Hard Money Loans

The residual income from owning rental properties may bring more money into your life than the fast flip in the long term. If nothing else, the stress is reduced because a well-chosen investment will pay for itself until you the market is ready for you to sell. In order to make this idea work, you must plan carefully. Choose your property, choose your management approach, and choose your tenants carefully to make the most of your investment.

Choose your property.

Not every house is going to bring in the money you need each month. Some considerations:

Will you be financing? How much you finance is going to have to be factored in to how much you need to cover the monthly expenses. Up to four units is considered a residential loan by most banks; beyond that is commercial, which means that the lender may factor in the rent more easily as income, but other, more stringent requirements must be fulfilled to secure a loan. The more equity you have now, the more able you are to weather periods of vacancy.

How many units? Not only is the number of units a factor in lending, it’s also very important for income. More units means less drain when you have a vacancy (a two-family house loses half the income when one tenant leaves!), it’s also just plain easier to get enough rent to at least cover your expenses.

What rents can you charge? Find out how much the rents for the current tenants are, if any. If you don’t know the rental market well enough, consult with your real estate broker or a professional property manager to determine what fair market rent for each apartment is. The monthly rent should be at least one percent of the value of the building for it to be a profitable investment.

Will major work be needed? If you’re getting a place cheap, you probably are expecting to do some renovations. This has to be budgeted in, because you’re spending money and not getting rent for that period of time. Contractors often break both deadlines and budgets, because hidden problems become apparent as you dig in to the project. Make sure you have a cushion to cover your mortgage, insurance, taxes and other expenses.

Choose your management approach.

Once you’ve found a winner of a property, it’s possible to just sit back and let the money roll in . . . or you could make a part- or full-time job out of being a landlord.

If you’re handy, enjoy paperwork, like working with people, and don’t mind being available pretty much all the time, you should be a landlord. Many people have left their old jobs behind to manage their own rental properties full-time. read more…

Low interest rates continue to encourage homeowners to re-finance their property. Owners use the extra cash to pay off credit card debt, complete outside repairs, replace porches, upgrade electrical wiring, install a new roof, de-lead the house, renovate kitchens and bathroom in their apartment, and similar large maintenance work.

When or if you have a large sum of money to invest in your real estate, you need to think about upgrading your tenant’s apartment, as well as your vacancies. The condition of your tenant’s unit is part of the market value of your house or building. If it’s in bad shape, it could lower the potential sale price. If it is good condition, it adds to the stability of your financial investment.

You also do not want to be in the position of having to do a complete renovation of the tenant’s apartment after a move-out. When you have the money, consider upgrading key areas of the apartment building.

When was the last time you saw the inside of your tenant’s apartment? Do you know what condition it is in? How long has the tenant lived there? The answers could impact how much money you will need to request to the bank.

Homeowners have an obligation to review and maintain the upkeep of their occupied and vacant units. Doing an annual apartment inspection helps you stay abreast of the condition of your investment. Once you give advance written notice to your tenant, go in with a pen and notebook, and write down what repairs need to be made. Also write down large replacement work needed. For example:

Are there illegal bars on your tenant’s windows that need to be removed or replaced?

Do you have an elderly or disabled tenant who could benefit from hold bars in the bathroom by the toilet and tub?

Are the ceilings and walls cracked from building settling? Does the apartment need any patch and paintwork?

Are there a lot of extension cords, indicating a need for additional electrical plugs? Is there a GFI electrical (safety) switch in the bathroom and kitchen, which may be a part of your state’s housing or building code? read more…

Who are the Folks That Makes an Ideal Tenant?

Finding the right tenant is a common challenge that most property managers encounters at one point or another in their life. The following bits and pieces of information in this article will allow you to have a better idea in picking the right or ideal tenant.

Searching for the right tenant can be simple or even a challenge sometime, but having an idea of the different types of America’s work force qualities as tenants could help you decide and screen the right and ideal tenant for your property.

So you have done your credit check with your prospective tenant ( you done it, right?) and now you’re probably wondering what part of the demographics would make an ideal tenant.

Generally there are Four (4) Population Strata or Groups where your prospective tenants will be coming from:

1. The Rich

- Generally own, not rent.

- Want homes that are too expensive.

- Will hire a lawyer to pick apart the lease.

2. The White Collar Worker-Wants To Be Rich. read more…

Every property investor will agree that without tenants you do not really have a property business.

