The War on Pests: How to Protect Properties from Insects

no-pestsExpect insect populations to boom after unusual fall and winter weather.

Milder fall and winter temperatures in many parts of the country are expected to drive an insect population boom in 2016. The absences of prolonged hard freezes and wetter weather are resulting in early arrivals of pests, some in greater numbers which are already affecting landscapes, and others that are sure to bring out fly swatters during the summer.

Aphids have been making the rounds in Texas and Nebraska, and cooperative extension officials as far as New Jersey are expecting higher populations because of above-normal temperatures in the Northeast. While some of the 4,400 known species target vegetable plants and crops, others are an annual nemesis to residential landscapes.

The small, sap-sucking insects can quickly destroy apartment landscape mainstays like ornamental plants and bushes. Aphids suck the juices out of the plant and leave a slick, shiny substance − honey dew – on the leaves that spreads fungi and damages plants. Symptoms include decreased and stunted growth and discoloration and wilting of leaves.

Tod Russell, an insect specialist at Earthworks, says he’s seen early signs of aphids, and that their appetites are shifting from Photinias and Crape Myrtles.

“The aphids seem to be out in full force,” he said. “I saw them on Indian Hawthorne bushes this spring, and I’ve never seen them on those before.”

Expect Aphids, Bermuda Mites and Spider Mites to be busy

Aphids’ early arrival is just one indication that insects survived a mild fall and winter across much of the country. Others are at work, too. Russell says that Bermuda Mites, which typically emerge during hot and dry temperatures, are already doing damage.

Bermuda Mites are microscopic but damage can be big if left undetected. With a life cycle of 4-7 days, the tiny critters can multiple in great numbers and destroy grass quickly. Typically, turf will turn brown and thin. A major sign is that stems will take the shape of a broom, with a lot of little blades of grass clumped together at one end and spaced out at the other.

“It can be difficult to control,” Russell said. “(Bermuda Mites) usually like hot and dry, and it’s kind of strange we’ve already seen it early this year. I’m guessing the winter probably didn’t affect Bermuda Mites that much. It’s usually not a huge problem.”

Spider Mites, which damage vegetable plants, are also expected to be out in numbers.

Other pests, including mosquitoes, are expected to be active

Landscapes likely aren’t the only targets of pests because of unseasonable fall and winter weather.

In March, the National Pest Management Association (NPMA) forecasted that ticks, mosquitoes, termites, ants and other pests could be especially active this spring and summer.

Mosquitoes are expected to thrive after a rainier and warmer winter in the Southeast, and termite swarms should be stronger as hotter weather approaches. In the Midwest, a record-breaking warm December along with wetter-than-average weather is expected to jump-start ant and tick activity. A cooler, rainier spring in the Southwest may drive up mosquito populations and lead ants indoors. Larger mosquito populations are expected in the Northwest and West after heavier rainfall and flooding during the winter.

“Knowing what to expect for the season is especially important as some springtime pests, such as ticks and mosquitoes can have a direct impact on our health, especially with the threat of Lyme disease and Zika virus becoming a heightened concern in recent months,” said Cindy Mannes, vice president of public affairs for the NPMA. “And other pests, including ants and termites can cause damage to our homes.”

A licensed pest control professional should be the best defense

It’s unlikely that pests that attack landscapes will manifest into epidemic scale, Russell says, but apartments shouldn’t let their guard down. While do-it-yourself chemical treatments are much safer than they were 25-30 years ago, he recommends consulting with a licensed pest control specialist at the first warning signs that shrubs, plants, trees and grass are damaged.

“There are quite a few different kinds of chemicals for control that are available on the market,” he said. “Apartments should be sure to hire someone who is licensed to apply chemicals. They should have the common knowledge to use what’s appropriate for the time of year.”

Just be ready to battle insects in larger numbers.

“I don’t think this year is going to be more difficult, other than there might be more insects with the mild winter,” Russell added. “The populations will probably be higher.”


6 Important Things You Should Consider Before Buying An Income Property

70-rentWhether it’s due to all the HGTV binge watchers out there or because Americans seem to have mentally recovered from the 2008 housing-market crash, one thing seems to be clear: The real-estate itch is alive and well.

But we’re not just talking families looking for their next home. Over the past few years, an increasing number of buyers have become interested in purchasing real estate specifically as a way to help make money. Last year, investment-home sales reached an estimated 1.09 million, a 7% jump over 2014 figures, according to a survey from the National Association of Realtors. Overall, about one in five homes bought in 2015 was an investment property.

