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5 key questions to ask yourself before hiring a property manager

We have shared tips for hiring a property manager and responsibilities of a property manager. We thought it best to cap this off with an article on whether you need a property manager in the first place.

The truth is that not all property owners actually need a property manager. As an investor in real estate, you must recognize that every expense you incur hurts your bottom line. In order not to affect the finance bit of your investment, do not take in unnecessary costs. One of the first unnecessary cost may be hiring a property manager.

Here are the 5 key questions to ask yourself before hiring a property manager.

 

#1 What is your level of experience in property management?

If this is your first investment in real estate and you do not have a clue about property management, you need to quickly decide whether it is better to bring in help or learn on your own as you go. Both have pros and cons but ultimately the choice is yours.

 

#2 Does the number of units you own warrant a property manager?

This is a critical question to ask because it has a direct financial implication on your bottom line. If you have many units, it makes sense to hire a manager to help run things but if you have just a few that you can manage on your own, do not take in unnecessary expenditure.

 

#3 Can you really afford a property manager?

Before you decide on whether to hire a property manager, you must crunch the numbers to figure out whether your finances can afford to sustain the costs of a property manager. In most cases, their fees usually range between 4 to 10 per cent of your property’s gross income per month. Ensure the math works in your favor.

 

#4Are you in a position to manage your property?

This is a question of time. Most people with real estate investments tend to have a full-time job somewhere else. Therefore, considering that property management is an almost fulltime gig, it is important to assess whether you are in a realistic position to manage your property. If not, it makes sense to hire someone to do it for you.

 

#5 Are you ready for the liability that comes with a property manager?

You must always keep in mind that you are giving your property manager the authority to make decisions on your behalf, meaning that even mistakes they make will be made on your behalf. Some such mistakes can end up costing you dearly both legally and financially.

The decision whether to hire a property manager must be clearly thought out as it is not a decision to be taken lightly, so don’t rush it.

We trust this information will help you make a more informed decision.

These are the main roles and responsibilities of a property manager

In our previous post, we shared tips on getting the best property manager for your real estate investment. We have decided to follow this up with a piece on some of the roles and responsibilities of a property manager.

As we have established previously, a property manager is basically the person or company that will handle the day to day management of your property. This could be a single or multiple homes, an apartment complex or a business premise.

The roles and responsibilities of property managers generally vary depending on the terms of their management contract. Here are some of the main roles and responsibilities.

 

They are responsible for the rent

When settling on a property manager, you have to know that they will be tasked with the responsibility of setting,collecting and adjusting of the rent being paid by your tenant. These are mainly tasks that will be influenced by market conditions and legal requirements therefore your property manager needs to always be up to speed.

 

They are responsible for the tenant

The tenant is the main and most customer because he/she is the one who pays the rent thus guaranteeing you an income therefore, their needs must be effectively addressed. This becomes the day to day responsibility of your property manager. These tasks will include finding and screening tenants, handling leases, tenant complaints, emergencies, move outs or evictions.

 

They are responsible for maintenance of the property

The tenant pays for the premise diligently therefore, all efforts should be made to ensure that the property is always in a good condition. This becomes another responsibility of the property manager. They are supposed to ensure that all utilities are in good functional order, and ensure regular as well as emergency repairsare done in the house.

 

They are responsible for taxes

Adhering to taxation regulations is very crucial in real estate therefore it is important to have a property manager well informed in the finance bit specifically taxes. They are mean to offer the property owner assistance in filing taxes for their property or filing the taxes themselves.

 

They are responsible for the legal aspect

Here, by legal aspect we mean the knowledge of landlord-tenant laws. Your property manager has to have a proper understanding of state as well as national laws when it comes to handling tenants, leases and safety standards.

 

They have a supervisory responsibility

In the event a property owner has hired other employees to work on the property such as security personnel, a concierge or cleaners, it is the responsibility of the property manager to supervise and ensure everyone is doing their jobs well.

