Exit Strategies for the Property Investor

Posted on September 2, 2010 by LouisvilleGalsRealEstateBlog

 

One of the most important things any real estate investor needs to know when he buys a property is what he plans to do with the property or his “exit strategy”. As the saying goes, “You make your money the day you buy the property”. In most cases, it will be very difficult for any investor to make money on any property if he pays too much for it initially. Whether you plan to wholesale the property, rehab it and then sell it or do a little fix up and keep it for a rental, you need to know your exit strategy right from the start. You will also need different amounts of cash on hand for the different strategies. Here are some tips for choosing your exit strategy.

How Much Money Do I Need To Close A Deal?

How much money you will need will depend on your exit strategy as a property investor. It is always wise to have at least two exit strategies for the property to fall back on. The “exit strategy” is what you plan to do with the property after you have purchased it. Some are short term strategies, and others are long term strategies.

Exit Strategies for Property Investors

  • Buy, renovate and sell (short term).
  • Keep the property for a rental (long term).
  • Flip or wholesale the property to another investor (short term).

As a property investor, having more than one exit strategy gives you options. For instance, your plan may be to buy, renovate and sell the property. But if you cannot sell the house when it is finished, you could hold onto it and keep it as a rental until the market improved.  Taking the exit strategy one step further; it makes a difference in your renovation whether you plan to sell the house to a landlord or to a retail buyer (a home owner).  Typically a property investor wouldn’t put in granite counter tops and expensive upgraded cabinets in a rental home. Knowing your exit strategies is crucial when making an offer on a home. If you have bought the house at the right price you will always have options available should one exit strategy not work out the way you planned.

Wholesaling Tips 

This is definitely the strategy where you will need less cash. I almost never give the seller (the homeowner) anything down on a house. If they insist, I make a check out for $100.00 to the closing attorney I will be using to hold in escrow. Never, never, never give any money to a seller! It is money you will never see again.

I will usually do simultaneous closings. While this is not allowed in some states, it is a common practice where I live and work and most of the property investors make use of this practice.  The first transaction where you buy the house from the seller is called the A to B transaction.  The second transaction is where you sell the house to your buyer, and this is called the B to C transaction. In a simultaneous closing, the B to C transaction funds the A to B closing. It’s a great feeling as a property investor to go to a closing with no cash in your pocket and come home with a big check. That is why I love wholesaling so much. Wholesaling is a strategy that all property investors need to lean whether you are flipping properties or are using buy and hold strategies. Wholesaling allows a property investor to make big chunks of cash that he may then use to invest in his rental property.

Buying Bank Owned Properties or REO’S 

If you are buying a house from a bank they will almost always require you to give them an earnest money deposit. Typically they will want about $1000.00. There are however, some banks that require you to put down a percentage of the purchase price.

In most cases, a property investor will not be able to do a simultaneous closing when purchasing a REO property. You will have to actually close on the property before you can re-sell it especially if it is an FHA loan. However, there are some exceptions to this rule. In my area we have some local banks that are investor friendly. If the loan is being held “in house” they will actually fund these types of deals between two property investors and allow double closings or simultaneous closings.

Buy and Hold Strategies

If you are planning to keep the house for a rental, you can expect to put a percentage of the sale price down. Just how much will be determined by the market at the time you buy and your mortgage company. In today’s market, it is not unusual for the lender to want 20% down. Another thing to consider when making your offer is the interest rate you will be paying.  Even with a good credit score, property investors are charged a higher rate of interest than homeowners so you need to figure this in when making your offer. All of these costs will end up in your monthly mortgage payment.

Renovate and Sell 

If you are planning to renovate the property and then sell it, you will most likely want to contact an investor friendly bank (probably a local bank) for help with structuring this type of loan. They typically have loans that property investors can get for up to one year when doing rehabs. The nice thing about these types of loans is that after making your down payment, usually you will not need to make monthly payments. Interest will continue to accrue but you can finish the property, get it sold and then repay the loan in full. If the project takes more than a year, you will have to convert this construction loan to a regular 20-25 year type of financing. A word to the wise, get that renovation done in a timely manner!