For Katherine Dayton, 42, of Bozeman, Montana, being a real estate investor has been a steady side gig since the age of 28.

After a few work colleagues gave her a primer on how mortgages work, Dayton realized that buying a home and taking in roommates would actually cost her less than renting a place by herself—plus, she’d be building equity. “I went into it with a financial approach of it being a good investment,” recalls Dayton.

But she didn’t stop there. After a few years, she sold her first property to buy and fix up another house closer to the center of town, eventually turning it “into a rental that more than covered the mortgage,” she says. This was followed by another rental home she invested in with a friend—and now, 14 years later, she owns several rental properties in the college town of Bozeman.

But Dayton is quick to point out that not all of her investments have been equally successful. For example, while smaller, more basic units fare well with the college crowd in her town, her investments in nicer, high-end buildings and vacation rentals haven’t done as well. “The few places that haven’t been so modest have been a little more of a test,” she says. “I know that other people have done better at those [markets] than I have, so it was just a lesson in sticking with what you know.”

Dayton’s experiences show that being a landlord can be a lot tougher than it sounds. Investing in real estate can be a risky and headache-inducing endeavor, especially if you aren’t mentally and financially prepared to play landlord and take on multiple mortgages. Below, we’ve lined up six things you need to think about before dipping your toes into real estate investing.

1. Your Financial House Should Be In Order First

First things first: Can your finances handle this type of commitment? In other words, do you have a steady income and a well-stocked emergency fund? Are your high-interest debts paid off? Are you on track to meet your retirement-savings goals? (And no, real estate investing isn’t a replacement for retirement savings, in case you were wondering.) If you have a financial planner, does he or she support a decision to put your hard-earned money into this type of investment?

“From an advisor standpoint, the client needs to evaluate if it makes sense to own rental property as part of their overall portfolio, given their current financial position,” says Tim Sullivan, a Certified Financial Planner™ (CFP®) and founder of Clarity Financial in Columbia, Missouri. “‘Does the purchase make sense financially?’ is certainly one question, but ‘Does owning rental property align with the goals the client has expressed?’ is also equally important.”

After careful consideration of your overall financial picture, you’ll want to map out the costs up front. “Not just any deal is going to make sense—it has to pencil out first,” says Brandon Turner, vice president of growth at the real estate investing social network, and author of “The Book on Rental Property Investing.”

Yes, you’ll have to factor in the down payment and monthly mortgage bill, but that’s just the tip of the financial iceberg. “Learn how to calculate all of the expenses you might face, including the ones that are only once-in-a-decade, like new appliances, a new roof and new carpet and paint,” Turner says. You should also plan to set aside money for repairs and maintenance. The exact amount will vary by property, but Turner recommends budgeting $100 to $200 per month for a single-family home or 10% to 15% of the rent for a multifamily property.

And here’s one more public service announcement: If you’re thinking of tapping your 401(k) to help cover some of these costs, consider rethinking that option. By doing that, you miss out on the benefits of compound growth and you are potentially sacrificing your future retirement fund.

RELATED: Ask a CFP: ‘Is It Ever a Good Idea to Borrow From a 401(k) for a Home Down Payment?’

2. Real Estate Isn’t Without Risk, So Calculate Your ROI Before You Buy

Just the way you likely wouldn’t put money into a mutual fund or ETF without first checking its performance, neither should you jump on an investment property without checking what your potential return might be.

“Rental property is not a low-risk investment, so investors should look for something with returns much higher than what a diversified portfolio would return,” Sullivan suggests. That’s why he personally recommends looking for properties with a potential return on investment of at least 14% to start.

To get an estimate of your first year ROI, subtract the annual principle and interest you’d pay from your total estimated net income from the property (which includes potential rental income, estimated tax savings, projected property appreciation and any estimated additional equity from renovations). Then, divide that number by your down payment, assuming that closing costs and taxes are already rolled into your mortgage, and rehab costs.

It’s important to remember that truly understanding your ROI can be extremely complex, and you’ll likely have to tailor any estimates to your individual situation. That’s why James Wachob, head of investor relations at Memphis Investment Properties, suggests buyers speak with a trusted commercial real estate adviser to help them better determine what their calculation could be.

