Complete Checklist for Potential Real Estate Investments

 A Complete Checklist to Refer to Before Putting an Offer on a Potential Investment Property

o If you are thinking about putting an offer on an investment property, the most important thing you can do is "run the numbers" first. What does this mean? This translates into creating a spreadsheet of what your expenses will be on a monthly, quarterly, or yearly basis. You should also try to account for expenses that are billed on an as-needed basis. Here's a quick checklist that you can refer to help start you on this journey.

Monthly Expenses

• Mortgage. Evaluate what your expenses will be by getting pre-approved before putting an offer on a property.
• Escrow. This includes property taxes and insurance costs.
• HOA or Condominium Fees. These may be collected on a monthly or quarterly basis.
• Utilities. If you include utilities ( electricity, cable/phone/internet)  in your rent payment, this will still be an expense for you.
• Security Fees. This refers to a home alarm system.
• Property Management Fees. If you employ a service, this could be a set monthly fee or based on the cost per rental. 

Quarterly Expenses

• Trash Removal. In some areas, this is not included in tax payments.
• Pest Control. Depending on the area of your investment property, this could be a contract you have with a local service for a monthly or quarterly service.
• Water Service. This expense is regularly calculated quarterly.

Yearly/Other Expenses

• Contracts. If you decide to get a contract for things like appliances, hot water heater, air conditioning and heating units, in order to keep an eye on aging units. 
• Service Calls. This could include fixing a garbage disposal, electricians or pest control. If you don't have a contract, these will be calculated on an as-needed basis.
• Landscaping/Snow Removal. These expenses are billed only at the time when service is rendered.
• Large Purchases. This could include oil, natural gas or propane delivery, replacement furniture if you offer a furnished property, replacement/service for broken appliances or units.
• Tennant Changeover Fees. This could include the cost of painting, cleaning, trash removal and credit checks.

Depending on whether you are purchasing a vacation rental unit or a long-term rental property, could wildly influence where the bulk of your money is allocated on your spreadsheet. It could also determine if this unit is really the great buy it looks to be at first glance. 

Costly Rental Property Features

 Four of the Biggest Features in Rental Properties That Lead to Hemorrhaging Money

Owning a rental property can come with hidden or unforeseen expenses. While many property owners factor in things like taxes, HOA or condo fees and insurance, the real cost is the maintenance and upkeep of the property or unit. If you are considering purchasing property, keep these four things in mind. 

Hot Tubs and Swimming Pools

Hot tubs and swimming pools demand constant oversight with regards to maintaining PH levels, cleanliness and repair/maintenance. It is important to have them under the care of a professional who can identify problems before they become too costly. 

Decks, Docks and Exterior Structures

Property owners should regularly inspect any structures that are constantly exposed to the elements. The potential for damage,  including anything caused by weather or animals, can be a hazard to renters. It can also be difficult to repair. 

High End Appliances

While many homeowners want their kitchens to look nice in photos and provide top of the line appliances for potential renters, consider whether it is worth it in the long run. In some cases, finding replacement parts or repairing an expensive appliance may take a lot of time. In this case, the renter would probably have preferred a more off-the-shelf, easier to service item. 

Older Heating or Air Conditioning Units

When purchasing a rental property, consider the age of these units. Many of these units have a life span of 15-25 years. While you may be able to get away with replacing parts as needed for a little bit of time, all those service calls and up and no one likes being without air conditioning or heat during extreme temperatures. 

Remember that when purchasing a rental property, to be sure to see not only if the items mentioned above are in good working condition, but if so, how much it will cost to repair or replace these items in the future. Next, set aside a small savings account to help cash flow these items so you are prepared to fix them as needed. 

Deciding Neighborhoods for Your Real Estate Investments

 How to Decide Which Neighborhoods Are the Best Fit for Your Real Estate Investing Strategy.

Most people say, "location, location, location" because the location is very important when it comes to investing in real estate. You need to find the right properties in the perfect location at a good price if you want to make a profit on your real estate. 

So, how can you decide which neighborhoods are the best fit for your real estate? Here are some things to consider. 

You need to figure out who you want to rent to, before you choose a property. If you are looking to rent your properties to college students, you are going to want to find properties that are close to certain colleges. If you want to rent to couples with young children, you are going to want to make sure that you select neighborhoods with playgrounds and good schools.

If you prefer to rent to older couples who are going to take good care of their home, you may want to look for neighborhoods that have an active senior center. You may even want to choose properties that are near communities for those over a certain age. You will attract others who want more freedom, yet they want to be close enough to their friends. 

