FORBES: Eight Reasons You Shouldn’t Manage Your Own Investment Properties

1Purchasing an investment property is an exciting business venture. If your building is in good shape and you find the right tenants, you stand to earn a lot of money from your rental units.

At first it may seem like a good idea to manage your own property and retain full control over costs, tenants and income. However, self-management can often be a headache: When something breaks down or your tenants are late with rent, you bear the sole responsibility to address it.

Hiring a third-party property management company can be worth every penny, especially if you’re looking to grow your investment business over time. Members of Forbes Real Estate Council shared eight common scenarios in which it makes more sense to outsource your property management tasks.

1. If Real Estate Investing Is Your Side Hustle

If an investor has a full-time job and they are investing as a side hustle, I would suggest hiring a property manager from day one. If the investor is fully focused on real estate investing, it makes sense to bring in a third party once they reach 10 units. At that point, their time is better used looking at more deals versus collecting rents or dealing with tenant maintenance issues. – Ali Jamal, Stablegold Hospitality

2. If You Lack Housing Expertise

Investors should not manage their own properties in situations where they are not familiar with the type of housing being managed. For example, with affordable housing, there is much compliance involved and making a mistake can result in fines. In that scenario, property management is best left to third-party companies that specialize in affordable housing. – Nathaniel Kunes, AppFolio Inc.

3. If You Want To Maximize Your Time As A Passive Investor

Your time is valuable, and technology is opening up many outsourcing options by connecting investors with qualified professionals in property management and skilled labor. Take advantage of every opportunity to maximize yourtime. In fact, investment platforms are allowing people to diversify across several properties without ever picking up a hammer. – Nav Athwal, RealtyShares

4. If You Need To Fill In Skill Or Resource Gaps

Each investor’s access to resources and prior skills and knowledge needs to be reviewed before providing this type of recommendation. It needs to be personalized. An investor who is a handyman likely doesn’t need to pay someone to make repairs. Finding the right tenant can make or break success, so evaluating candidates may be the best area to have help, particularly at first. – Michelle Ames, HorsePower Team Texas/Independent Realty

5. If You Don’t Have Time To Learn The Laws And Run It As A Business

Outsourcing will avoid legal liabilities from Fair Housing and Fair Credit Reporting Acts, state landlord-tenant laws and local regulations. Property managers will have resources that can perform services for less. You’ll also be less likely to lose income from tenants who don’t pay their rent or rents that end up being below market. – Alex Hemani, ALNA Companies

6. If Your Properties Are Located In Different Markets

Using third-party management is usually advisable when properties are located in different markets, as well as when owners don’t have the time or skills required to manage the property effectively. While it is tempting to save the 7-8% management fee typically paid to property managers, there are a host of tasks they take care of to keep the property occupied, cash-flowing and maintained. – Gary Beasley, Roofstock

7. If You’re New To Being A Landlord

You should hire a third-party manager if you’re new to being a landlord and don’t completely understand local ordinances and leasing practices, or don’t have all the contacts needed for repairs and maintenance items. A good third-party manager will know all of the above and you will learn them over time. – Lee Kiser, Kiser Group

8. If You Want To Scale Your Investment Business

If you want a large income property portfolio, don’t self-manage beyond one to two years. After that time, you will be better able to understand “a manager’s perspective.” Your highest and best use isn’t faucet repair or replacing bathrooms. It’s researching geographic markets and establishing competent teams. If you self-manage, ask yourself better questions like, “How scalable is this?” – Keith Weinhold, Get Rich Education

Source: forbes.com

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How Tenant Screening Changed In 2017

1One of the most important things that property owners and landlords can do to prevent problems with renters is to conduct a thorough tenant screening. The best tenant screening reports cover areas like criminal record, eviction history and credit score. Without it, landlords increase their risk of dealing with tenants that have a history of unpaid rent, costly damages and evictions.

However, there were two major changes in 2017 that affected the way that landlords get information from tenant screening efforts.

National Consumer Assistance Plan

The National Consumer Assistance Plan (NCAP) is a joint venture between the three credit bureaus, Equifax, Experian and Transunion. The plan stems from a settlement in 2015 between more than 30 state attorneys general and the three major credit bureaus.

The goal of NCAP is to boost the accuracy of the information on the credit report, among other things. One of the ways they plan to do this is by decreasing the reporting of such public records such as tax liens, parking tickets and civil judgments. So how does this affect landlords?

The new reporting changes are especially critical for landlords because evictions are civil judgments and as of July 1, 2017, they disappeared from credit reports of any prospective tenants. If tenant screening companies provide landlords with just a credit report as part of an applicant’s background check, the landlord will have no insight into that person’s rental history.