Keep in mind when estimating any potential loan amounts that the rules for investment property financing may not be the same as for primary homes. For example, many of us are familiar with the rule that recommends putting down at least 20% on a home to avoid paying private mortgage insurance (PMI). However, some homeowners still opt to put down less and pay the PMI. But with an investment-property mortgage, you may have a harder time finding a lender willing to consider you if you can’t put down 20%—or more.

“Educate yourself about lending for investors, because it changes daily,” Wachob says. “It’s not something you learn [once] and you’re done.”

In an ideal situation, your tenants would help cover the full amount of your loan and then some, while your property continues to grow in value. However, the key word here is “ideal”—keep reading below to continue weighing the pros and cons.

3. Finding the Right Real Estate Agent Is Key

Many agents may view you simply as potential commission, so it helps to find someone who’ll be on your side: a real estate agent who’s interested in establishing a relationship, owns rental property themselves and specializes in investment properties, suggests Wachob. “Make sure you’re aligned with afiduciary who has your best interests in mind,” he adds.

Finding that person becomes exponentially more important if you’re considering a neighborhood you’re not very familiar with. “[You need] somebody in town who lives and breathes investment real estate with their boots on the ground,” Wachob says. In many cities, safety and desirability can vary not just by ZIP code but from block to block. An experienced agent will be well-versed in the area and will know when a property is too good to be true.

4. Your Investment Property Doesn’t Have to Be Your Dream Home

Does your list of must-haves generally include hardwood floors, a two-car garage and double-sink bathrooms? Maybe those were right for your personal abode, but they may not be necessary in an investment property. Many people bring their own emotion into the process and wait for the perfect place—only to see an opportunity pass them by, Dayton says.

Generally speaking, one of the biggest factors you should be focused on is the cliché-sounding location, location, location. “Look for property in a location that you feel comfortable spending time in and will attract high-quality tenants,” Turner advises. Beyond that, think about what would appeal to the demographic of the renter you’re trying to attract: What may appeal to grad school students in a college town, for instance, may not be suitable for a young family starting out.

5. Expect Your Taxes to Get More Complicated

The minute the keys are handed over to you, plan to hire a CPA or Enrolled Agent, a federally authorized tax practitioner, to help you with your taxes, Sullivan suggests. In the brave new world of landlordship, you’ll need to track expenses associated with the property, understand the difference between a repair and an improvement, and report rental income and losses with an IRS form Schedule E.

Plus, your tax preparer could help you unearth all the tax benefits you could potentially be eligible for. “When you own real estate, the U.S. government is very friendly to you in terms of your taxes owed,” Turner says. You may be able to take deductions, for instance, on the property taxes you pay or what you shell out for repairs.

6. Know That Finding—and Keeping—Good Tenants Will Require Some TLC

Homing in on the right property is only step one. Then comes filling it with people who will treat it properly and pay their rent on time.

“I tell people that you aren’t getting into the property-management business so much as the tenant-screening business,” Sullivan says. “First, ask yourself if you would mind getting a phone call from a tenant on a Sunday afternoon—just as you sit down to watch some football—letting you know that their toilet is broken. If something like that ruins your day, then you better think twice about having rental property.”

The closer you live to your investment, the less likely these calls should come as a surprise. “It’s helpful to be a landlord who lives at the property because you can keep an eye out; you know what’s going on at all times,” says Jeff Lanci, 39, who renovated a property in Queens, New York, and lives on the main level while renting out an upstairs apartment.

To find high-quality tenants, don’t be shy about conducting background checks and requiring deposits. Lanci also contacts two prior landlords from each prospective tenant. “They had no qualms telling me if [the tenants] were late in rent or throw loud parties,” he says. “I found that information to be invaluable.”

The extra work upfront can be worth it in the end. “If you take the time and energy to find good tenants and treat them nicely, they will stay longer and life will be much easier,” Sullivan says.


Not hiring a Property Manager to protect your LARGEST investment is like not buying insurance to protect your Lamborghini.


Not hiring a #PropertyManager to #protect your LARGEST #investment is like not buying insurance to protect your Lamborghini. #FoodForThought #LandlordTip

Why Your Property Isn’t Renting

exterior-houseSo you’ve taken the step to invest in rental properties. Of course, we think you’ve made the right choice. From building wealth to tax advantages, there are many good reasons to own rental properties. But you may be wondering why your properties aren’t renting. After all, why own rentals if you don’t have renters?