These are just some of the roles and responsibilities and as we earlier mentioned, it usually depends on what has been agreed upon on the management contract.

 

info3 - These are the main roles and responsibilities of a property manager
Infographic by: www.appfolio.com

Real Estate – 5 tips for finding the best property manager

If you have been following our previous posts, you have established that real estate investment is a fulltime job. This is not something you can do on the side, you need to have someone doing it for you or with you.

At some point, you will need to hire someone who will be responsible for managing your real estate investment and this is where a property manager comes in handy. This is basically the person who will be making the critical decision about your property on your behalf, decisions that have a financial implication on your bottom line.

Here are 5 tips for finding the best property manager.

 

You can search online for property managers

The internet is usually a good resource for information about real estate. A number of property management companies are listed on various websites complete with reviews. This is always a good starting point in your search for a manager for your property.

 

You need to get referrals from trusted sources

A property manager can either be an individual or a company and this means that they have a track record which can be easily retrieved by asking around. It is a good idea to consult realtors and other property owners in the vicinity of your property to get referrals.

 

Find out more about their current work

Here is where real estate ads come in handy. It is advisable to pay attention to some of the ads they have running. Check for their quality in terms of level of professionalism, persuasiveness, reach and the different places their ads have been places. Also take time to talk to tenants in the properties they manage to learn more about the quality of their work.

Be sure to interview several managers

The interview process is probably the most important in that you get an opportunity to interact with your potential property manager. You need to interview several of them so that you can get to find a person with the right personality, experience and most importantly, one who shares your vision. At this point, you need to trust your gut and who you feel most comfortable with.

 

Do a proper examination ofthe management agreement

Once you have settled on your person or company of choice, take your time and review the management agreement. This agreement needs to define the roles and responsibilities of both the property manager and the property owner in a very clear way, leaving no ambiguities. It would be a good idea to let your lawyer go through the document.

There you go. We trust that with this information, you are well on your way to selecting the right manager for your real estate investment.

4 best flooring options for rental property

In real estate investment, when you own a rental property your goal is always to make financial gain from it. This therefore means that you need to invest smartly when it comes to renovations. Do not be too stingy or to extravagant.

Flooring is usually one of the most important aspects of renovating needed in a rental property as it enhances the look, personality and even value of the house. It is probably the first thing you notice when you walk into an empty house.

As you decide to do your flooring, you must factor in the rate of abuse the floor will be exposed to, your goal which is making money and the function of the room. Here are 4 best floor types to consider.

 

#1 The carpet option

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The beauty about carpets is that they have really good insulation which helps in cutting down on your energy bills and they also keep noise to a minimum. The downside is that they easily stain, can be difficult to clean and patching up when damaged can end up becoming an eyesore. Carpets are best for the bedrooms and living rooms but not a good option for kitchens, bathrooms and entryways.

 

#2 The Tiling option

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Tiles whether ceramic, porcelain or stone are a very good flooring option because they are easy to clean, water resistant and they are durable. They also come in a variety of price ranges hence can be done on various budgets. The downside is that tiles are not a good insulator, they have a tendency to crack, some types need polishing to maintain their look and most importantly, they require skill to install meaning an extra expense to you. They work really well for kitchens, bathrooms, basements and common areas.

 

#3 The hardwood option

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The beauty about hardwood is that it can last a lifetime if the quality of the wood is right, it gives you an option to refinish, and does not react to moisture changes if it was engineered hardwood. It is also relatively easy to clean. The downside is that it can be expensive, requires skill to install meaning an extra cost on you and it is susceptible to water and sunlight damage. It works really well in the living and dining rooms, bedrooms and offices. For obvious reasons, it is not good idea to install it in the bathroom.

 

#4 The lamination option

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The beauty about this option is that it is really affordable when compared to other options like hardwood, it is easier to install, and resistant to scratching. The downside is that it cannot be refinished, it tends to chip and has a much shorter lifespan in comparison to the other options above. It is a good option for the living, dining and bedrooms, and the office. It is however not recommended for the kitchen and basement.