Landlords need to check with their tenant screening service to ensure that they are now using an alternative source to discover any eviction judgments on an applicant. There are several national companies that do provide information on forcible detainer and unlawful detainer judgements for tenant screening companies. It’s now the only way that landlords can get information on prior evictions.

Because of the extra cost involved in using a national eviction search, many tenant screening companies are increasing their fees and passing the cost on to their clients. Landlords may have to charge more for their application fees (if allowable in their state) to cover their own costs.

Any landlord that wants a thorough background check on an applicant must ensure that the tenant screening service they now use includes this separate eviction search.

Equifax Breach

One of the country’s largest credit reporting companies experienced a data breach that compromised information for more than 145 million customers. The company experienced unauthorized access to data from May through June and key identity information was accessed, including names, birthdays, social security numbers, driver’s license numbers and more.

Because of the massive potential for identity theft, many consumers placed a freeze on their credit report. With a freeze, potential creditors are unable to access someone’s report without the consumer removing it temporarily. This prevents anyone from opening a line of credit with that information, including identity thieves. However, it also prevents landlords from accessing the info they need to get a complete picture of their applicants.

Landlords need to be aware that identity theft and fraud will be on the rise as a result of the data breach, affecting innocent applicants. They should also know that because many people have put a freeze on their report, their tenant screening company may not be able to access anything without consent.

During the application process, landlords can make things go a little more smoothly with any applicants that have set up a freeze. Many tenants don’t think about unlocking their credit report for a background check on a rental home. Landlords can ask applicants or include a reminder on the application about lifting the freeze temporarily. If the applicant can’t or won’t lift the freeze in a timely manner, landlords may have to move to the next applicant.

Despite the freeze on a credit, landlords should never change their tenant screening practices. When looking for the best tenants, landlords need to get a good idea of what kind of renter an applicant will be. Proper tenant screening will always save landlords time, damages and money. However, in 2017, these two factors just made it a little more difficult for landlords and tenant screening companies to get the background information they need.

Source: realtybiznews.com

Trulia’s Hottest Real Estate Markets to Watch in ’18

See which cities are making the cut this year.

If you’re thinking about where to move next, you’re probably considering a wide array of factors like work, family, and the start of a new chapter. Every home purchase is also a huge investment—possibly the biggest you’ll make in your life. Looking at the markets poised for growth can ensure your new home is also a good investment. To help, Trulia looked at the 100 most populated metros in the country, then used five key metrics to determine the 10 real estate markets with the highest growth potential in 2018: strong job growth, affordability, low vacancy rates, home search rates on Trulia.com, and a high population of young households (you can find our full methodology below). It may surprise you—it did us—to learn that Texas and Ohio are home to more than one fast-growing city. See where else made the cut below

1. Grand Rapids, MI

On the mighty banks of the Grand River, Michigan’s second-largest city is at the top of our list largely due to its strong employment growth, which is up 2.5 percent year-over-year. Grand Rapids also has a relatively low vacancy rate (ranked 16th overall) and a high share of households with residents 35 years and under (22 percent). A full two-thirds of Grand Rapids’ residents own homes, and the median home sale price is a friendly $163,750. Living here means enjoying the waterfront, the Frederik Meijer Gardens & Sculpture Park, and the Grand Rapids Art Museum, which spotlights Michigan’s artists. A bubbling brew scene doesn’t hurt either.

2. Nashville, TN

Next on our list is Nashville, also known as Music City. But you don’t have to be in the band to love it here. Home of the famous “Grand Ole Opry,” residents in Nashville are always down for a good time. Need more evidence? Just walk through The Gulch, a trendy Art Deco-inspired neighborhood. Not surprisingly, Tennessee’s capital has a high share of households under 35 years old (23 percent) and the strongest job growth in the country (3.1 percent year-over-year), luring people from all corners of the nation to relocate. But taking the top spot in job growth may come at a price: affordability, where Nashville is ranked 58th overall.

3. Raleigh, NC

North Carolina’s capital, Raleigh, is known for the bright minds of North Carolina State University and the Research Triangle (together with Durham and Chapel Hill). But it’s also beloved for its wealth of culinary and cultural cornerstones, like the Oakwood historic district, designated on the National Register of Historic Places, where homes date back to the 1800s. This City of Oaks made our list due to its strength in two categories: job growth (ranked 3rd overall) and low vacancy rate (ranked 15th overall). Its popularity, though, leaves the city lagging in affordability—the median sales price in North Carolina’s second most popular city is $250,000—where it ranks 43rd overall.