There are many things you may be doing to limit your rental’s potential. Here are the most common mistakes we see when it comes to properties not renting:

  1. Poor external curb appeal. It is easy for property owners to neglect the curb appeal of their rental properties, dismissing it as not important. But the truth is that the curb appeal of your rental property matters a lot.I encourage you to read my article on landscaping for rental properties to understand the impact this has.
  2. A weak first impression. “You never get a second chance to make a first impression.” This applies not only to future in-laws but also to your rental property. Your property may be great, but if you aren’t preparing it well and doing what you can to increase that first impression to potential renters, you are hurting yourself more than you know.I’ve provided seven steps you can take action on today to make sure your property impresses renters immediatelyand encourages them to come back.
  3. The wrong price. You must understand what comparable rental properties are renting for and honestly assess your listing against them. Of course, your price should cover your expenses to maintain the property. But if your price is too high, then your rental property will not be attractive to renters. If they can find a residence just as beautiful yet for significantly less, you will lose every time. You must also know if renters are interested in paying more for your location or not. Price is one of the top filters tenants use in their search and it matters a lot to all parties involved. We recommend talking to a third-party management company with significant experience in the relevant region to get the price point just perfect.
  4. The wrong marketing. You may be spending hours and dollars on paper fliers, but if the audience you are trying to reach never sees your fliers, then you are wasting a lot of time. The majority of potential tenants start their search online, so you must be sure that you are maximizing your rental property’s exposure on the Internet. If you aren’t marketing your property in the right way not only are you losing potential tenants, you are losing a lot of your time and money. Consult a rental professional to either advertise or screen for you, or to do what they do best – manage your property from A to Z.
  5. Poor reputation online. Again, since most tenants start their search online, you need to make sure your property looks good online. To fully understand what your online reputation means, I suggest reading my article on how to manage your property’s online reputation. While it can seem overwhelming, it is actually quite important and simple process: Can tenants find your property online and, when they do, do they like what they see?

The good news is that you can fix all of these to get your property rented. Especially with the help of a third-party management system, such as Sweyer Property Management, all of these can be rectified. Contact us today to get started and we’ll help you get your property rented as soon as possible.


Business Partner Can Fast-Track Investment Property Purchases

Real-Estate-Investing-With-A-Business-PartnerBuy A Rental Property With Lower Upfront Costs

Real estate investments have several advantages over other investment vehicles – including preferential tax treatment, leverage, and a hedge against inflation.

But it usually takes a bigger sum to purchase rental property than it does to buy a mutual fund or stock. And completing your first investment purchase can be challenging.

Fortunately, rental property mortgage rates are very low.

Rock-bottom rates reduce the monthly payment on a property, making it more feasible to rent it out at a profit.

The initial barriers can be overcome more easily by finding a partner to go in on a rental property purchase with you. There is no requirement that you be related or that any previous relationship exists. You can buy a home with anyone you would otherwise feel comfortable going into business with.

Your upfront costs will be lower, and your partner could help you qualify for the loan more easily.

Investment Property Downpayment Requirements

Most programs require a minimum 15 percent downpayment for a single home with a fixed-rate mortgage. Downpayment requirements are higher for other situations.

  • 1 unit fixed-rate investment property purchase downpayment: 15%
  • 1 unit adustable-rate investment property purchase downpayment: 25%
  • 2-4 unit fixed-rate investment property purchase downpayment: 25%
  • 2-4 unit adjustable-rate investment property purchase downpayment: 35%

Downpayments under 20 percent will trigger a private mortgage insurance (PMI) requirement. The mortgage insurance provider will review the loan for approval, which is a separate approval process from the lender’s.

According to mortgage insurance provider MGIC, a $250,000 loan would require PMI of $120 per month with 15% down and a 740 credit score.

If each partner can contribute at least ten percent of the purchase price, your costs drop. But a sub-20% downpayment is not a deal breaker.

Cash Requirements After Closing

In addition to your down payment and closing costs, you and your partner will need reserves.

“Reserves” are savings that are available to pay your mortgage if your income is temporarily interrupted.

Reserves are measured in months. For example, your mortgage principal, interest, taxes and insurance (PITI) come to $1,000 a month. You will have $2,500 in savings after you make your downpayment and closing costs. In this case you would have 2.5 months of reserves.