Selling Your Home to a Retail Buyer

When selling your property to a retail buyer or a “homeowner”, you will always want to get a down payment. $500.00 -$1000.00 is typical for my area. When selling your house, be prepared that this strategy that will take longer than some of the other ones such as wholesaling.  When a property investor sells his renovated property to a homeowner they will most likely be getting a mortgage. In most cases, you will have a wait of several months to get everything lined up and to get the house to closing. What’s the upside to selling to a retail buyer? You will almost always make more money than when selling to another property investor.

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Making Offers Part 3

Posted on September 2, 2010 by LouisvilleGalsRealEstateBlog

 

How Do I Figure Out How Much To Offer?

If you ask half dozen investors how they determine how much to offer when they want to buy investment property, you will most likely get 6 different answers. There are so many things to take into consideration. Most all real estate investors either use or are familiar with the 70% ARV (after repaired value) way of figuring out a dollar amount for the offer. Using this formula combined with other criteria, is probably the most common way to they determine what their offer will be to buy any investment property.

Comps

The first thing that I do is to get the “comps” for the area. Comparable sales for an area or “comps”, tell you what the houses in that area are selling for.  I look at all of them, and I try to gauge if the highest comps are true values or is it just a fluke that they sold that high. Also, I will try to determine why they were among the highest selling prices.  Were the houses completely renovated? Did they have something that was larger or better than the rest? Maybe there was a finished basement. There are no shortcuts when you are trying to figure out what to offer to buy investment property.

The lowest numbers will almost always be houses purchased by investors. They may be distressed houses in need of a lot of work or they could be foreclosures. Either way, they are most likely not your true values for the neighborhood. However, they are very likely the amount an investor is willing to pay for a comparable house in that area. This is one thing I will use to gauge how much to offer. In looking at the ARV, I am going to be looking at the average of the middle group of houses in most cases. Crafting an offer to buy investment property takes a little practice.

 What Is the 70% Formula

The second thing to look at is the “70% of the ARV less repairs” formula. This very simply is the percentage an investor will be willing to pay for a house. If you are going to rehab the house your formula would look something like this:

If the after repaired value (ARV) of a house is $100,000 you take 70% of this number ($70,0000).  Knowing that the house needs $15,000 in repairs, you subtract this number and come up with $55,000. ($70,000-$15,000=$55,000) . This is the MAO or maximum allowable offer you can make to the seller. If you are a wholesaler you will need to subtract your fee from the MAO to get the new maximum allowable offer.  In any case, you must be able to use this formula when you buy investment property.

This is why it is critical to know what the house will actually sell for when the repairs/renovation is completed. Whenever there is any doubt about the ARV, plug in the lower number to be safe. The one thing you don’t want to do is to “hope” it will sell for a higher price and end up losing money on the house.

What Can I Expect To Make?

This is always the first question any investor asks himself when he wants to buy investment property. At first glance 30 percent may seem like a lot of money to leave for the investor. But, in addition to all of the repair costs which have been put into the formula, he will have other costs while the house is under renovation. There will be holding costs such as interest he may be paying on money used to fund the deal, utilities, insurance and lawn care to name just a few. One thing you need to know when you buy investment property, is that in most cases your homeowners’ insurance costs will be higher because the house is vacant during the renovation. The investor may also need to list the house with a Realtor and pay a commission when it is completed to get it sold. As you can see, the rehabber is not really going to make 30%.  He does however need to be compensated for the work he has done and the risk he is taking. Otherwise, there would be no point to buy investment property.

After looking at this formula, I will determine if there are any other variables I need to take into account that could impact the value of the house. Once I am convinced that I have included everything, I will be ready to make the offer.

Check back later for information on earnest money deposits, inspection contingencies, transactional funding, and more.