You also should think about the types of rentals you want. Are you going to want seasonal rentals, where people vacation? This may bring you more income because people pay more for a week's vacation than they do on their home. However, you are also going to have to set up bookings and make sure that the rental gets cleaned between each tenant. You may also have downtimes, when you won't have anyone interested in renting your property. 

Would you prefer to find homes, where your tenants may stay for a year (or even longer)? Long-term rentals can be great, because many will take care of the property like they would their own home. They don't mind mowing the lawn or even doing some painting, because they are in their own home. 

You also want to choose neighborhoods that are decently priced. If you decide to pick property in a lower-priced area, you may not be able to get enough rent money to afford your mortgage. Instead, you are going to want to find neighborhoods that are decently priced. However, if you choose a location that costs too much, you might find yourself in over your head. 

Choosing the right location for your rental property can be challenging. You want to get the right tenants, so you have to choose wisely. To do so, you really need to think about who you want living there. Do you want young parents, or would you prefer to do vacation rentals? You also need to make sure that you can get the property at the right price. Otherwise, you could be paying them to live there! 

 

Determining Rental Value

 3 Ways to Determine the Rental Value of a Property Based on Its List Price

With the housing market going topsy-turvy over the last year and half, figuring out the rental value of an investment property can be difficult. Zillow and other online estimates can be outdated and old ways of pricing may not be the most accurate. If you are considering investing in a particular market, it is important to do your homework to determine if the purchase is a sensible one. You may need to look beyond the price per square foot. Keep in mind, this may require some good, old-fashioned detective work. 

Interview Property Management Companies 

Whether you are choosing to go with a property management company or not, asking them questions about the market is one of the best ways to determine if a property is worth your time. Discuss with them what the rentals have been like over the last year, and when you can, over the last six months. This will give you an estimate of how easy and at what price point similar properties are commanding. 

Talk to a Realtor

Realtors can tell you a lot about the community, the most recent price of similar properties and other things planned for the community to determine if there will be a lot of competition for rentals shortly. For example, if you are buying a condominium in a particular area but there is slated to be a new high rise apartment building in the area within the next year, find out what similar units will be asking for in rent. 

Consider the X Factor

While the price per square foot is a great launching point in determining the rental value of a unit, consider the amenities and other intangibles that can add value. Things like a doorman building in a city environment, access to gym facilities, outdoor space, new appliances, and even a great layout or view can have positive effects on your ability to command a higher price for your property. These types of comparisons may include a visit to other buildings or single family dwellings to determine how your property compares.

The best advice is to talk to the people on the ground who have seen how the rental market has reacted to the swings of the last year and a half. Sometimes that conversation can be invaluable. 

Benefits of Property Management Companies

 Why You Should switch to a Property Management Company Before Winter Starts

Snow, ice, water, low temperatures, and other factors are some of the things to deal with during winter. You have not invested a lot of money in your rentals to start making losses in winter, which can easily negate all the gains you have made this far this year. Property management ensures that your rental property remains both profitable and valuable throughout the unpredictable fall/winter.

Keep reading to discover these top 4 reasons hiring property management makes all sense now than ever.

1. Maintenance and Repair Works

Tenants have to deal with low temperatures during winter. Essentially, they're mostly indoors because of the harsh weather outside. This basically means that the HVAC system will be working harder. If it's included in the rent, then it's your responsibility to ensure the heating equipment is in good condition. Managing this can be hectic, especially if you have a couple of properties. Rental management companies have created relationships with the best HVAC contractors and got the team to deal with all those repairs and maintenance. The result is happy tenants, which keeps your property occupied. 

2. Cut Costs

The harsh weather plus the long hours spent at home means high electricity usage. During the winter, you want to reduce expenses as much as possible if utility is part of the rent. Property managers can improve the property's energy efficiency by sealing windows or cracks to prevent heat loss. Besides, they ensure the heating appliances are in good shape and energy-efficient, as well as installing energy-saving bulbs.

3. Accidents and Fire Prevention Precautions

It's no surprise that most property fires and accidents are reported during winter. Such can mean costly litigation and unrecoverable property damage. Hiring professionals ensures that neither has to happen to you. This is done by ensuring fire/carbon monoxide alarms are working and eliminating any appliance that may cause fire beforehand.