Reserve requirements are typically between six and twelve months for investment properties. If your rental property will cost you $1,500 per month, you could need at least $9,000 after closing to qualify.

It makes sense to open a special property account into which both partners hold the money needed to purchase and maintain the rental. You might want to require both of your signatures to withdraw from this account. Just make sure you keep a paper trail for any funds being deposited, so you can prove the source of any large deposits into the account.

Can You Use Future Rental Income To Qualify?

Ideally, your incomes are sufficient to qualify without the subject property rental income. If this is not the case, though, you may still qualify using the property’s income potential.

If it’s currently rented, you’ll supply a copy of the lease to the lender. If it’s not currently rented, the appraiser will complete a rental schedule, known as Fannie Mae Form 1007 or Freddie Mac Form 1000. This form compares the home to similar rentals in the area to arrive at an estimated future rent.

The lender will reduce the estimated or actual monthly rent by 25 percent. This is because, as a rule, lenders assume the property will be vacant 25 percent of the time.

The lender then adds that amount to your income to help offset the future cost of the rental property.

For instance, the home will cost $1,500 per month in principal, interest, taxes, and insurance. Estimated rent is $1,200 per month.

The lender will add $900 per month to your income. For qualification purposes, the new property will add only $600 per month to the applicant’s total debt load.

One More Piece Of Rental Buying Advice

While no longer required for most mortgage programs, you might want to purchase a landlord insurance policy. This covers the perils of ordinary homeowners insurance, plus extra liability coverage and rent income interruption coverage.

Finally, it’s smart to require your tenants to protect their belongings with renter’s insurance. This insurance is very affordable and covers the renter’s personal property if it is damaged or stolen.

What Are Today’s Mortgage Rates?

Owning an investment property is a good wealth-building strategy. Doing so with a business partner can make the initial purchase and ongoing management easier.


How Real Estate Adds to Retirement Income

GetAdvice-inner-page-image-23When it comes to retirement, multiple streams of income may be the magic phrase. Perhaps you will have Social Security payments, retirement fund distributions, annuity payments or, if you are really lucky, a pension.

For those looking to beef up their retirement income stream, real estate investing is another option to consider.

But investing in real estate isn’t like writing a check to a mutual fund company. This one requires legwork, maintenance and perhaps a few headaches along the way. Think broken pipes, bad tenants or vacant rental units.

Investors willing to pull up their sleeves and invest time along with money may find real estate could be another pipeline toward the multiple streams of income that we all desire. Real estate can be another form of diversification.

“Rental properties can be an excellent way to balance an investment portfolio, since real estate does not correlate highly with stock market fluctuations. Real estate, if purchased correctly and managed properly, can provide a steady stream of income regardless of economic conditions, and can appreciate in value over time, leaving a nice nest egg for retirement,” says Lukas Krause, CEO of Real Property Management in Salt Lake City.

Growth in renting. The current landscape is still positive for real estate investors. “Now is still a great time to buy rental properties,” says Bill Brown, a Realtor in Oakland, California and president-elect of the the National Association of Realtors.

“Interest rates are still low and rents are still rising in a lot of areas. I do, however, think we are closer to the end of the cycle of dramatic rent increases than we are to the beginning,” he says. “We probably have another two to three years of strong-to-moderate rent growth.”

Here are some steps to get started.

Start saving cash. When you have an adequate down payment, get pre-approved for a bank loan so you can act quickly when a great property becomes available, Krause says.

“Do your financial analysis before placing an offer,” he says. “Confirm likely rental rates, the cost of making the property rent-ready, and work with a real estate agent well versed in investment properties.”

The trick for making real estate investing profitable is making sure the numbers work. Make sure there is a large enough rental income stream to cover the mortgage, insurance, taxes, upgrades, refurbishing between tenants, maintenance and repairs.

“Do your due diligence to see if the actual market rent that can be achieved is at or above current rental rates. Real estate is usually a solid investment and if you do your homework, it can pay off quite well,” Brown says.

One method to assess if an investment property is worth purchasing is to utilize the IRS Income Tax Schedule E. Put the numbers on the tax schedule to see if you can cover expenses with the property’s income stream.

Also, ask the current owners for the previous two years of detailed profit and loss statements and current year-to-date statements, Brown says.

First-time real estate investors may want to start small. Options to consider include a single-family home or a small- two or four-unit apartment building. One drawback for a single-family home is that if the rental is vacant, you will be stuck with a 100 percent vacancy rate. A small apartment building can spread the vacancy risk.

