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Searching for the #NeedleInTheHaystack? Search no longer! We are the top-rated property management firm in the #TriangleArea!
#Apex #Cary #FuquayVarina #HollySprings #Morrisville #Raleigh
Any competent real estate investment advisor will tell you it’s easy to make your fortune with a real estate career – as long as you know what you are doing. The first advice your real estate investment advisor should give you is to not jump in with both feet right away.
Before making your first investment, you need to do some studying. First of all, do you want to invest in residential or commercial real estate? Which one you chose affects the real estate investment advisor you work with and what you need to be studying.
Once you have a real estate investment advisor, he or she will help you decide what books and articles you need to learn from. If you go into commercial real estate, you will have a ton of options to choose among. Your advisor will give you the pros and cons on subjects like industrial properties, apartment buildings, retail space, office space, etc. It will greatly increase how fast you conquer the learning curve.
With your new knowledge from a general overview, you’re advisor will help you narrow down a more detailed reading list. Now is also the time to start talking to everyone in your chosen market segment that will give you a few minutes of his or her time. You want to advance your career with knowledge gained from other investors, attorneys, brokers, appraisers, mortgage brokers etc. Your real estate investment advisor will have contacts he or she puts you in touch with.
Next, you want to select a geographic market and learn everything you can about it. If you decide to get into retail space, pick the brain of your real estate investment advisor to learn everything you can about the current market conditions and for tips selecting a geographic subsection of your local market. Then talk to existing tenants in the market to learn what is going well and not so well for them.
Having cut your learning curve substantially with the help of your advisor, you will now be ready to make your first investment wisely. In all likeliness, you’ll have come across several potentially highly profitable investment opportunities during your studies.
This is where your real estate investment advisor brings invaluable knowledge to your first real estate investment. It’s all about the money. You’ll gain great help performing your first due diligence. When the numbers make sense, you’re advisor will show the ins and out of creative financing. You’ll learn about low cost and no cost techniques such as sandwich lease purchases and seller financing. There are also many sources of private funding available.
Your most important decision that will determine the success or failure of your rental is the person you put in the property. A bad tenant can potentially cause years of stress, headache and financial loss, while a great one can provide years of security, peace and prosperity.
So, don’t underestimate the importance of renting to only the best tenants. While it’s not possible to know with 100 percent certainty what type of tenant your applicant will be, here are six telltale signs and traits that will give you a pretty darn good indication that this person is great tenant material:
The first and foremost quality of a good tenant is his or her level of financial responsibility and ability to afford the rent. Without proper payment, the landlord may be forced to evict the tenant and face potentially thousands of dollars’ worth of legal fees, lost rent and damages.
Most landlords require that a tenant’s (documented) income equal at least three times the monthly rent. Many tenants believe that they can afford more than they really can — so it is the landlord’s job to set the rules to protect his or her investment. If the tenant is already financially responsible, income that amounts to three times the monthly rent should be sufficient.
While some landlords look at late rent as a benefit because of the extra income from the late fee, a late-paying tenant is more likely to stop paying altogether. The stress generated when the rent doesn’t come in is not a pleasant experience and can be avoided by renting only to tenants with a solid history of paying on time.
While a tenant may be able to pay the rent and pay it on time right now, his or her ability to do so in the future is often determined by the job situation. If this person is the type to switch jobs often or has had long periods of unemployment, you may find long periods of missed rent.
No tenant stays forever — and upon departure needs to leave the property in good condition. As such, it is important that the tenant’s day-to-day lifestyle be clean and orderly. This means taking good care of the property.
A person who has no regard for the law will also likely have no regard for your policies. Tenants who engage in illegal activities will cause you nothing but stress and expense. So, be sure to run a background check on your prospective tenant to ensure he or she doesn’t have a shady past.
That said, keep in mind that a prospective tenant’s past history of drug or alcohol abuse could be considered a medical problem — and thus something you can’t reject him or her over without being guilty of violating fair housing laws. If this person is selling drugs, that’s different from using. Be sure to study up on the fair housing laws in your area.
The final quality of a great tenant is something I call the “stress quotient” or, in other words, the amount of stress a tenant will cause you as landlord. Some tenants are very high maintenance and constantly demand time and attention. Others simply ignore the terms in their lease and need constant babysitting, reprimands and discipline (late fees, notices, phone calls, etc.). This type of tenant will only be a thorn in your side.