There are many more options available but we thought these are the top options for you to consider.

As a real estate investor, it is always upon you to do your research, do the math and ensure the finance bit makes sense to you as this will guide your renovation options.

These are the advantages of investing in the suburbs

In some of our previous posts, we have mentioned that urban properties offer the best investment options. We would like to clarify however, that all investments are based on an investor’s ultimate goals.

In real estate investing, different investors have different intended outcomes. Some want quick cash, others want higher returns then there is an investor who just wants a steady flow of income. If you are the latter, then investing in a suburb is your best bet.

Here are theadvantages of investing in a property in the suburbs.

 

There is less turnover

Anyone who is looking to settle in the suburbs is looking for permanence therefore, as an investor, you are sure that a renter for your property will be there for the long haul. This means that you are highly likely to have a steady flow of rental income for an extended period of time.

There will be less wear and tear

Renters who sign a long term lease tend to develop some sort of personal connection with a house. Often, they will see it as a home thus take better care of the place. This is good news to an investor because it means your expenditures on repairs will be less hence more less constraints on your profit margin.

 

Homes have more value for money

Homes in the suburbs are priced better than homes in urban areas in terms of price per square foot. This means that you are likely to get a larger property at a lower price in a suburb hence more potential for a better rental income.

 

Homes come with outdoor space

The biggest perk about suburban living is that there is plenty of outdoor space. The same cannot be said for urban homes. This tends to make these homes more marketable.

 

There is a lower crime rate

Based on statistics, suburbs have a record of lower rates of crime when compared to urban areas. Considering that safety is a major concern for most renters, properties in suburbs then become more appealing.

 

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Infographic by: citadelnetinc.com

Access to peace and quiet

Suburbs are known to provide an element of peace and quiet which is a very welcome escape from the noise and hustle that is associated with city living. Some people are always just looking for peace of mind. This makes suburban properties appealing to some home owners and renters.

These are just some of the advantages, we believe there are many more.

We would love to hear from the suburban dwellers.

3 pros and cons of flipping property

In our previous post, we shared with you tips on flipping property. Well, it would not be wise for us to live it at that. As an investor in real estate looking to grow your finances through such a profit making venture, it is important to know that property flipping comes with a number of pros and cons.

Property flipping falls under the category of high risk, high reward investments. Just as you are likely to make a financial kill, you are equally at risk of losing it all. So before you decide to put your money in such a venture, let’s first look at the 3 main pros and cons.

 

The pros of property flipping

Let’s get right into it.

 

#1 There is a huge potential to make a veryquick profit

Property flipping is a quick money game. You get in quick and get out quick. If you get it right, you stand a chance of making some really good financial returns. That is what makes this a very attractive investment venture.

 

#2 You will gain valuable experience in real estate

When you decide to get into property flipping as an investment option, you are bound to gain a lot of valuable experience in the real estate sector. The idea is that you want to make your financial return quick so you invest a lot of time in learning all you can about construction, the local market, unanticipated costs and real estate in general. By the time you are done and you have flipped your property, your body of knowledge of the real estate industry will be tremendous.

 

#3 It is an opportunity to growyour network

When undertaking the venture of property flipping, you will end up creating very many new valuable contacts as this is not a venture you get into on you own, you have to work with others in the industry from realtors, building inspectors, insurance brokers, attorneys, contractors as well as other investors.

 

The cons of property flipping

Just as there are pros, there are also cons.

 

#1 The potential of losing money is high

This venture relies on everything going right therefore, if one or two things go wrong such as unanticipated expenses or change in the tax regime, you have the potential of taking a major financial hit.

 

#2 The property loses value pretty quickly

The major challenge with house flipping is that every day you are unable to find a buyer, the property loses value to increasing costs. As the owner, you have to pay holding costs therefore such costs eat into your potential returns thus making your property lose its value.

 

#3 House flipping is stressful

The process of house flipping is not for the faint hearted. The task of identifying and buying the right property, working with contractors, designers and realtors, and finally finding a buyer within the right time is a stressful period of time.

