes:

• If you choose to live on one side of the duplex and rent out the other, then you are stuck living with whatever tenants you lease. If they are bad neighbors or are constantly loud, this could make life miserable for you (or the other tenants living next door).
• If you live on the other side of the duplex loud or obnoxious neighbors may become a nuisance to you. If you're not disturbed by the person, the other tenants living there may have complaints.
• You are easily available and easier to constantly be pestered for every single little thing if you live right next door to your tenants on the other side of the duplex.
• You lose some money (less than a single-family home) if half of the complex is vacant for some time after tenants move out.
• There is some additional responsibility to owning a duplex as you have to be responsible for repairs and maintenance for everyone that lives in both units, so some additional responsibility is undertaken even with a duplex investment (which is less responsibility that many individual family homes pay present).
• Home values for duplexes may vary from single-family homes (being more or less valuable) based on the area in which you live and the various home values in that area. Understanding the home values in your area can help determine if a duplex is a better (or worse) investment than a single-family home would be.

In the end, just like everything, there indeed are pros and cons to purchasing both a single-family home or a duplex as an investment property. Understanding what you want from your property, your budget, the costs associated with each, and the responsibility you take by choosing your investment properties can help you determine which investment is right for you.

Conclusion:

Many people lean towards duplexes as you get two (2) units that you can rent versus one in a single-family home. The lower property insurance and taxes on many duplexes make them tantalizing for investors who want to purchase investment properties without the responsibility of managing entire apartment complexes that offer 10s or 100s of units to renters, but offer several opportunities (2 per duplex) to make some extra rental income on the side. Others prefer single-family homes that offer residents more privacy and space.

Either way, understanding your investments and the values of properties in your area will help you make the best choice for investment porfolios.

Putting More Money Down or Have More Available Capital: What's the Smarter Investment Strategy?

When purchasing an investment home, many new investors struggle between deciding if they are going to put more money down an investment property or if they should have more available capital left in their reserves. Understanding the upside and the downside to each option will help new investors make better choices when it comes to acquiring new properties and deciding how much money to put down on their investment property upon purchase.

Reasons You Should Choose to Put Up a Large Down Payment:

Putting up a large down payment on the property they you are purchasing for investment purposes does have its benefits. For one, if you put up a larger down payment, you will likely be able to avoid having to get private mortgage insurance (PMI). Avoiding PMI  means that you will be able to save money when you make your monthly mortgage payments as you won't be paying fees (higher interest rates) for extra PMI insurance because of a low down payment.

The average down payment requires about 20% of the value of the property to be put down at the time the property gets purchased. For example, if you were to purchase a $200,000 property that would require a traditional $40,000 down payment.

Some other benefits you get when you put a larger down payment out for a property includes the following:

• Protects you against home price declines if the value of the home ever was to fall below what you owe the bank through your mortgage you could be at a greater risk of losing your property.
• Eliminates the need for mortgage insurance which can save you money each time you pay the mortgage as you don't have to ensure the mortgage you have taken out if you put a big enough down payment out up front.
• A larger down payment up front helps keep your monthly mortgage payment lower. For example, if you put 5% down on that $200,000 property instead of a traditional 20%, your loan size will now balloon to $237,500, and the loan payment would rise from $955 with 20% down to $1137 with 5% down. Larger down payments are key to keeping your monthly expenses down throughout the life of the mortgage.
• A 20% down payment will allow you to get the lowest interest rates possible and best mortgage terms available. That means that you pay less money towards the principal on your loan and not more interest to the bank.
• You have a better chance to get approved for the mortgage to purchase your investment property.
• You will have a much easier time paying off the mortgage in a much faster and easier manner.

The recommendation of putting up a 20% down payment when you are purchasing a property is highly recommended to save you from having to make higher payments and pay more in interest in the future.

Large Down Payments Take Away Investable Capital:

Many individuals who wish to invest in real estate might be tempted to put less down on a property than the recommended 20%. However, along with that comes what will generally be a higher monthly mortgage payment and more money that is going to pay off interest rather than the principal loan that you took from the bank.

It's understandable to want to have extra capital to invest in other resources such as stocks, or cash to keep in the bank in case your investment property needs repairs. However, putting less than the 20% down on a property means that you will be literally "throwing money away" by paying higher interest rates and paying for property investment insurance that you otherwise wouldn't have to have if you put the 20% down. The lower monthly mortgage payments will also be nice in the long run (15-30 year life of the mortgage).

Putting down a full 20% and also saving for some emergencies might mean you wait a little longer to buy your investment property, but that can be worth it to avoid throwing more money away in the future through increased interest rates and PMI insurance.

Conclusions:

In the end, you want to put your 20% down on an investment property to ensure that you can get the best possible terms for a mortgage. Paying less interest and avoiding PMI insurance will likely save you $10,000s over the life of your mortgage loan. Developing a strategy to wisely invest your capital (cash) to help it grow faster can help you reach your dreams of being a property investor more quickly than just leaving cash in a low-rate (less than 1%) checking or savings account.