Obviously, no tenant is going to be 100 percent perfect, so deciding how much near-perfection you require is a personal choice that largely depends on your desired involvement and the community in which your property is located. If tenants are difficult to find, it may be financially advantageous for you to rent to a less-than-perfect tenant in order to fill a vacancy.
Notice the use here of “less-than-perfect tenant,” and not “anyone.”
On the other hand, if you have plenty of applicants to choose from, you can be significantly more picky. Just remember, it’s much better to have your unit vacant a little longer while you wait for the right tenant than to rent to the wrong person.
So, how exactly do you weed out the bad tenants and find those quality tenants? The answer involves setting strict qualifying standards and screening your applicants to verify whether or not they meet those standards.
If you are feeling hesitant about allowing tenants with pets to rent your property, it might be time to take another look.
Property investors have long been hesitant to list their properties as pet-friendly on the rental market. Fears that animals will damage their property prevent landlords from all the potential benefits of offering a pet-friendly property. It is important for homeowners to consider all the benefits and potential pitfalls before a decision is made, to ensure they are not needlessly excluding a large amount of prospective tenants.
Benefits of managing a pet-friendly property
Pitfalls of managing a pet-friendly property
How to make your investment property pet-friendly Making slight modifications to your investment property can minimize the damage caused by tenants’ pets and the need for excessive maintenance.
Here are some easy things you can do to properties within your portfolio to make them more pet-friendly and reduce your long-term outgoings:
Pets in apartment buildings Keeping animals in the confines of an apartment is a more complex process than allowing pets in a house, townhouse or villa – and it may require more planning. However, it is certainly achievable.
When it comes to strata buildings, there are general laws in place that vary from state to state. As a general rule, strata communities have the choice of one of a selection of options regarding the acceptance of pets in the building.
Some buildings may not allow pets at all. Some may allow tenants to submit a ‘pet application’, and make a decision based on the type of animal, the breed and temperament, and any supporting documentation or references. The reason for this process is to protect the health and well-being of tenants and pets. Very large animals are unlikely to be accepted into an apartment building, as there is not enough space for the pet to live comfortably, and allow other tenants to live undisturbed.
With an increase in demand for pet-friendly rental properties, developers and strata managers are becoming aware of the benefits of running a pet-friendly building.
Developers could decide to design and construct their apartment building as pet-friendly from the get-go – which would mean many of the modifications and additions listed above would come as standard. There is also the advantage of tenants living among other pet-lovers, reducing the risk of upsetting neighbors and inter-building disputes.
Property investors can have tenants sign a standard Pet Keeping Agreement, which requires them to agree to a certain level of cleanliness, minimal noise, and responsibility for damage to the property caused by a pet. A Pet Keeping Agreement also gives the body corporate peace of mind, as they know the tenant is in breach of contract should they disturb the living environment for other tenants.
It is important for landlords to be covered by the right homeowner’s insurance, as terms change when pets are permitted in your property. Investors should do their due diligence when making the decision to approve a certain type of pet, as some pets are considered bigger risks than others, which can hike up your insurance premium.
There are plenty of low-maintenance pets that won’t have much of an effect, including fish and rodents in enclosed cages, as these animals are contained, easily cared for, and won’t provoke noise complaints.
Buying a rental property can be a very lucrative and sound financial investment. But it can also winding up costing you, particularly if you haven’t done your due diligence prior to making a purchase.
Location for the property is critical. Buyers tend to think of a rental property in terms of dollars and cents related to the transaction with less focus on location. While this isn’t necessarily a bad strategy, a rental property in a fantastic location will always have strong rents, fewer vacancies and much better appreciation over time compared to a property with better cash flow in a less desirable location.
Generally, it is a good bet when you can buy a rental property where the rent is greater than the mortgage payment, turning your cash flow positive. Still, it is a good idea to allocate at least 5% of the gross rents for the inevitable repairs that you’re going to incur as a landlord. These repairs include but are not limited to:
Considering how much cash your rental property will need to earn X return is critical. Rate of return (ROI) is your net (after expenses) annual income divided by the capital investment. For example, if your net income is $1,000 per month and your cash to buy a rental is $100,000 (down payment + closing costs), then $12,000 divided by $100,000 equals a 12% return.
