Pets? Pros and Cons

 Pets in Your Properties? Here are the Pros and Cons.

Renting to pet owners might make you wince, but it's not as bad as you think. Most of the stories we hear come from horrible experiences, not from the general trend of clean, respectable, and rule-abiding renters. There are several advantages to renting to pet owners that outweigh the cons.

The Cons

You've likely heard nightmare stories of renting properties to pet owners. While it's not as bad as it seems, there are some concerns:

• Noise—Dogs bark and birds caw and cats yowl. Your other renters have the right to peaceful enjoyment of their homes, and pets can complicate this.
• Odor—Animals have odors, and these can linger. This might require extra cleanup once a tenant leaves and this could cost you.
• Property damage—from scratched floors to dirty walls, there are several ways that pets can add extra wear and tear.
• Injuries—There are some valid concerns about your liability when injuries like dog bites occur, but there are steps you can take to lessen the risk.

These are all legitimate concerns, but most of these come from those few pet-owning outliers. In fact, most pet owners are conscientious caretakers of both their pets and your rental property.

The Pros 

More renter options

It's difficult for pet owners to find pet-friendly properties, but opening them up to pet owners means a bigger pool of applicants for you.

More responsible

Taking care of an animal often gives pet owners a better sense of their obligations and priorities. This leads to benefits for you, like your renter paying their rent on time and taking care of the property.

Longer Tenancies

Because the rental pool is smaller for pet owners, they often stay longer at a property than other renters. This means less hassle and fewer costs with those expensive renter turnovers.

Higher Rent and Fees

Renting to pet owners means you can charge more rent, ask for a higher deposit, and charge a monthly pet fee to mitigate that extra wear and tear.

What to look for

When renting to pet owners, ask for some of the following information:

• Documentation such as city license, training certificates, proof of recent vaccinations, and permits when required.
• If their dog is a restricted breed, such as a German shepherd, cane Corso, rottweiler, or great Dane. Check your local regulations for a list of restricted breeds.
• Exotic or illegal pets like medically significant reptiles and European rabbits can cause complications for both parties.
• Venomous pets, like snakes and spiders.

Check with your state and city to make sure you're up to date with local laws and regulations.

Costs and Mortgage Integration

 Is It Possible to Include the Cost of Repairs and Improvements in Your Mortgage?

The cost of renovating a fixer-upper may rapidly mount. Things might get tight if you've already put down a considerable amount of money for the down payment and closing charges. Even if you're a cash-rich investor, leverage is crucial. Less out-of-pocket spending is typically preferable, especially in a low-interest-rate environment.

There are home renovation loans that you may use to incorporate the expenses of house renovations in your mortgage, depending on your requirements, what the property will be used for, the scale of the project, and your credentials.

Continue reading to determine which financing option is ideal for including remodeling expenditures in your mortgage.

Mortgage Alternatives for Renovations

Home renovation loans are not as popular as other types of mortgages. There are just two basic types of home repair loans available.

HOMESTYLE RENOVATION MORTGAGE FROM FANNIE MAE

Fannie Mae has sought to increase eligibility for the Homestyle Renovation Mortgage in recent years.

• Applicants must fulfill Fannie Mae's qualifying requirements.
• Renovations are limited to 75% of the After Repair Value (ARV), defined as the Purchase Price + Project Cost (whichever is lower).
• With this financing, contractors can pay for up to 50% of material expenses in advance.
• The initial post-value appraisal, completed before the loan closure, is the sole valuation necessary.

Fannie Mae is giving bonuses if consumers combine a renovation mortgage with their new HomeStyle loan product for energy upgrades.

203(K) REHAB LOANS FROM THE FEDERAL HOUSING ADMINISTRATION

The Federal Housing Administration (FHA) insures and secures 203(k) home renovation loans for borrowers who are buying a fixer-upper that requires repairs, improvements, and renovations.

This makes it simpler to finance the property purchase and any necessary modifications, whether the work is done by qualified professionals or done on your own.

Take note of the two sorts and variants of this loan:

203 (K) Standard 

This is intended for large-scale repairs to a principal dwelling. A normal 203(k) loan would most likely cover damage from a fire or flood.

This category might include foundation concerns for essential structural changes to alleviate security hazards. Also eligible are room expansions and floor repairs.

This financing covers up to $625,000 in combined startup and renovation expenditures, with minimal remodeling requirements starting at $5,000.

203 (k) Limited

This loan, also known as a Streamline, is for less substantial repairs involving less than $35,000 in alterations. Upgrades and other visual improvements, such as B. Kitchen and bathroom changes and the replacement of old appliances, are examples.

If you don't have the funds to undertake repairs, there are other options:

USDA LOAN FOR RURAL DEVELOPMENT

A loan guaranteed or given by the United States Department of Agriculture (USDA) can assist you in traveling out of town. USDA loans assist low- and middle-income persons in purchasing a house with little or no money down. You can include the cost of required repairs done by qualified contractors in your 30-year fixed-rate mortgage if your small house on the prairie requires some maintenance.