Find a property that is affordable to the buyer and to potential renters, Krause says.

“Properties near the average or median property value – $210,000 – tend to be the least risky and can command a good rental rate. Houses with three bedrooms, two bathrooms in a good neighborhood, in a strong school district and in good shape are the most desirable. Think opportunistically. Be on the lookout all the time, because good deals come and go quickly,” Krause says.

Location, location, location. If you plan to manage the property yourself, which will include showing the unit to potential tenants and being on call for maintenance and repairs, you may want to consider a property near your own home for convenience.

Other considerations are types of neighborhoods. Are you willing to be an aggressive investor looking at property in perhaps undervalued but potentially more risky neighborhoods?

“If you’re conservative, do you want a well-established area that will have a lower rate of return but one that you can consistently count on compared to an area you think is in the path of progress where rents will significantly rise in the next three to five years? A Realtor can help you determine what your goals are and what your comfort level is, and then help you find the right area and property for you,” Brown says.

Last but not least, pick your tenants carefully. “Tenant screening is a critical step that is often discounted. If not managed correctly, a whole host of issues could be created to significantly damage your returns, such as increased risk of tenant default, eviction and litigation. Proper screening will include credit and criminal background checks and referrals from past rental property owners. The Fair Housing Act and local and state regulations also must be considered when setting selection criteria,” Krause says.

Investing in real estate should be considered a longer-term commitment. You can’t exit a real estate investment by clicking the sell button on your brokerage house account screen. Take the time to consider all aspects carefully before jumping in.

“The investment is not necessarily liquid, because it is not always easy to sell a house,” Krause says. “However, rents continue to increase and housing appreciates very well in the long term. There are also potential tax benefits.”


How To Avoid Dishonest Renters By Checking References

hand-opening-doorknobProperty owners are always looking for ways to find more tenants and to keep them once they have them. But another really important aspect of finding tenants is finding honest renters.

There is nothing worse than having a full house of tenants when they are dishonest because it just brings so much hassle onto you as a property owner. It is tempting to accept any would-be renter that shows interest in your property so that you can stay successful; however, it can be more trouble than it is worth. Read on to learn how to avoid dishonest renters!

Check References

Many property owners request references from potential tenants on their applications but rarely, if ever, actually go through with the reference check. But verifying them can actually be very enlightening for a property owner, regardless of if you have a good or bad feeling about the renter.

If you have a good feeling about the tenant, you can confirm the good vibes you are receiving from them very easily. If they pass the reference check, they are well on their way to showing that they are an honest renter. If you have a good feeling about a renter only to find that their reference check falls through, you can take a step back and re-evaluate. You can do further checks to see what else they might be being dishonest about and see if they can redeem themselves. Or you can stop there, the failure of their reference check enough to stop you from approving them. It can also give you a good gauge of how accurate your gut is, and by gut I mean your first impressions and instinctual feelingsyou feel about a potential renter.

If you have a bad feeling about the tenant, you can confirm your gut feelings, that churning in your stomach that starts when you think about renting to them. If they fail the reference check, that means your gut, and your instincts, were right and this person probably would have been a dishonest renter. However, if someone that gives you a bad feeling passes their reference check, especially with flying colors, you can give someone a second chance that you might have otherwise disregarded. Rather than losing a renter based on a faulty gut feeling, you might find a tenant that is a golden rather than a rotten egg. It is recommended that you pursue other options to check a potential renter’s honesty besides a credit check though, especially if you do have a bad feeling about them.

Passing a Reference Check

What does passing a reference check entail? You want to find people that really fit the demographic of your property and that will fit in well with your other tenants and the lifestyle you are hoping to provide for your tenants. By conducting reference checks, property owners can avoid costs and fees slapped on them caused by dishonest renters. You want to confirm that the renter provided correct information.

First, the potential renter should have provided all the necessary information and filled it out accurately. The references given should not be family members. Next, the phone numbers should work and not be dead-end numbers or belong to someone other than the person listed by the renter as their point of reference.

Conducting a Reference Check

Right away when you speak to the reference provided to you by the potential renter, identify yourself, your title, and organization name. Be clear and open about why you are calling — for a reference for a potential renter you are considering. Be considerate and ask when would be a good time to talk and whether they would rather schedule a call at a later time. Make sure they recognize that you have the permission of the applicant to call and speak with them and that all responses will remain confidential. Give the reference time to respond to your queries. And be sure not cut them off or put words in their mouth while they are answering. Let them speak at their own pace.