It is therefore upon you to weigh these pros and cons and decide whether it is all worth it.

We would love to hear your thoughts.

Here are 3 key tips to a successful house flip

Over the past couple of months, we have shared with you various insights on investing in real estate, specifically home properties, and how to identify the best ones.

Once you have acquired a property, the next step is figuring out how to add value to it with a view of making the most money in order to achieve a financial net return. This is where the term flipping comes in.

So, what does flipping a house mean anyway?

In simple terms, flipping a house basically means investing in buying a house with the sole purpose of selling it quickly and making a profit. Usually, this is not a long term play, it is more of a short term investment play.

We look at 3 key flipping tips below.

 

Ensure you buy the property at the right price

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The whole point about making an investment in real estate is to make profit when you finally sell. Flipping property applies the same principle. The idea is to buy the property way below market rate so that by the time you are done working on the improvements, you don’t spend too much of your money that takes the cost of the house beyond market rate. The less you spend on purchase and renovations, the more your profit margin. You need to do proper research to ensure you have all the financials well calculated before purchase. Only do it when the finance bit makes sense.

 

Be sure to get out quick

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House flipping is a short term play that aims at making the most profit in the shortest time possible. The longer you hold on to the property, the higher your chances of losing your investment. Seasoned real estate investors know that the property market at times can get very volatile. Property can dramatically lose value for one factor or another, you just never know when. So it is a good idea not to be too greedy. Once the value of the property gets to a number you are comfortable with, you better sell. Don’t seat around waiting for it to go higher so that you can make more. Things might actually take a turn.

 

Pick a team to work with wisely

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Often, a property flip is not something you will do on your own. You will need to work with a contractor or designer for the renovation work and a realtor to handle the quick sale. You cannot afford to go wrong here. You ought to pick a team of individuals you can trust, and those who know what they are doing. The costs incurred in this process also determine how the bottom line will look. This is a make or break decision.

Now you know. We trust you are better equipped for a house flip.

If you have any insights and personal stories to share about house flipping, we want to hear about it.

Real Estate – The top 6 websites with the best investment property

Knowledge is power, it goes without saying. This is true especially in real estate investment. The more information you have about properties, where to get them and how to get them, the better placed you will be to make the most beneficial and timely investment decisions.

Here are the top 7 websites with the best investment property listings. This is a list that will benefit both seasoned and newbie real estate investors.

 

#1 Craigslist (craigslist.com)

11 - Real Estate – The top 6 websites with the best investment property
Craigslist.com is undoubtedly one of the simplest ways to find property online. From the website, all you have to do is filter out the part of the country you wish to find a real estate property then go through the selection provided to find something that may be of interest to you. The site allows you to narrow down searches through simply keying key words, prices or even available deals.

 

#2LoopNet (loopnet.com)

12 - Real Estate – The top 6 websites with the best investment property
Loopnet.com focuses more on listing commercial real estate properties that are available for sale or for leasing. This particular website has a very extensive inventory of property that provide good investment options. One of the main benefit of this platform is that you can pick a target area and go ahead and make sales comparisons.

 

#3 Realtor (realtor.com)

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Realtor.com is an official website for the National Association of Realtors. This particular website gives you the option of millions of property listings from across the country owing to the fact that it is a compilation of hundreds of databases. The interesting thing about this site is that it gives you the option of searching for foreclosures.

 

#4 Auction (auction.com)

14 - Real Estate – The top 6 websites with the best investment property
Auction.com, just as the name suggests, is a platform that has a specific focus on listing properties that are on auction. These are all the auctions that take place in courthouses, on-site as well as online, and includes all properties from foreclosures, short sales, notes to luxury properties.

 

#5 Trulia(trulia.com)

15 - Real Estate – The top 6 websites with the best investment property
Trulia.com can be considered as one of the most user-friendly real estate websites available. The site allows you to search for property through keying in what you want to search for. This site has an extra feature in that you can see statistics such as school and crime displayed alongside the property you searched for as well as market trends.