4. El Paso, TX

This Southwestern city on the Rio Grande is loved for its incredible Tex-Mex cuisine, a wealth of locations for outdoors lovers to explore, and a rich downtown artist community and farmers market. Major employers in El Paso range from the US military to the University of Texas at El Paso, healthcare corporations to major retailers. The average price of a home here is just $186,611, and it’s a hot market for the social young and single set: the median age is 33, and 24 percent of residents are single. You’ll find many of them moving to the up-and-coming Mission Hills neighborhood. “The fantastic weather, developing downtown area, and affordable price range of housing speak to younger buyers as well as just about everyone,” says Laura Baca, an area real estate agent.

5. San Antonio, TX

San Antonio is known for its River Walk, an oasis of cypress-lined paved paths and lush landscapes where locals and visitors alike go to relax. But the city is bustling, too. In 2017, job growth rose 2.2 percent, and the national homeownership rate increased significantly for the first time in more than 10 years. In fact, homeowners make up two-thirds of the city’s population, at 65 percent. San Antonio’s top employers are a mix of military, city, and school districts, as well as private and public businesses, making this 300-year-old city flush with new job opportunities. These trends are expected to continue into 2018, with homeownership outpacing renting for the indefinite future.

6. Fort Worth, TX

This city of cowboys and culture is a hot destination in the Lone Star state, welcoming 8.8 million visitors annually. Fort Worth is comprised of seven primary entertainment districts, each offering dining, shopping, entertainment, and cultural amenities—offering mass appeal for a new generation of residents, allowing the city to lay claim to the youngest population of any major metro in Texas. It’s only 17 miles from the DFW International Airport, ensuring personal and business travel is extremely convenient. The city also has an impressive percentage of homeowners (68 percent), and with popular employers such as Lockheed Martin Aeronautics, American Airlines, the Naval Air Station, and city and school district offices, it’s a solid place to set down roots.

7. Austin, TX

Capital city Austin, with its legendary live music, burgeoning restaurant scene, cool culture, and vibrant community is a draw for everyone—even those who aren’t coming to listen to tunes in the Live Music Capital of the World. Austin’s also a university town, and many folks stay on after school. The national homeownership rate ticked up both for households under 35, as well as those aged 35-44, with the former showing a substantial increase from 34 percent in 2016 to 35 percent in the second quarter of 2017. Though home buying among millennials is likely to be sluggish in the short-run, the long-run potential for this generation to support housing consumption in the United States is big.

8. Columbus, OH

Big things are happening in Columbus, Ohio’s capital and most populous city. It’s booming, and not just in population. There are 33 acres of new riverfront parkland in downtown, cultural institutions are adding to their offerings, neighborhoods are bursting with new places to eat and shop, and the innovative food scene gives residents plenty of options. Trends in Columbus show a 12 percent year-over-year rise in median home sales price, and even with the upward trajectory, the average home comes in at just $159,900. “Our urban areas are booming with renovation and new build projects, and our suburbs maintain their investment values very well,” says Cheryl Chapin, an area real estate agent. “We have a lot of areas across the city that are walkable, have great dining and shopping, yet they’re close to downtown amenities.”

9. Madison, WI

Madison is Wisconsin’s second-largest city and state capital. It’s also home to the state government and the University of Wisconsin-Madison, the city’s largest employers. The town’s amassed a treasure chest of kudos, from most-walkable and best road-biking city, to most vegetarian-friendly, LGBTQ-friendly, and environmentally friendly city, too. Of the places on this list, Madison has the highest percentage of college-educated residents (60 percent). The up-and-coming Tenney-Lapham neighborhood houses lots of young families and hosts a popular annual art walk.

10. Cincinnati, OH

Resting along the banks of the Ohio River, the vibrant Cincinnati region spans portions of three states: Ohio, Kentucky, and Indiana. The third-largest city in Ohio has dedicated homeowners, with 63 percent of the population owning homes and its home sales price slowly growing, up 4 percent year-over-year. Cincinnati’s popular Over-the-Rhine district, which includes Findlay Market and food and craft vendors, is a favorite place for locals to spent the weekend, as is Cincinnati Zoo and Botanical Garde.

Source: trulia.com

Why Renters Insurance Matters for Landlords

1Do you know someone who owns a house and doesn’t have homeowners insurance? Most likely, you don’t. That’s because if someone has a mortgage, their lender requires the home is insured. Which makes sense. If the house burns down, the lender’s money goes up in smoke.

 

In the world of renting, renters insurance is just as important, but few people understand exactly why.

 

Let’s start with the basics. Renters insurance protects renters and landlords.