You can ask them questions like how they are or were associated with the renter. Keep your questions appropriate and on topic and if an answer you receive is ambivalent, you can always ask followup questions to help you get a clearer idea of who the renter is as a person and if they are someone you want to get further involved with in business.

Especially if you have many potential renters, this is a good way to weed out which renters you want to continue to pursue. If a potential renter does not pass their reference check, do not let them rent from you. They have already shown themselves to be dishonest and will only continue to do so.


Rental Property Investing for Beginners: Smart Tips to Take Your First Financial Step Forward

security-deposit-piggy-bank-moneyInvesting in rental properties is one of the best ways to begin accumulating wealth. You not only build equity in the properties you own as you pay them down, but if you work your numbers right, you should also be generating some positive cash flow each month. However, like any other type of investment, there are some things you need to know before diving into the deep end of the pool.

Here are some smart tips to get you started with rental properties:

Fix Your Financial Situation

Don’t do anything until you’re sure that your credit and finances are in good shape. If your credit history is questionable, you’re likely to have trouble acquiring financing. A high debt-to-income ratio is a red flag that will prompt most lenders to reject you right away. It would be best to take care of any outstanding debt before attempting to get financed for a house.

Educate Yourself

Before purchasing any properties, take a few months to familiarize yourself with the real estate business and learn what will be expected of you as a landlord. There are lots of books you can read and clubs you can join where you can meet other investors that can answer just about any question you may have. Social media sites are great places to meet investors, mortgage brokers and property managers. For all you know, the investor whose brain you decide to pick might end up partnering with you on a profitable deal sometime in the future.

Check Out Lots of Properties

As tempting as it may be to buy the first property you see that you think you can afford, it might not be a good idea. As a new investor, it’s going to take some time for you to learn how to spot a good deal and if you jump too soon, you may overlook something important and become discouraged when it doesn’t go as planned. Visit properties in different neighborhoods and ask to view units that are occupied (if it’s okay with the tenants). You’ll get a feel for what types of tenants you can expect to attract with each type of property in various neighborhoods and hopefully you’ll see what a well-managed rental looks like on the inside.

Prepare for Expenses

Although it does happen, it’s unlikely you’re going to slide right into a property that doesn’t need any repairs whatsoever. Even if nothing’s “broken,” it’s advisable to do at least some minor work to the property for the purpose of improving its appearance and curb appeal (think paint and landscaping). Furthermore, you’ll have to set some money aside for things like accounting, legal fees, garbage collection, pest control and vacancies. Remember that regardless of who your tenants are, they’ll probably stay for a few years and leave. At that point, the mortgage, taxes and other expenses on the property will have to continue getting paid, no matter how long it takes you to find new tenants.

Hire a Property Manager

Just because you’re investing in rental properties doesn’t mean you have to be the person answering the phone whenever something breaks in one of your units. Property managers make it their business to take care of these and other administrative tasks for you, so you can concentrate on other things, like looking for your next property. They can even find new tenants and screen them for you. Check out for more information on property management services.

Think Realistically

There’s nothing wrong with being optimistic, but your expectations of this real estate investing endeavor should always be grounded in reality. You’re not going to become a millionaire overnight and some of the deals you get involved with may seem rather modest until you develop the ability to spot better ones. If you quit your job expecting to make a fortune, you could find yourself heavily in debt and in worse shape than when you got started. There’s lots of money to be made in this business, but you’ll have to look at lots of properties, learn various types of buying strategies and figure out cost-effective ways to handle property-related expenses.

Above all, learn to enjoy this new venture you’re undertaking. Get to know as many people in the business as you can and read every book on real estate or rental properties that you can get your hands on. The more you know about how things work and how to avoid the pitfalls, the sooner you’ll start making the kind of money that allows you to quit your day job and pursue this full-time.


Realtor view: Consider factors before becoming a landlord

apartment-background-checkIf you’ve ever thought about buying a home strictly for use as a rental property, this may be a good time to start. In all likelihood, it will be a sound investment for your future. However, there are some factors to consider:

Of primary importance is your willingness to be a landlord. It’s not for everybody. Do you have experience with tenants? Is there a steady stream of tenants in the area? Are you going to be close enough to get to the property in case of emergency or other situation? Who will handle repairs and maintenance? How will your insurance coverage change?