Your tenants will pay the rent set by you. This rent will be used to pay for:

? Your mortgage repayments
? Recurring property maintenance
? Fixtures and furnishings in a furnished property

Any money left over will be used by the property investor for

? Advertising
? Finders fees for further property acquisitions
? Further acquisition financing costs
? Legal fees
? etc.

As you can see, there are numerous expenses here. To be successful, you need to treat property investing as a business and not just a hobby.

I know of a lot of people who have tried property investment only to find that their costs far exceed any income – this is certainly NOT the right way to run a successful business.

As with any business you need to look for ways to reduce costs or increase the income. Now the only way for you to increase the money coming in would be to increase the rent. This is not as easy as it may at first look. read more…

If you are an existing landlord, or intend to become one soon, you need to be aware of certain regulations.

The Property Business is like any other business where you need to comply with several regulations in order to operate in the business.

Fortunately, the requirements are not that onerous, and soon become second nature.

As a landlord, you have a duty to

• take safety measures including:

o ensuring means of escape are kept clear, maintained in good order and repair, clearly displayed and signposted to all occupants.

o ensuring fire fighting equipment is kept in good order and is well maintained.

o taking all measures reasonably required to protect the occupants from injury, for example, preventing access to unsafe areas, such as roofs.

• supply and maintain water supply and drainage, gas and electricity.

• maintain common parts and installations.

• maintain living accommodation including any furniture or appliance provided by you, the landlord.

• provide waste disposal facilities.

You also need to be aware of The Furniture and Furnishings Regulation 1988, Gas Safety and Electrical Requirements.

If you are unsure of any specific requirements, you could always contact your local authority and ask them for their advice. Alternatively, a quick 30 minute search on the internet could provide you with all the answers that you require.

When starting your property business, you must comply with these regulations as non-compliance could result in hefty fines or imprisonment in the most severe of cases.

However, once you’ve bought your first property and have ensured it meets all minimum requirements, all you need to do is to replicate the processes, thus any additional property will be much easier for you to prepare for letting.

Dr Javaid Kiyani is a successful Property Investor and Internet Marketeer. He has an MBA from Cranfield Business School and PhD from the University of Birmingham. Formerly a Chartered Engineer and Management Consultant, he has 10 years experience of property. His knowledge of property investment is vast as evidenced by the books he has written. Dr Kiyani believes in helping others achieve their dreams too by personally training them through his property mentorship programme. read more…

So, you’ve been working for years, you’ve saved up some money, and you’ve decided to invest it in a more secure market, the myth of the unsinkable real estate investment, by buying certain residential properties, houses or an apartment complex, in order to generate some steady, passive income, so you think.

You spend additional money, let’s say $45,000, improving the property; you paint it, put in new carpets, new kitchen cabinets, washer and dryer, and everything else, hoping to entice your prospective tenants. So, you’ve bought some ads in your local newspapers, and little did you know, you’ve finally found someone who’s willing to sign your lease agreement.

Now that he or she has moved in, you don’t have to worry about fixing stuff inside the property, because everything was new and in super working condition when your tenant first moved in.

You’re now reaping the benefits, just as you’ve planned it. Your tenant pays the rent on time each month; so you have nothing to worry about. The money is good, right? Yeah, right. A few months later, the police is called for domestic disputes at your property, but no big deal, right? Right! A few more months, the neighbors complain about loud music from your property, but it’s okay, read more…

The days of 10% yields are now all but a distant memory for landlords.

Interest rates are still moving upwards and seem destined to hit 6% by the end of the year.

So what can landlords do to drive up margins & help cashflow. The answer is to cut costs and here are six ways for landlords to do this.

1. Buy cheap – landlords need to be tough negotiators

There is still money to be made in the property market whether landlords buy at auction or they find a residential investment property in the local estate agents or over the internet.

The secret for landlords is to always drive a hard bargain. Landlords should view 50 residential investment properties, put in 50 ‘ridiculous offers’; 49 will be rejected but the chances are one will succeed. Then a landlord will get a buy-to-let bargain. That way a landlords rent will reflect the value say of a £200,000 property but if a landlord has managed to secure a 15% discount their costs will only be that of a £170,000 residential investment property.

2. Landlords need to get the best finance deal

The biggest cost to any landlord is their mortgage. If a landlord can cut this by even a 0.5% that will work out as a cost saving of £62.50 per month on a £150,000 buy-to-let mortgage.

For a landlord to ensure their mortgage is competitive they need to keep checking their rate against the best BTL mortgage rates currently available.

Landlords should never, ever pay the mortgage company standard variable rate, the chances are you will be paying 1-2% above what you need to. Most landlords can save at least 0.5% on their interest rate if they shopped around.