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Making Offers Part 2

Posted on September 2, 2010 by LouisvilleGalsRealEstateBlog

 

Where Do I Find Houses To Make Offers On?

 My market is like a lot of other markets. We have an active investors group with a lot of educated folks that earn their living as real estate investors. There is a lot of competition for really good deals when buying investment properties.

Using the MLS

Many of these folks have alerts set up on their phones or computers that notify them once or twice daily when new listings come out on the MLS.  In my area this is called the “hot list”. If a house hits the market that is really a great deal, it is not unusual to have two dozen offers on it in the matter of a few hours. When buying investment properties, I personally don’t like that much competition nor do I intend to get into a bidding war so I really don’t chase these houses.  I like to go where there is much less competition. If  I am searching on the MLS, I might look for houses with high DOM (days on the market) and ones that have big price reductions or discounts. If I can find a house that has gone past 90-120 DOM and one that needs a lot of repairs, there is a much better chance of putting a deal together not only with a bank but with someone trying to sell their own house.

Direct Mail Campaigns

One of my main sources of leads when buying investment properties, comes from my direct mail campaigns. I have done these for many years both in my real estate business and in my former business. There is a statistic that states that someone has to see your offer 9 times before they will buy. I don’t know if this is exactly the magic number for real estate, but I do know that success is in the follow up. I think this is where many investors go wrong. They send out a letter or a postcard or two, and then they just quit. I run my direct mail campaigns for varying amounts of time. When I am mailing to persons with estates to settle, I generally mail to these people for about 16-18 months. About 50% of  these houses that I purchase are bought after 1 year of mailing to the person settling the estate.  For absentee owners, I have a continuous campaign going. The tough job is to keep the list “clean” and updated. Things change for these absentee owners. They may not want to sell now, but they may be in a completely different place a year or two from now. When doing direct mail campaigns for the purpose of buying investment properties, you will always need to tailor your campaign to the market or individuals you are targeting.

Networking

You should tell everyone you know or come in contact with about your business. Tell everyone that your business is buying investment properties. I often get leads from friends and acquaintances. Get out in you community and network. Join a local business group and be sure to attend your local REIA (Real Estate Investor Association) meetings. Most all large cities will have a REIA Group where you can network with like minded people. The more people that know what you do, the greater the chances you will be the one they call when someone needs to sell a house quickly.

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Making Offers Part 1

Posted on September 2, 2010 by LouisvilleGalsRealEstateBlog

 Know Your Farm Area

First and foremost, when buying investment property, you need to get to know the areas where you will be making offers. Your “farm area” is the area where you intend to concentrate your marketing efforts. You can get a lot of this information from the MLS (Multiple Listing Service) by doing a search of all the homes that have sold in that area during a specific time period.

Another good way to find out the values of homes in a particular area, is to get in your car every Sunday and hit all of the open houses in your farm area. When I first opened my home inspection company many years ago, that is exactly what I did. I took a coffee mug full of “goodies” (a pen and pad of paper with my company name and logo, some chocolate, mints, a tea bag to make a cup of tea, etc) and gave it to the agent. I introduced myself when I arrived and spent a short time chatting with the agents. In the early years this really helped me to build my business.

Working With Real Estate Agents

You can use this same principal of going to open houses to meet with real estate agents when buying investment property. It will not only help familiarize you with the general area, but it will help you to determine what homes are selling for in your target area. A Realtor that works in your particular farm area is a valuable source of information when buying investment property. When you arrive, introduce yourself and hand out your business card. Let the agent know that you are an investor and that you are doing research in your target area. Ask them if they ever work with investors. If they do, ask them to add you to their list so they can give you a call when they have a house that might meet your specifications.