4. Preparing the Rental for Winter

The reason you own rentals is to make an income. But that depends on whether you have tenants all through. Property management makes it easy for tenants to stay put when winter approaches by making the area safe through:

• Cutting down branches or trees that may pose a danger during winter.
• Cleaning and clearing drains and gutters.
• Checking roof and water pipes for leakages
• Measures to clear ice and snow off the rentals

Hire Leaf Management for Quality Services

Our business is to make yours profitable and long-lasting. Years of experience give us an edge to better manage your property. We protect your tenants and investment with our state-of-the-art tenant screening and market know-how. Contact us today to learn more about our services, including private financing options.

Remodeling Budgets

 How to Change Your Rental Remodel Budget Taking Into Account Material Shortages and High Prices

With so many people working and learning from home over the last year and a half and completing their own DIY projects, the demand for renovation supplies has caused a rise in material prices. This makes prioritizing or staggering repairs and remodels based on need and impact on your bottom line rental price very important for property owners. In a Good Morning America interview in May 2021  with the President of the National Association of the Remodeling Industry, the estimates are that remodeling costs are 25-40% higher than last year.  Appliances and lumber have seen a sharp rise in costs. However, experts expect that prices will begin to decline in the fall. So putting larger, big ticket items on the back burner may be best for now.

If you are still in need of remodeling, here are some alternative ways and ideas to get the job done. 

• Painting. This is a great way to make any space feel new again.  According to HomeServe.com, a gallon of paint can cost between, $15-30, with the average-sized bedroom needing 2-3 gallons. The cost to have a space professionally painted can range from $500-$3000 for 1,000 square feet and a gallon of paint can cover 400 square feet.
• Refinish Cabinets. Looking to spruce up the kitchen or bathroom without a high renovation cost? The cost to refinish cabinets is far less than replacing them, up to $4,000. This is a great alternative to buying them since materials and labor are still in short supply.
• Upcycled Materials. If you are in desperate need to replace furniture after a hard year of renter use or the kitchen cabinets won't make it through the next renter, consider upcycled materials. Places like Habitat for Humanity sell  new and reclaimed cabinets, appliances and building materials. 

Before you embark on a remodel or renovation project, do some homework and determine where the greatest need lies. Once you have done that, you may be able to find a less expensive alternative if you just take the time to think outside the box. 

 

Signs it's Time to Rewrite Rental Agreements

 6 Signs It's Time to Rewrite Your Rental Agreements for Future Tenants

The rental agreement is among the most crucial document every landlord ought to be mindful of. A clear and well stipulated rental contract ensures smooth living among tenants as well as protects your property from damage. An incomplete/outdated document puts you at greater liability, which can sometimes lead to pricey lawsuits. It's therefore paramount to ensure that every tenant gets an updated contract before occupying your space.

While this is mostly the case, you might have been overlooking some tell-tale signs to know when exactly you need to redraft your rental agreement. Below are some of them.

1. The Current Lease is Old

Old here is relative. But it all boils down to the same thing – time changes things. When last did you review your lease agreement? You might be making losses either because the market fluctuated and the rentals are damned as expensive, or you're charging the same price for 5 years. Modify your agreement to reflect the current market environment.

2. Just Finished a Remodeling Project

After revamping your rentals, it's essential to revise the agreement to reflect these changes before enlisting new tenants. For example, you'd want to charge more because the rentals are more hospitable. Besides, it's vital to alter rules to ensure the property is protected from damage so that your effort and money don't go down the drain.

3. Laws Changed

Property laws both at state and county levels keep changing. The last thing you want is to get on the wrong side of the law just because you failed to update the rental agreement on time. That can cause fines and losses that you could otherwise avoid.

4. Tenants Experience

This can be good or bad. For instance, if your previous tenants kept complaining about their neighbors' pets, you'd want to include a pet's clause detailing rules concerning keeping pets before people can start searching for somewhere else.

5. More Occupants

If someone is coming to stay with one of the renters as a roommate (this happens mostly for colleges/university students), then your lease agreement should be up for review. If there is no clause on how many roommates can be allowed or procedures for enlisting additional occupants, include it before another tenant faces the same issue.

6. You have a New Rental(s)

It's not surprising that many landlords might see no problem with using the same lease template for their newly acquired property. This is not recommended because every property is uniquely different. Learn to draft a new agreement for every rental property so that the specifics of each one are perfectly reflected.

Today's Key Takeaway

Rewriting your rental agreement between tenants is a must-to-do thing if you're to remain at the top of the game in this ever-changing industry. This is because it's impossible to change terms midway the lease without first getting the tenant's approval. Hiring a property manager like Leaf Management can also be of great help to enact the above efficiently.