Each property will have a different rate of return. What’s the best return to aim for? That depends on your appetite for risks, cash on hand and rents the property in question could generate.
This one is big and is by far the most important decision you’ll need to make. To give you some general rules of thumb, let’s consider single-family homes, condominiums and multi-family properties. Multi-family properties almost always generate more rental income than single-family homes. A multi-family home is essentially getting several single-family homes for one.
Here’s a reason: Buying a rental, such as a duplex, allows the landlord to have flexibility when there’s a vacancy. If one unit is vacant, the other unit makes up for the loss and vice versa. The combination of more units means more revenue-driving potential and higher returns.
Single-family homes can be solid financial investments as long as you do your homework. A single-family home in a great location can be a sound financial investment. However, if you have a vacancy, you don’t have another unit to offset loss of rent — unless you have a single-family home with a granny unit. The granny unit can help offset that negative rental impact from the vacancy.
Condominiums are at the end of the list of properties types to consider since they are the last to appreciate and the first to depreciate in economic cycles. Additionally, you’re sharing units with other owners, which makes the income potential limited compared to a single-family home or a multi-family property. Taking it a step further, the homeowner’s association payment can be anywhere between $200 and $400 per month. That’s a big chunk of your cash flow that otherwise could be used to plan for upkeep or pay a property manager.
Ask yourself the following questions when evaluating whether a rental makes sense for you:
A good rule of thumb when buying a rental property is to make sure you understand all the figures associated with this high-ticket investment. (Remember, this can include checking your credit, since a good credit score will generally net you lower rates on a mortgage. You can view two of your credit scores, updated every 14 days, for free on Credit.com.) The better handle you have on the numbers, the better chance you will have at purchasing a solid rental property.
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Q: Dear Mr. Reno:
Bottom line is that my renters have had issues from the beginning and I extended their security deposit due date until the second month of their lease (9/1/16). As of this writing, not only have they not paid the security deposit, but they have not paid their entire months rent for September. I sent an email on 9/4 explaining that they would need to pay the entire months rent by 9/5 (as noted in the lease) to avoid a late fee. I then went on to point out that it’s unacceptable to not pay the security deposit. I left it with giving them one last chance to come up with a plan that they can abide by and have since heard nothing. I really don’t want to evict as I would have a hard time maintaining two mortgages for long, but the lack of communication since my last email is cause or concern.
Should I bite the bullet and get a local attorney involved?
Sincerely, Rich N., Aurora, IL
A: Attention Landlords: PLEASE STOP giving possession without security. (Making the tenant agree to pay it later turns logic on its head.) It’s like saying “I need security in case you breach because I don’t trust you. But don’t worry, you can pay it later, because I trust you”. See what I mean?
The Landlord Protection Agency’s “Ask the Attorney” column is for informational purposes only. The questions answered by Mr. Reno on this site do not constitute an attorney – client relationship and are not to be considered legal advice. Not all questions will be answered and some may appear in the LPA Q&A Forum.
The Landlord Protection Agency recommends that you seek legal advice before using any of the material offered on this web site, and makes no guarantee on the effectiveness, compliance with local laws or success of any of the material offered on this web site. The Landlord Protection Agency is not engaged in rendering legal advice.
Protecting your investment from a fire when you aren’t around isn’t easy but there are some simple steps you can take to minimize the chance of it happening, and any damage if it does occur. As a landlord, you can’t control everything that happens on your property. However, you can implement rules, provide advice, and protect yourself by giving your tenants everything they need to be safe and secure. When it comes to preventing house fires, there are a number of things to keep in mind. It’s always important to think about fire safety in the home – especially leading up to winter, when people start using heaters and fireplaces again.
For optimum protection, fire alarms should be installed in every bedroom, living area and hallway. This will almost certainly be required by the local fire code, but smoke detectors and fire alarms should be checked every time a tenant moves out. Make sure you check it at the start of each tenancy, during routine inspections, and ask your tenants to check them too.