Agents get houses all the time that are in need of a lot of repairs or are just plain “junkers”. When a Realtor gets a call from a repeat customer that says they have a run down rental in a bad part of town that they have to unload, that agent just cannot say no to this person. They have to take the listing. The agent really doesn’t want to invest a lot of time and advertising dollars on this house to get it sold. If they have a list of people buying investment property that they can call and quickly sell the house to, it is a win-win for everyone. You get a great deal and they look good to their seller!  Agents have “pocket listings” all the time. “Pocket listings” are houses that the agent has just put under contract that has not even made it onto the MLS. It is a brand new listing. In most areas there will be a specified time during which the house must be entered into the MLS; this may be within 24 hours after the listing is received. Whatever this requirement is, there will usually be a short time period where the agent can simply call his or her “list” and try to get it sold. This saves the agent a lot of headaches not to mention that they will get the entire commission. Having an agent on your team that will let you know about “pocket listings” helps to feed your “buying machine” when you are buying investment property. Once again, it is a win-win for everyone.

Working with Landlords

Another thing I like to do when buying investment property to get a general idea of the market in that particular area, is to call on houses for rent. Knowing what a house will rent for in a particular area is invaluable to a real estate investor. If you are looking at buying a rental house and your estimated payment will be $700.00 dollars per month, knowing that they typical house in that area will only rent for $600.00 per month just saved you from making what could be a costly mistake. You have just learned that this is probably not the house to buy. Call a few landlords and see what the average house rents for in your farm area. A wise investor uses all the tools available to him that will help him make a sound decision when buying investment property whether it is to flip or hold as a rental unit.

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Lessons Learned As a Newbie Real Estate Investor

Posted on August 31, 2010 by LouisvilleGalsRealEstateBlog

I was having lunch recently with a fellow real estate investor that is just starting out. She was feeling like quite the failure as she was relating to me a story about an event that happened solely because she was inexperienced.  It was really a very funny story, but of course she didn’t think so because she was the one in the story.  My message to her was that if we are honest, as investors we all have a few stories we could tell.

Having this conversation with her reminded me of something that happened to me a few years back. I had been mailing absentee owners for a while, when I had a fellow call me several times wanting me to buy his house. The house was in a bad area of town and I really wasn’t interested. After calling me several times he finally said, “I will sell you the house for $3000.00. I am in California and I just need to get rid of it.” Well, that got my attention. I figured I could always sell a 4 bedroom, $3000.00 house even if it was in a less than desirable neighborhood so I agreed to take a look at it. The seller told me that he didn’t have a key, so I called a locksmith to go to the house and make a key. He called the seller for payment and told me where he had hidden the key.

I arranged to have a rather large male friend to with me to the house just so I would feel secure going into this particular neighborhood. His wife wanted to go on this adventure so we set a time where she could also make it. As it turned out we were running a little later than planned when we arrived at the property, and it was going to be dark in about an hour or so. I just wanted to take a quick look at the house and get out of there.

When we pulled up to the property, one of the first things we noticed was that all of the neighbors were sitting on their front porches. It was summer time and not many houses in this area had air conditioning so I didn’t think too much about that.  We walked to the right side of the house, looked under the appointed concrete block, and there was no key to be found. After looking in the general area, we determined that the key had already been stolen. All eyes were on us as we walked back to the front door of the house. Some of the folks were actually standing up looking at us by this time.

We walked up a couple steps to the front door. There was a large sheet of plywood just leaned up against the door. My big, strong friend leaned the piece of plywood back and we determined that the door was still locked. After having come all this way, we were determined to get in so we didn’t have to come all the way back down to this house. It was at that point that we decided to take a credit card to and try to open the door.  After carefully sliding the card in the crack by the door lock, the door popped open.  We noticed that the folks on the porches were all still watching us and chatting, and I was wondering if possibly one of them had called the police by now. You could tell this house, a big frame 2 story, had been vacant for a long time and needed a lot of work. I figured if the police pulled up, I could convince them that I had gotten into my Acura and driven to this area for the sole purpose of looking at this piece of run down investment property without too much effort. So, we went into the property.  I have to admit it was pretty scary in there. It was obvious someone had been living on a mattress on the floor at one time. There were clothes, papers, food wrappers and other trash everywhere.