 

For starters, renters insurance covers a renter’s personal belongings, something a landlord’s property insurance doesn’t cover. Without renters insurance, a renter would have to pay to replace everything stolen in a burglary or damaged by a fire. Renters insurance will also cover the cost to replace a stolen bicycle or laptop, even if the theft happens someplace other than home.

 

It also protects renters from liability if they accidentally damage their place. If a renter accidentally starts a kitchen fire or overfills the bathtub, with renters insurance they won’t be liable for the damages, even if they damage a neighbor’s place.

 

What many people don’t know is that the liability coverage benefits landlords, too. Without renters insurance, a landlord could be responsible for the cost of damages and repairs if their renter accidentally damages the property.

 

It’s important that renters carry renters insurance. Just like mortgage companies require homeowners insurance, most landlords require renters insurance in their leases. If possible, landlords should verify that renters have a current policy.

 

With renters insurance, both renters and landlords can relax knowing they’re covered. That means less stress all around!

 

Source: huffingtonpost.com

10 Things All Landlords Should Remember To Ensure Good Tenant Relations

1Investing in rental property can be highly rewarding if successful, as it can help build your net worth and make a profit by generating a steady monthly income. This type of investment takes work, however, with landlords having to worry not only about finding the right property but also about maintaining it, making it attractive for potential tenants and finding suitable and trustworthy renters.

All experienced landlords have their share of tenant horror stories, ranging from dealing with unruly renters to facing significant property damage, but with a proper screening process in place, most problems can be avoided. Establishing a professional, positive relationship between landlord and tenant can help the former obtain a solid return on investment and the latter achieve a higher quality of life. Below, 10 real estate experts with Forbes Real Estate Council share some of the most important things any landlord should remember to improve their tenant relations.

1. Over-Communication

Keeping good lines of communication open can solve many landlord/tenant problems. Make sure tenants understand why things are happening, and give good advance notice for anything disruptive. – Jeremy Brandt, WeBuyHouses.com

2. Tenants Are People, Too

The opportunity to serve others comes with a variety of faces. As a landlord, the ability to engage with tenants as stakeholders brings conscious leadership to our everyday interactions. Home is where the heart is, and supporting people as they create a home is a gift. Realizing you are part of impacting the social/emotional environment for others, brings a humanitarian vibe to a traditional role. – Susan Leger Ferraro, Peace, Love, Happiness Real Estate

3. Boundaries And Limitations

As our investment platform scaled nationally, we noted the variation of landlord-tenant laws as some geographic regions favored landlords disproportionately. We found it essential to understand the legislative dynamics of the community by partnering with local experts to mitigate our liability and legal exposure. – André Bueno, The BM Group

4. Being Approachable

Many tenants are afraid to contact their landlord about issues. From landlords, I hear that tenants don’t tell them about repairs until they are really bad. From tenants, I hear they don’t want to call because they don’t want to bother the landlord or are afraid. Be approachable. Be supportive of you tenants. One way we can help landlords have better tenants is teach tenants about maintenance. – Michelle Ames, HorsePower Realty/Realty Executives Metroplex

5. Trust Is The Key To A Better Relationship

My company was born from my own awful renting experience when I was pitted against other potential tenants in a bidding war. Even worse than the high monthly rent, I ended up with was the poor relationship with the landlord that ensued. Renters who have a poor experience leasing their home are more likely to churn from their lease. Landlords should make sure they build trust in the leasing phase. – Anthemos Georgiades, Zumper

6. Better Protocol

The majority of horror stories typically boil down to one thing: horrible tenants, right? However, it is incumbent upon the landlord or property manager to have a proper, thorough and strictly held vetting process for which to qualify the people who will be occupying your investment. If you’re allowing just anyone, the nightmare began before the lease even started; you just didn’t realize it yet. – Tracy Royce, Royce of Real Estate

7. The Little Things

I’ve come to the conclusion that succeeding in real estate comes down to doing the little things on a consistent basis. The same thing goes for being a landlord. Little things such as a move-in package and holiday gift cards for tenants, responding quickly to maintenance requests and being pleasant can be the difference between a tenant that will want to stay and pay and one that won’t. – Engelo Rumora, List’n Sell Realty

8. Careful Lease Review Before Signing

Many people sign documents without thoroughly reading them. Although it is not your job to hold your tenant’s hand through committing to the terms you have laid out, if you take the time, in the beginning, to make sure they understand and are willing to comply with all the terms, there will be fewer surprises later on and less chance of conflict. – Hillary Hobson, Highest Cash Offer