3. Save on managing fees by DIY Landlording read more…

Landlord security deposits are often misunderstood and not handled properly. Many states have imposed deadlines requiring landlords to itemize any amounts withheld. In some states, any amounts retained in bad faith by the landlord can result in stiff penalties against the landlord. I will provide a few tips that can assist the landlord:

Landlord Security Deposit Tip #1

It is often a common practice by landlords to retain an entire security deposit when a tenant breaks a lease. Landlords often assume that this is acceptable because it is justified by the tenant’s actions. In many instances, this is illegal. The landlord is often required to make reasonable attempts to re-rent the property and remit any pro-rata amount back to the tenant.

Landlord Security Deposit Tip #2

Consider a partially deferred landlord security deposit. A partially deferred deposit just means that rather than collecting an entire security deposit upfront, you accept it in future monthly payments. Normally you might require the entire deposit to be paid in three to six equal monthly payments.

A partially deferred deposit may make sense when you have a credit worthy tenant that lacks the funds for a full security deposit. In addition, it often allows you to get a larger deposit in exchange for allowing a tenant the privilege of paying the deposit in installments. In some difficult rental environments, you may consider allowing a deferred deposit as a move-in incentive, which could attract additional applicants to your property.

Landlord Security Deposit Tip #3

Know your state landlord tenant laws. These laws are established to clarify the laws governing the rental of residential dwellings and the obligations and rights of both tenant and landlord. This includes, but is not limited to, landlord security deposits, maintenance requirements for both tenant and landlord, the regulation of rental amounts (if applicable), occupancy and access guidelines, and possession of the unit. read more…

What ‘skeletons’ do you have hidden away that may come out to haunt you? Sounds scary doesn’t it? And it could very well be….

I was recently negotiating on a fairly large character conversion/reno project for an associate of mine. He had considerable experience with rezoning and land utilization but not so much with actual conversation and restructure of the buildings. He was so ‘pumped up’ about the potential project that I wondered how much in depth research he had conducted, as there seemed to be some sizable obstacles to overcome before getting the project to the final stage.

I felt an icy hand on my shoulder and heard a deathly whisper in my ear ‘Do the due diligence now, run the costs and speak with your team, get the written quotes…’ What was going on? The voice was just my ‘friendly’ skeleton reminding me of the lessons learned 5 years ago.

See, I had been doing a sizable reno deal where the costs and time frame kept on extending. I had done the usual groundwork, quote gathering and cost analysis for the property, but it still was taking longer and costing more than planned. In the end the deal was completed and all went relatively well, but there had been a few months worth of stress and grey hairs from this seemingly simple deal. What happened next was I spent a period of about 6 months feeling rather reluctant to enter into another reno job.

My skeleton was keeping me out of the market. My repair job didn’t go exactly as planned, but still ended up being profitable, although not nearly as much as I had hoped. What I realized was that I needed a better system and a better team to rely on. I then went out and spoke with several of my colleagues that specialized in these sorts of projects. I then saw how I could ‘bomb proof’ my next deal, maximize my time, money and create more profit- all with fewer grey hairs.

The funny thing is how much my skeleton continues to teach me. read more…

Deposits are an administrative burden and cost center that has long been considered a “cost of doing business.” Why? You have to comply with state regulations for each stage of the process: collecting the deposit; placing the funds in a separate account; informing the resident in which bank the funds have been placed; sending U.S. 1099 Interest Income forms to each resident annually; and refunding all, part or none of the deposit with an explanatory letter sent by certified mail. Each step in the process costs both time and money. You incur all the costs, and the banks profit from the easy money.

Solution. Offer alternative deposits.

How it works?
Resident (principal) buys a surety bond, that assures the owner that the resident will fulfill his obligations to the owner at the end of the lease term. If resident leaves a damaged apartment, or leaves with out paying the last month’s rent, the surety will pay the owner on behalf of the resident. The surety will then seek reimbursement from the resident.

The one-time, non-refundable premium is paid by the resident at lease signing and remains in effect for as long as the resident lives in the apartment.

Residents benefit as well by keeping their cash. They can reduce their move-in costs and find better uses for their money when they need it most. Imagine how much traffic you could generate if the headline to your ads read, “No Security Deposit.”

Leasing promotion ideas

• Include renters insurance in the rent

• Pay for instillation charges for the internet. Or, offer free wi-fi in the building.

When you are advertising a vacancy and potential tenants call inquiring about the apartment you should be prepared. When on the phone, don’t just give price and hang tell them the strong points on why they should rent. read more…