Intent on looking at the house after going through all or this, I started toward the kitchen at the rear of the house. It was at this time that I saw the hole in the wall. There was a hole in one side of the house big enough to drive a car through.  I also realized why the neighbors were all looking at us trying so hard to get into the house. I have no idea why the locksmith didn’t bother to tell me about the side of the house that was missing.  The neighbors were probably laughing hysterically when we finally got the door open.

I have to admit, there were several lessons learned here as a newbie real estate investor.

-Always walk around the outside of the house before going into a run down property. One time the seller told me there had been a small fire in the house. He didn’t tell me the whole back of the house was destroyed and the house was scheduled to be torn down.

-This brings me to the second thing I learned that day. Always check for building code violations before buying a house such as this one. This house had over 20 building code violations and had incurred fines totaling over $13,000 that needed to be paid.

The folks at the building code office told me that it costs a homeowner somewhere between $10,000 and $15,000 typically to have a house torn down and hauled away. My advice to this seller was to donate the house either to Habitat or to the Fuller Center. Both of these organizations should be able to have the fines waived and the seller should be able to take a tax deduction instead of paying out a large sum of money.

I have learned that as a real estate investor these experiences are just part of the “learning experience” and that remembering these times can actually put a smile on our face when we are having a bad day or a ‘rough patch” in our investing business.

If you want to learn how to buy bank owned properties or “REO’s” without making all of the mistakes others have made, I have a great resource for you that can save you a ton of money not to mention a lot of headaches along the way. Check out this Ebook <a href=”http://bit.ly/9CvOmw” target=”_blank”>Flip This REO</a>

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Finding Motivated Sellers When Wholesaling Houses

Posted on August 31, 2010 by LouisvilleGalsRealEstateBlog

There are many ways to find motivated sellers when you are wholesaling houses. The one thing you will absolutely need in order to succeed in this business is a steady stream of leads. You will discover very quickly that your main job will be to find these motivated sellers that will sell you their house at a deep discount. To achieve the goal of having a steady stream of leads, you will need to have a marketing plan that you follow consistently.

One problem that real estate investors in particular seem to come up against is the “ebbs and flows” of leads due to lapses in marketing.  What I mean by this is that you tend to get behind in your marketing when you are getting a lot of calls and looking at houses. One day you look up and the phone has stopped ringing and you are back to square one. No leads! When this happens you crank up the marketing machine until you get overwhelmed again, and the cycle is repeated.
Where Do I Begin?

This answer is different for everyone. Direct mail campaigns have always been my primary source of leads when wholesaling houses. However, there are many other things you can do. I believe that having a combination of marketing activities brings the best results. Some of the things you might consider when looking for motivated sellers are:

1. Bandit Signs.

Bandit signs are those annoying signs you see put up on telephone poles that say “We Buy Houses”. Do they work? In general, I believe the answer is yes. Are they a pain in the neck to put up? Absolutely!

I believe the name “Bandit” comes from the way you feel putting up those signs. Most folks will go out either early in the morning or later in the evening when there is less traffic and therefore less chance of being seen. From experience, I can tell you that you kind of feel like a criminal that is trying not to get caught when attaching these signs to the poles. Having to pull a ladder out of the back of a pick up truck doesn’t help. For those of you that haven’t put up Bandit signs, you try to put them up high so someone can’t just walk up and pull them down easily. You want them to have to work at pulling down those signs. There is also a device that is sold for attaching signs to the poles that kind of looks like a huge staple gun. I haven’t tried it, but I’m almost sure it works better than a hammer and nails.

You also need to be aware of the “Bandit sign police”. Those are the folks that hate the signs and go behind you and take them down.  I might mention that it is also illegal in some neighborhoods to put them up. You might get a call or two, but in general they will just be taken down. I used to put them up early on Saturday mornings at busy intersections and around large department stores such as Wal-Mart, Home Depot, etc. You just need to put them up in neighborhoods where you want to buy houses. They should be located in high traffic areas where they will be seen.

2. Ads

Before the internet started to put newspapers out of the advertising business, you would see a lot of investors advertising in the local papers with “We Buy Houses” ads.  This type of advertising is very costly. While you still see some of those ads, the internet has pretty much replaced that form of advertising.

Craigs’ list is a good source of leads. I have gotten calls from Craigs’ list ads as well as other internet sites that you can advertise on. The main advantage to this type of advertising is of course that it is free so you can do it on an ongoing basis.

In my area, many of the small neighborhood papers that you once could place an ad in at a very low cost have simply gone out of business.

3. The MLS

The MLS or “Multiple Listing Service” can be a good source of leads. This is where Realtors list their houses. The owner of a house that has been sitting on the MLS for an extended period of time can become a very motivated seller at some point if he is paying two mortgages. If you don’t have access to the MLS, there are many online sites such as Realtor.com where you can search for the same houses.

The main advantage to having either direct access to the MLS or having access through a friend or business associate, is that there is just so much more information available to you. Much of the information that a Realtor can see such as the number of days the house has been on the market, is not available to you through other services. Realtors can also see the comments section of the listing. They will be able to know that the seller “must sell” or is “a very motivated seller”. Having access to this information is one of the main reasons folks wholesaling houses and other real estate investors actually become Realtors.

4. Attorneys

Attorneys, particularly ones that work in probate, bankruptcy or divorce, can be a great source of leads when you are wholesaling houses. One way you can develop a relationship with these folks is to get to know the attorneys that belong to your local REIA (Real Estate Investors Association).  You could also periodically send out a letter to attorneys in these specialties letting them know that you are an investor and you would be interested in buying distressed property from motivated sellers. Most of the calls I get from attorneys are about properties that would generally be classified as “needing a lot of work”.  Whenever I am marketing to probates, I send the letters to the attorneys if they are listed as the contact person.

5. Direct Mail Campaigns

For me, direct mail has been my biggest source of leads. You will need a list of names to market to. There are many different lists that you can buy.  I personally love marketing to absentee owners. These folks live in another area (probably another state) and they own a property in your town. For one reason or another, they decide that they want to sell the property. They can become very motivated sellers depending on their circumstances. Possibly there is a situation such as a divorce, illness, job loss or other family problem. However, most folks will tell me that owning an out of town property has just become a too much of a burden. They just want out of the “landlord business”.

You can use one of many list services to purchase your names, but I am able to buy an absentee owner list for a couple hundred dollars from my local PVA (Property Valuation Administrator).

In my area, probates are published once monthly in the newspaper. So each month, these names are added into my database. Buying properties from estates has been one of my largest sources of wholesale deals. Often times these are properties that haven’t been updated in 30-40 years. Many of them need a great deal of repairs. The heirs either don’t have the money to spend on the house, or they simply don’t want to sink their money into the house to get it back into shape so it can be listed. Either way, these are some of the most grateful motivated sellers that you will come across. They just want to be rid of this problem (the unwanted house).

I have ongoing direct mail campaigns for both of these groups.

Marketing Tips

They say that you have to market to someone for 9 times before you are able to make a sale. I don’t know if this is the magic number for real estate or not, but I do known that you will get most of your deals after sending to them letters or postcards consistently over a period of time. It is not uncommon for me to get a call from a seller after marketing to them for a year. This is true both for probates and absentee owners. Circumstances change and the degree of motivation changes for these folks over time.

The most important thing to remember is to market consistently. If you set up a system and follow it, you will be successful at wholesaling houses or any other real estate strategy that you decide on. No matter which strategy you pursue, you need those leads to produce motivated sellers.