9. Tenants Are Clients

Every landlord should remind themselves that tenants are their clients. They’re also trusting those clients with a very valuable asset. It’s best to be respectful, communicate openly and professionally and take care of tenants so they take care of the rental property. A landlord’s behavior influences the tenants’ behavior. – Dave Zirnhelt, Snap Up Real Estate

10. Having A Property Manager

I own a property management company that collects rent, handles tenant requests/repairs, takes care of everything from A-Z. Take the stress off your shoulders as the landlord and let a professional handle the “dirty” work for you. Let us be the “bad” guy, while you vacation in the Bahamas with friends. The less you interact with your tenant, the better your relationship will be with them. – Angela Yaun, Day Realty Group

Source: forbes.com

9 Sneaky Fees to Watch for When Hiring a Property Manager

security-deposit-piggy-bank-moneyTo many landlords, property management services are superfluous, cutting their profit margins to a minimum in exchange for basic services. But the reality is that property managers can make your life extraordinarily easier—and most charge a reasonable enough rate that you can draw a monthly profit from your properties (headache-free).

However, when you’re searching for a property manager to handle your landlord responsibilities, it’s important to note that not all fee structures are the same. If you don’t understand how a manager’s fees work, you won’t be able to compare apples to apples, and you might end up shaving your profit more than necessary if you aren’t prepared for those fees when they come up.

9 Fees to Watch For

These are some of the most common “hidden” fees, extra fees, and differences in fee structure to watch for when comparing providers or finalizing a contract:

1. Rent Due and Rent Collected

Many property managers will charge fees as a percentage of rent, but watch how this is worded—there’s a difference between charging as a percentage of rent due and a percentage of rent collected. A percentage of rent due means your company will charge you based on how much money a tenant owes you; a percentage of rent collected means your company will charge you based on how much money a tenant actually pays you—and is generally more favorable. If you’re charged based on rent due, you’ll end up paying for property management even when your property is vacant and you have no money coming in.

2. Early Cancellation

You may also be charged an early cancellation fee should you break the contract with your property manager before the end of its outlined term. For example, if you agree to work with them for a year and you want out after eight months, you might pay an additional few hundred dollars. Be especially wary of this fee with untested property managers.

3. A La Carte Management Fees

“A la carte” management fees refer to a suite of extra fees a property manager may charge you in addition to basic services. Usually, a property manager will either charge a higher price (and no additional fees) or a lower price, with multiple additional fees, somewhat evening out. Accordingly, it pays to know what fees are applicable and what they might run you. The remaining items in this list could all be classified as a la carte management fees.

4. Vacancy

If a company isn’t charging you the full cost of management while your property is vacant, there may still be an additional vacancy fee. Rather than collecting a percentage of rent due, they may collect a smaller amount from you as a kind of retainer.

5. Advertising

When it comes time to seek a new tenant, some property managers may charge you an additional advertising fee. This would cover the cost of creating media (such as taking photos) and placing it on sources like online listings or paper publications.

6. Leasing

A leasing fee may apply when you find a new tenant for your property. This covers the cost of drafting and securing a new lease agreement and is generally low in cost. If the cost here is high, it should raise a red flag, especially if your resulting tenant turnover seems to increase.

7. Lease Renewal

Lease renewal is even simpler than initial leasing, but it may still require a fee. You may need to draw up new paperwork or renegotiate terms with a tenant, and that means your property managers will be doing a bit of extra work. Expect minimal fees here as well.

8. Maintenance

Property management fees should cover basic instances of maintenance and repair, but some companies may charge extra for big jobs, or for an inspection between tenants.

9. Eviction

Eviction can be a messy process, and if you ever need to evict, you’ll be grateful you have a property management service in your corner. Most property managers will handle the eviction completely on your behalf, but some will charge you an extra fee for the extra work involved. Expect to pay at least a few hundred dollars for this process.

Apples to Apples

Different companies might charge money in different ways, but if they’re offering similar services, you’ll likely find the bottom-line price of each to be competitive with one another. The big difference here is how you plan on using your property management company; for example, if you’re looking for long-term arrangements, an early cancellation fee shouldn’t factor much into your decision. Try to consider all these factors and all price points when comparing providers and making your decision.

Source: biggerpockets.com

Is landlording causing you to experience excessive “noise” in your mind?

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Is #landlording causing you to experience excessive “noise” in your mind? Does it get worse when you have a #TenantProblem or #PropertyIssue?#BevRobertsRentals is crucial to maintaining sanity. Through Bev Roberts Rentals, close your mind to distracting and disturbing thoughts, and enjoy inner peace and happiness. Unravel your mind with Bev Roberts Rentals, before it unravels you.