A LOAN FROM THE VETERANS ADMINISTRATION

If either of you has served in the military, you may be eligible for a Veterans Affairs (VA) mortgage. You can use your VA loan to buy, construct, or repair a house. The VA may also be able to provide you with additional funds to help you enhance the energy efficiency of your house.

CONCLUSION

Borrowers can utilize a renovation mortgage loan to purchase a home and pay for all of the necessary upgrades and repairs with one loan. Like a regular 30-year or 15-year mortgage, the loan may then be repaid over time with manageable monthly installments.

Renovation mortgages pay for expert labor, allowing repairs to be accomplished swiftly, effectively, and frequently at a cheaper interest rate than any other type of financing.

The mechanics of a renovation mortgage vary depending on the lender and program, but in general, a renovation mortgage works like this: You'll look for a lender that offers this form of loan and submit an application. To get accepted, you must satisfy certain requirements.

If you're thinking of rolling the cost of repairs and improvements into your mortgage, go to a respected mortgage lender first to learn about your alternatives, financing, and other criteria. Contact Leaf Management , we can go through your mortgage alternatives for home renovations and help you get the best financing for your needs.

Impact of Rising Interest Rates in the Housing Market

 What to Expect With Rising Interest Rates

Prices in the housing market have been rising since March of 2020. While some investors feel that the prices may be too steep, others are taking the plunge. In 2020 and 2021, low interest rates made buying a more expensive property worth the investment. In the end, this translated into a low or manageable monthly payment. However, with interest rates expected to rise this year, where does this leave property owners ready to buy? Here are a few strategies that can help your deal make sense.

Big Cash Down Payments

If you are a property owner of short-term rentals, 2020 and 2021 were great. With many people needing a change of scenery for their work from home offices,  the short-term rental  market saw a surge in demand, putting larger amounts of cash in property investors' pockets. If you were one of them, this should leave you with a hefty down payment available to help offset your new rental investment. 

Use Equity as Your Down Payment

2020 and 2021 saw almost everyone's home equity rise. This is good and bad. The bad news is that it may make the purchase of rental property higher than what you may have paid for it 3 years ago, but the good news is that the property you currently own has more equity. This means that you can use the equity in what you currently home as a down payment for your rental property. Additionally, if the home is your primary residence, the interest rates may be lower than what the market would offer otherwise.  If the home is another rental property, lenders may offer less money but it still may be better than a traditional loan.

Try the BRRRR Method

If you are looking for a property that is below market cost, try the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat). This method assumes that you are looking for a property to renovate and therefore increase the value of the home to a point where the reappraisal process would make it valuable for you to cash out and use the proceeds for your next investment while the unit continues to earn passive income. This process is definitely for the more experienced investor as it assumes you are willing to take on 1) a project, 2) the inherent risk of not renting consistently while there is an additional loan out on the house and 3) a slow supply chain may make the turn around longer than projected.

As interest rates continue to rise, Fool.com  believes that this may ease the competition as fewer people are willing to pay those higher interest rates. If you are able to secure a deal that makes financial sense, 2022 may be the year for you.

Risks of Owning Rental Properties

 3 Risks of Owning Rental Properties Even With a Comprehensive Property Management Service

Using a property management service is a great way to relieve the day-to-day stress of owning a rental property. This is especially true for owners who live outside the area in which they own property. Property management services can also help with everything from finding tenants to getting them moved in and everything in between. However, owning a rental property, even with a property management service, does not come without risks. Here is a list of things that owners should take into consideration. 

Stay On Top of Regular Upkeep and Maintenance

Depending on where your rental property is located, it is a good idea to have contracts with local maintenance and repair companies. For example, if you need the lawn cut or the snow plowed, have someone on hand who is there on a regular basis. Other contracts might include pest control, air conditioning and heating. 

Communicate Regularly with Property Management Service

 It is inevitable that things will break in the unit, like the washer or dryer, the air conditioner or the refrigerator. Many property management services will have someone on call to help with immediate needs, but if there is a problem that requires a bigger fix, for example, a new appliance, staying in touch with the service will help prepare for unexpected costs and expenses. Many contracts have clauses that say, "if a repair is more than XXX, the service must call." This helps ensure you understand what the problem is, the best way to fix it and whether you need to get more involved.

Decide How to Handle Big Problems

If there is a problem with a property while there are renters in place, decide how you and the property management service will manage it. For example, if a window breaks, will you call the local window repair company or is that the responsibility of the service? Keep in mind that convenience comes with a price. The more they do to make your life easier, the more they charge. Most companies charge a percentage of the total cost of the repair or service for their time on top of their regular fees. 

Keep in mind that on top of the mortgage and property taxes, there are going to be either HOA, Condo or other upkeep and maintenance fees, repair fees to budget in, monthly heating and electricity if it isn't built into your monthly rent, etc. Before you purchase, create a spreadsheet with all the monthly finances and this will help you assess the risks associated with buying that particular unit.