 

#6 RealtyTrac(realtytrac.com)

16 - Real Estate – The top 6 websites with the best investment property
Realtytrac.com is a site with a specific focus on properties that are on foreclosure. The site allows you to make searches based on the latest listings countrywide. Through the site, you can find additional information such as how to buy foreclosures as well as statistics on foreclosures.

Be sure to check them out and be sure to share your reviews.

5 ways to identify a home for sale with investment potential

It is usually a great feeling being a landlord, especially if your property is bringing in a good and consistent rental income. This is usually the case if you managed to invest in just the right property at the right place and at the right time.

Here are 5 ways to help you make better informed investment decisions when it comes to buying a home as an investment.

 

#1 Urban areas are a good place to start

When it comes to real estate properties, the closer you are to amenities, infrastructure, schools, and so on, the faster the property value will increase. It is therefore advisable for you to look for homes in urban areas if your goal is to sell it later.

 

#2 Homes in a school district have an added advantage

Often, most potential renters are people with families, specifically kids that are still in the school going age. Therefore, properties that are within a school district are in demand. The numbers also indicate that renters would be willing to pay extra for a home that is close to a school district. As an investor, you need to take an extra step to find out the ratings of the schools within the district you would intend to purchase the home as this is crucial.

 

#3 Be sure it is a property you can rent

Many investors in homes have ended up very disappointed after finding out that they cannot rent out their property. In various places, there might be zoning laws or even homeowners’ associations that have put a restriction on rentals. It is therefore important to do your homework before signing on the dotted line.

 

#4 Find out how vibrant the job market is

Jobs go hand in hand with purchasing power therefore as an investor looking to buy a home, try and find out how the job market is in that particular area. Availability of jobs means there is an availability of renters ready and willing to pay for your property.

 

#5 Ensure the property will require minimal landscaping

As a rule of thumb, when you are planning to invest in a home, you should ensure that the property is not high maintenance as this will eat into your net returns. Generally speaking, you cannot count on the fact that you will get a tenant passionate about lawn mowing or gardening hence most of the costs of maintaining the landscape will fall on you.

We trust this will be helpful information for all budding investors in home ownership.

Let us know if you have any additional ideas.

 

info1 - 5 ways to identify a home for sale with investment potential
Infographic by: visual.ly

Here are 4 ways to finance your real estate investment

Before deciding whether to invest and what property to invest in, it is important to know how you are going to finance your investment. The method you use to finance your real estate ventures ultimately determines your net return.

Here are four ways you can finance your real estate investment.

 

#1 Financing using your cash

With cash, an investor can significantly save up on interests charged on other financing options and maximize the return on investment. If you can, it is advisable to invest using your own cash. If you think of it even in terms of risk, it is better to lose your own cash than to lose someone else’s cash. The latter means you are left with a debt which you have to pay off. In addition, when you have cash, your offers are accepted much faster by the seller of the real estate property.

 

#2 You can opt to turn to traditional lenders

Many real estate investors have been known to opt for traditional lenders as the option to finance their ventures. The most common options they go are FHA and traditional loans. Investors prefer these options because they have traditionally attracted lower interest rates in comparison to other financing options. The main thing to keep in mind is that lenders here often have strict conditions attached to their financing.

 

#3 You can opt for hard money lenders

Hard money lenders are primarily private businesses or individuals who offer loans to potential investors. This loan can be in form of a short-term financing which is often at a higher rate when compared to banks. For this option however, you need to be careful because the lenders don’t conform to standards as compared to banks.

 

#4 You can opt for private money lenders

Private money lenders are almost similar to hard money lenders however, the difference lies in the level of interest in working with you. Most private money lenders will want to see you succeed and pay them back therefore they are more interested in working with you. All that is required is for you to go by the terms of repayment agreed. Their interest rates are usually also very reasonable.

As an investor, ultimately the choice is yours. We welcome your take on this article.

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