At a minimum, you should have a fire extinguisher located in the kitchen. If you have properties with multiple levels, consider placing one on each floor. Keep a fire extinguisher somewhere visible and easy to locate, but out of reach of children and inform tenants of its location at the start of a tenancy and ensure they know how to operate one. While a fire extinguisher may not be capable of combatting widespread flames, they can quickly control small outbreaks and may prevent large-scale damage. Regularly check your extinguisher works and get it serviced according to the manufacturer’s instructions.
Under no circumstances should you allow your tenants to smoke on your properties, neither indoors or outdoors. Get a professional to clean your fire place at the end of autumn or as the weather starts to cool and have a fireguard and ensure tenants use it on fire places. Regularly have all of your heat sources and gas lines checked, and change filters. Make sure you include very strict language in your lease agreement and follow up on any suspicious activity.
If a problem or issue doesn’t directly bother them, most tenants won’t mention anything to their landlords. However, this can be dangerous on your end if its related to something like an electrical issue or fire hazard. Give your tenants your contact information and encourage them to call you anytime they suspect something is wrong. In addition to potential loss of life and property damage, fires often lead to legal issues. In order to protect yourself from potential lawsuits or penalties, remember to document all the efforts you’ve made to protect your properties and tenants from fire-related harm.
Scenario: You’re ready to give up on the landlord business, or maybe you just want to unload one of your investment properties. You own the apartment in Boston, MA, so you can sell it and move on, right?
It’s not always that easy.
Deciding to sell a house that someone else calls home — a tenant-occupied property — is much different from selling your old guitar online. Although you do own the place, as long as the tenant has paid rent, they have a right to live there.
Some tenants are terrific. They keep the home neat and clean and allow you to show it whenever you like. But others can be problematic, especially if they refuse to let you in or even change the locks on you.
No matter what type of tenant you have, it’s crucial to know where landlord rights begin and renters’ rights end.
Look up the laws of your state to determine how much notice you’re required to give your tenant to vacate. Usually, it’s 30 or 60 days.
Send your tenant a letter letting them know when their tenancy ends. Even if you’ve had an unpleasant landlord-tenant relationship and are thinking, “Don’t let the door hit you on the way out,” keep it to yourself! Politely ask your tenant to remove all belongings by move-out day and to leave the keys on the counter.
If your lease agreement allows, you can show the property with your tenant still in it. If not, wait until your tenant has moved out to show the place. “The key to rightful access is to give proper notice (generally 24 hours),” says Lucas Hall, chief “landlordologist” at Cozy.co.
Unless your lease has an early termination clause that allows you to end the lease early, your tenant gets to live out the lease period, assuming they’re in good standing.
If your tenant failed to pay rent or violated any lease terms, you can terminate the lease.
Otherwise, hold out until the lease is up and your tenant is out to sell the property. Or you can start showing it while your tenant is still there … if your lease terms allow this and if you give proper notice before stopping by.
If you want to sell immediately but your tenant still has time on the lease, you could market the property to investors, who would be happy to have a tenant already in. This might be a tougher sale — your market will be limited, and the new owner would need to honor the tenant’s current lease.
Yes, you read that right.
Paying someone to leave your house might be your best option if you need to sell immediately.
But how much do you offer?
Do a quick Trulia search to find the average rent in your area. If typical rents are more than you’ve been charging, offer the difference multiplied by the number of months left on your tenant’s lease. You could also offer to pay any moving costs. If your tenant won’t budge, throw in some extra cash to pay the security deposit for the new place.
In the end, your tenant doesn’t have to accept any cash you offer. You might just have to wait.
If your tenant really doesn’t want to leave, ask whether they want to buy the property. If they can’t get a mortgage, consider seller financing. Here, you’re the seller and the lender, letting your tenant make payments to you.
What if your tenant refuses to let you show the place, even if you’re allowed to per the lease? You can enter anyway. But a hostile tenant probably won’t keep the house exactly show-ready and might even scare away potential buyers. So you may want to tread lightly until this tenant is out.
What if that tenant changes the locks? “Call the police, who can force the tenant to grant you access,” says Lucas Hall. “Or hire a locksmith to re-key the locks at the tenant’s expense.”
Try sweetening the deal by giving a break on rent if your tenant cooperates, meaning they not only agree to showings, but they also make the bed, contain any pets, and clear the dirty dishes from the sink before prospective buyers come by.