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6 Tips for Staging Your Home

Posted on August 31, 2010 by LouisvilleGalsRealEstateBlog

Selling your home in today’s market can be challenging. Remember, when you finally get a buyer into your house to take a look, you only get one chance to make a first impression. You want to be sure to have your home in the best shape possible before putting it on the market. It is definitely a buyers market now and they can be very picky when it comes to spending their hard earned money. You can be sure they will be comparing your house to the other ones they are considering. Here are 6 easy and low cost tips for staging your home.

1.   Have a friend walk through your property with you. Take a look at everything in your house.  Be brutally honest!  Make note of anything that looks worn or is in need of repair.  Is your home up to date?  There are many low cost ways to spruce up your house and stage it so that it is more appealing to buyers.  

2.    Clean out all of the clutter. Begin with the closets. Store away out of season clothes, extra toys, and items that you will not need for a while. Prospective buyers will definitely look in all the closets and you want them to notice how spacious they are. Next you need to go through each room and de-clutter. Clear off the counter tops in the kitchen and baths.  It is a good idea to rent a “Pod” or a storage area while your house is on the market so that you can completely clean out your basement, garage, and remove anything else you will need to store. The last thing you want perspective buyers to think is that there is not enough room for storage in your home. 

3.   Thoroughly clean of all the rooms. Give everything a good scrubbing. Make sure your windows sparkle. Pay particular attention to the bathrooms and the kitchen. Take the time to calk and do minor maintenance as needed. Also, take a good look at the walls.  If at all possible, it is recommended that you paint all the walls a neutral color.  Buyers may not love the bright colors you have used throughout the house. Be sure all the carpets are clean. If the carpet is stained or worn out you may need to replace the carpet for a quick sale.  

4.   If you can, update light fixtures, faucets and any broken or missing hardware such as door knobs, towel bars etc. Be sure to replace all burned out light bulbs on the interior and exterior.  You want your home to look bright and inviting, not dark and dingy. Add fluffy new towels in the bathroom. Fresh flowers and scented candles are a nice and inexpensive touch to any room. 

5.   Look at your furniture arrangement. Can you move easily through the room? Does the room look open an inviting?  If not, consider rearranging or even paring down the furniture that you have.  Remember that you want your home to look uncluttered and spacious. Make sure that the function of each room is clearly defined. 

6.   Last but not least, “de-personalize” your home.  Remove photographs and other personal mementos while the house is for sale. You want your buyers to be able to picture themselves living in the home.

Simple home staging can pay big dividends. Homes that have been staged tend to sell more quickly and for more money. Having your home as “move in ready” as possible will put your house at the top of the buyers list every time.

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10 Tips for Being a Good Landlord and Having Happy Tenants

Posted on August 31, 2010 by LouisvilleGalsRealEstateBlog

 

1.  Educate your tenants when they first move in.  Your tenants can’t follow the rules if they don’t know the rules.

2.  Take care of repairs quickly. If you don’t have a maintenance staff, make sure you have reliable trades people that can fix problems quickly.

3.  Contact your tenants once a month.  Ask them if everything is ok. You can also make it a habit to stop by once a month to change the furnace filter.  By doing this you monitor the condition of the property.  It’s much easier to correct bad habits when they first begin.

4.  Let your tenants know how they can earn “rewards”.  Have a policy where they can earn things like a carpet cleaning or the installation of a ceiling fan for signing another 1 year lease. Make them want to stay in your property.

5.  Give your tenants periodic gifts as a way to show appreciation.  Something as simple as a birthday card or a $25.00 grocery store gift card around the holidays will go a long way toward having happy tenants.

6.  Make sure the grass is cut when they move into their new home. They have enough jobs to do when moving. This is something they will really appreciate.

7.  You can order a roll of address labels for just a few dollars to give them when they move in. They probably haven’t thought of doing this.

8.  Include a change of address booklet in your move-in packet.

9.  Send them a letter after they have moved in telling them how happy you are that they are your new tenants. Let them know once again how they can contact you in if there is a problem.

10.  “Train” your tenants to pay on time.  They will get the idea quickly that they have to pay on time if they get a 7 day letter immediately when they are late on the rent. A happy landlord is more likely to be a good landlord.

As a landlord, taking care of your responsibilities quickly and efficiently benefits everyone. Being a good landlord typically results in having happy tenants. Simply setting the stage for a good experience at the very beginning assures them that they have made the right decision moving into your rental.

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Buying Investment Property. Pocket Listings, Working With Landlords and More

Posted on August 31, 2010 by LouisvilleGalsRealEstateBlog

Pocket Listings

 

Agents have “pocket listings” all the time. A “pocket listing” is a house that they have just put under contract that has not yet been entered into the MLS.  There usually will be a specified time during which the house must be entered into the MLS; this may be within 24 hours after the listing is received or possibly a different time period depending on where you are located. Whatever this requirement is, there will usually be a short time period where the agent can simply call his or her “list” and try to get it sold. You want to find a way to be “first” on that agents list of people to call. Why would the agent want to do this? Because it saves them lot of headaches not to mention that they will get the entire commission. When you are buying investment property, having an agent on your team that will let you know about “pocket listings” will help you feed your “buying machine”. Once again, it is a win-win for everyone.  

 

 

Working with Landlords

 

When buying investment property, another thing I like to do is to call landlords in the area. You can just drive around your farm area and call the numbers on the for rent signs. This helps you to get a general idea of the rents in that particular area. Knowing what a house will rent for in a particular area is invaluable to a real estate investor.

For example, if you are looking to purchase a rental house and your estimated house payment will be $700.00 dollars per month, knowing that the typical house in that area  only rents for $600.00 per month is huge. Having this information just saved you from making what could be a costly mistake. You will most likely want to pass on this house if your intention is to add it to your rental portfolio. Wise investors use all the tools available to them. These tools help them make a sound decisions when buying investment property whether they intend to flip the house or hold onto it for a rental unit.

 

 

Networking

 

Being skilled at “networking” often makes the difference between being successful and dooming yourself to the “struggling investor” category for what seems like an eternity. Here are a couple of tips for successful networking.

-Don’t camp out in a corner of the room or spend the entire time talking with friends or people you already know. 

-Introduce yourself to folks in the room you don’t know and ask them what their business is. Show a genuine interest in what they have to say. Ask questions about their business.

-Resist the temptation to talk about yourself. This is not the time to try to sell yourself or you product or service.

-When they do ask you what you do, be prepared with a short 60 second “blurb” that clearly states what business you are in and the benefits of your product or service. Just let it go at that unless they ask for further information.

-Finally, exchange business cards and let the person know that you will be happy to assist them in any way possible in the future.

When  buying investment property, you want to be able to benefit from other peoples experiences both good and bad. Networking with those folks that have already been where you want to go can shave years off your leaning curve. If you are lucky, you will make a lot of great friends and pick up a couple of mentors along the way.

Check back for more tips on buying investment property.

Posted in Building Your Team, Investing In Real Estate | Tagged , , , , | Leave a comment

Carbon Monoxide Poisoning

Posted on August 24, 2010 by LouisvilleGalsRealEstateBlog

 

If you are a landlord or if you are rehabbing a house to resell, the safety of the people that will eventually live in the house is always a major concern. That is why it is so important to be certain that your furnace and other gas fired appliances operate correctly. If these items are not working property they may put out carbon monoxide. This can be deadly to the inhabitants of the house.

Carbon monoxide is a colorless, odorless, tasteless gas produced during incomplete combustion of fuels.  It can escape from any fuel burning appliance, furnace, water heater and fireplace used in the home. 

Low levels of carbon monoxide poisoning are often mistaken for common flu symptoms.  These symptoms may include mild headache, nausea and dizziness.  High levels of carbon monoxide may result in serious illness or death.

To enhance the safety of the inhabitants of the home, you should install a carbon monoxide detector in the areas around any gas fired appliances.  The detector sounds an alert when carbon monoxide is detected.  They only cost a few dollars to install and every home should have them for safety reasons.

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