For a rental house, it’s obviously a goal to keep tenants in the property. Almost as important is to make sure that what the tenants pay covers your expenses of owning the home. These expenses should include mortgage, tax, insurance and maintenance. If you can break even, you enjoy available tax benefits and profit from the overall appreciation of the property. Additionally, rents tend to go up over the years while your mortgage payment, assuming standard financing, is fixed.

Your insurance coverage will be substantially different as well. Landlord insurance can protect you from loss of income in the event that the property becomes uninhabitable, such as in the aftermath of a fire, or during a tenant/landlord dispute. The Texas Department of Insurance has a great website that offers information and help for those seeking all kinds of insurance.

Finding a house that will turn into a performing asset can be tough. I recommend that you use the services of a Realtor who specializes in investment property. Your wants and needs are much different from a retiree or a first-time home buyer. Your Realtor will understand this and may even have investment properties of their own.

Realtors also can provide some history about the neighborhood and other valuable information and may be able to give you a pretty good idea as to the estimated cost of certain repairs.

Once you’ve acquired the property, you may consider hiring a property management company – particularly if you’re not located close to the property or you have more than one rental unit. Many Realtors specialize in property management and can screen tenants, collect rent, and inspect and maintain the property.

Are you handy? It’s good if you are; but if not, make sure you know who to call. Be ready to make some repairs. Tenants expect things to be right – in fact, that’s why many of them choose to rent.

Your Realtor even may have a vetted list of contractors to help you with any projects.

Another option you may want to explore is purchasing a home warranty for the property, which will cover the appliances, electrical infrastructure and the plumbing. These warranties are typically affordable and give you peace of mind. Be sure to read the policy to know exactly what is covered.

There are pros and cons to owning rental properties, but if you have what it takes and your financial situation allows for it, it’s an excellent way to accumulate wealth.



sidewalk-shadows-night-walking-crimeIn a recent phone call from a prospective tenant, Robert’s last question of me was, “So, do you rent to felons?” When I asked what his felony was, he replied, “Strangulation.” I told him I’d have to talk to my owner, and suggested he call me back in a couple days. (I’m the owner, of course, but keeping that fact private has saved me time, stress and hassle through the years.)

HUD Secretary Julian Castro recently released a 10-page statement, warning property managers, agents and landlords they can be held liable for discrimination if they deny tenancy because of criminal records.

He wants to protect the fair housing rights of people who are re-entering the housing market after leaving prison. He claims that colorblind policies — like screening all applicants for criminal background checks — have a discriminatory disparate impact on minorities that are arrested at rates higher than their proportion of the general population.

So, even though barring tenancy to felons serves a nondiscriminatory, legitimate purpose for our neighborhoods, we may be putting ourselves at risk to do so!

And although Robert never called me back, let’s assume I had rented to him, and three months later, he fought with and strangled my tenant on the other side of the double. Was it my responsibility to protect the neighbors? Would that tenant have the right to sue me for negligence?

Although I’ve given second chances to some who’ve had run-ins with the law, I’ve always had a policy of not renting to people with felonies. I’m a single woman, I work alone much of the time, and I care deeply about my neighborhoods and tenants. With this new missive from HUD, maybe a conversation with my real estate attorney is in order …

So, when it’s time to go, make a written plan to make things right quickly, or make the move to get them out. Although we’re witness to a myriad of sad situations, this is an income-producing business — first and foremost — and our decisions have to focus on that priority.

Barb GettyA Bit About Barb Getty:  Graduating Purdue and marrying soon after, Barb settled in Indianapolis in 1980.  In 1992, after the loss of her son and the ending of her marriage, Barb bought a fixer upper and moved in with her daughters.  With her first project successfully completed, Barb purchased her first duplex with little money, no credit, and no experience as a landlord.  Today she proudly owns over 27 single and multi-family units as low and middle income rentals. Her book, The Landlord Chronicles, Investing in Low and Middle Income Rentals, offers common sense advice to all types of investors.  She is financially and emotionally invested in her work with a positive attitude and a strong sense of humor.  Barb Getty is making a difference in her tenants’ lives, the neighborhood, and the city as well.  To learn more about Barb, follow her blog, or purchase her book, visit: