The article Five Benefits Of Using A Good Property Management Company was first seen on: Red Hawk Property Management Website Blog
If you are a landlord that would like to avoid dealing with monthly rental income and expense management or would like to eliminate weekend maintenance calls, read on. The right choice for you may be hiring a property management company to handle your real estate investment. Of course, they are going to take a cut of the revenue from your rental, but they are also going to free up your time and much help to streamline your business.
It is essential that you interview several companies and that you take your time making the best decision. The truth is that not every property manager will be the best fit for you, so taking the time to find the right choice is time well invested. The truth is that when you find the correct choice, your days of managing your rentals will indeed be over.
Take A Look Here At Five Benefits That Will Be Provided By The Best Property Management Company For You:
1) Screening Out Problem Tenants
The fact of the matter is that experienced property managers see hundreds of applications, so they are well versed in spotting any potential red flags. Your chances of landing that reliable tenant is vastly improved by their experience and care in these matters.
2) For Tenant Concerns, They Act As The Point Of Contact
When there is any breakdown of your property, it is not always an easy task to rush over and evaluate the situation. This is even truer when the property is not near where you are. A property manager can and will address whatever the problem might be and when necessary, get a service provider to take care of the problem. Still another significant advantage the property manager offers is handling the ever complaining tenant who seems to have some problem that requires attention continually.
3) Decreasing the turnover of tenants
Renters are always kept feeling happy and satisfied by competent property managers. They take care of any problems or issues when they come up and are readily available to address all concerns. When the tenant is happy, they are far less likely to seek another dwelling and are also more accepting of rent increases which are reasonable.
4) Making Certain Rent Is Paid On Time
The property management company is motivated to keep the rents coming in when due since they deduct their fees from the money coming in. The property management company will be there to enforce the terms of the agreement if for any reason the payment isn't received when it is due. If there is a consistent problem with the rent being collected when due, the property manager has the money to handle the situation properly.
5) Lessening Your Rental Headaches
You are going to have fewer complications and issues to have to deal with when you have a property manager handling the daily management of your property. This allows you to enjoy a better quality of life and far less stress.
The bottom line is that there are so many definite advantages to securing the services of a competent Phoenix property manager and it is well worth whatever the cost may be!
Red Hawk Property Management
Single-family homes continue to be a significant investment and the areas surrounding the Phoenix area are especially attractive investment opportunities. Flipping a house is one way to earn income, but moving toward renting is a whole different path, and when you take that route you need to consider how you'll manage the property or properties seriously. Finding the right property management company can be a daunting task, but with these tips, it should make things easier for you to get a handle on.
1. Make sure the company knows the local market
There's nothing more frustrating than working with a company that has no clue about your market or location. They don't cater their decisions toward what the local market and economy look like and do a poor job in using other people's data in making their decisions. Property management is no different, and it requires knowing the local market to secure the best deals and best contracting opportunities. It also requires that the company know enough about the local market to be able to promote it, not from the 50,000-foot level but the street level and it takes a local to know the best things about the locale.
2. Planning with the property manager
The property management company should have a manager who will set up a meeting and go over all the details with you. This can't be something done remotely; it needs to be on site and in person. The game plan needs to be discussed and agreed to by all parties. Budgets, goals and long-term vision need to be explained and detailed, and a plan needs to be put in place to achieve these. Going into this without a plan is like wandering through the desert with a blindfold.
3. Make sure your property manager provides excellent customer service
Customer perception is a huge part of any business, so why shouldn't it be with your property management company? When you select a property management company, you're counting on someone being there to answer the phone or respond to issues quickly and be able to take care of things 24x7. With all the available communication channels today, there's entirely no reason why a property management company would not be able to handle 24x7 communication.
4. A property management company is responsible for accounting
Would you trust an accountant who kept loose scraps of paper and notes scattered about his office? How could you possibly trust a property management company who doesn't show up with reliable accounting and bookkeeping processes and procedures firmly in place? Demand that you see how they manage their expenses and accounting. A walk-through of their process is not asking too much.
5. A property management company should be praised by its tenants
In World War II, the allied POW camps went out of their way to the outside world to appear as if the prisoners were content and well taken care of, going as far as pushing out certain prisoners to provide a grand image. You need to make sure your property management company is honestly taking care of its tenants. You should inquire with tenants and look through the turnover rates. Happy tenants are tenants that will continue to provide you income.
It is a huge decision, hiring someone to manage your investment and so it is essential you do the necessary research before committing to one. Just some of the vital qualities to look for are honesty, organization, and experience. Take a look now at six suggestions that will be of great help in finding your property's best fit.
From Different Sources, Get Referrals
Word of mouth is tip number one to find a property manager. You can get some great options by talking to other property owners in your area and also by talking to local real estate agents in the community.
Getting a list of property management companies and property managers that they are currently using or have previously used can be of great help. It is also important to ask about any problems or issues they may have had, as well as just what they have been happy with.
Keep in mind that a referral can be biased. This makes it vital that you seek out various sources of referrals. If you continue to hear multiple times the same thing regarding a property manager, chances are far more likely that it is indeed true.
Conduct An Online Search For A Property Manager
Doing your research online is so important. There are websites like AllPropertyManagement and T-Rex Global that permit you to plug in the location of your property, and it's size, and they will then generate a listing of property management companies that will be in that area.
You will also want to go over a company's reviews on sites such as https://www.yelp.com/about and even Facebook, before making any arrangements to interview a property manager.
Still another principal source is the Better Business Bureau where you can see if a company has complaints filed against them and also just what kind of a rating it has.
Very often, conducting this research will allow you to come across some of those companies you may have also received referrals, and this will give you, even more, information about them.
Look At Their Current Work
Take a look at some of the current rental ads being run by the property manager. Are they compelling, professional and free of any statements that are discriminatory? Do they place ads in a variety of different places or just on free sources such as community bulletin boards and perhaps Craigslist?
Look at the actual properties that are managed by them. Are they well-cared for and clean?
Speaking to the tenants that are currently managed by them can be an excellent source of revealing information. The tenant's opinions are so important because property management is about keeping both you and your tenants happy and satisfied.
Do the tenants feel as if any complaints they might have are being adequately addressed? Just how long does it take for a maintenance issue or a repair to be completed? Is the building overall noisy? Is the tenant considering signing a new lease? If not, just why? All of these inquiries will give a clear indication if the tenants are pleased with the performance of the management team.
You should also ask to see an example of the monthly report furnished to you by the management company.
Several Property Managers Should Be Interviewed
Interviewing several different property managers is tip number four. It is just so important that you take the time to do this so that you can come up with the one that you are the most comfortable and at ease within trusting the management of your property.
You will quickly be able to separate the bad from the good when you interview several different potential managers. You will also quickly see those with a solid plan and real knowledge of just what they are doing. That property manager who is consistently placing tenants and within a short period seeking to evict them is apparently one that is just not good at screening them.
You also want to find the candidate who is not dismissive of your questions, but instead is receptive to them. The truth is that if during the interview, they are not putting their best foot forward, things are only going to go downhill if permitted to manage your property.
You should ask questions about their experience and education, fees charged, services provided and whether or not they have a good understanding of the tenant-landlord law.
Check Out Their Certification And License
The majority of states require a property management license or a real estate broker's license be held by a property manager/management company to show vacant premises. To see if their brokerage license is active, you should check with the Real Estate Commission of the state in question.
Also, you will want to know if the manager or company is certified with a trade organization like the National Apartment Association(NAA), the Institute of Real Estate Management(IREM), the Community Associations Institute(CAI) and the National Association of Residential Property Managers(NARPM). Certification is offered by these companies after a robust training program has been completed. Their going through this process will indicate to you that they are indeed committed to correctly handling their job.
Of course, your instincts should also be trusted, making it so necessary that you are comfortable with the choice that you ultimately make.
Look Over Their Management Agreement
The responsibilities of both the property manager and the property owner should be defined in the management agreement.
You will want to pay close attention to the sections on provided services, responsibilities of the owner, extra fees charged, hold harmless clause, compliance with fair housing laws and any reason for cancellation.
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The article Arizona Cities Seeing The Greatest Real Estate Growth In 2017 is available on: Red Hawk Property Management
With the addition of approximately 217,000 new residents, the state of Arizona is one of the country’s fastest growing states. The new growth has resulted from an enormous economic turnaround, specifically the opening of the Apple plant in the Phoenix suburb of Mesa. There are an estimated 10,000 places available for new residents and homeowners, making the silicon Desert the place to be.
Are homes available? What you want to look for when analyzing areas for relocation and availability of homes, check ownership rates. A high ownership rate leads to a higher overall score, whereas a lower one shows high competition and more options for renters over buyers.
Can you afford to live there? To determine whether a place is affordable you want to use monthly homeowner costs and median home values. The higher score in our report go to high median homes with low coasts of living.
Is the area growing? To answer this, population growth will tell you if an area is attracting new residents. A thriving local economy will usually bring in more home buyers.
Using the above measures, the best places to live in Arizona are provided below. Each of these towns are ideal if you are looking for a place to buy a home. Evaluate what you are looking for regarding incomes, median house values and area growth you can determine which town is a better suit your needs.
With a population jump of 19.6%, this area located in the Gila River Valley is a top spot for relocation. More that 805 of homes are owned versus rented, and the median cost for a house is $132,000. Hosting the popular Harrah’s Ak-Chin hotel and casino, the town features a great historical collection of the Ak-Chin people. The casino is the largest employer in the area. The community additionally offers the Ak-Chin-Him-Dak Eco Museum which showcases stone tools, arts and crafts and jewelry.
2. San Tan Valley
This suburb in the Greater Phoenix Area had the highest population spike has not yet been incorporated as its own town, but did get its own postal code in 2009. With a median home value of $126,300 and an ownership rate of 74%, this area is quickly becoming a popular place. There is potential for growth here and the low cost of living makes it ideal for first time home owners.
3. New River
The residents here earn a monthly income close to $7,185 with 28% of that going towards home ownership costs. Situated to the north of Phoenix, the average home value is $312,200 and it has the highest ownership rates (90.7%). Overall the town has seen 11.23% in population growth. The attraction to this area comes largely from the low numbers of rentals, showing this is a preferred place for those looking to settle and purchase a home.
A more technologically advanced area located south of Tucson; Sahuarita has median incomes around $5,700 and a relatively low cost of living. The majority of homes in the area are owned rather than rented. Most employment stems from the huge organizations located there such as Raytheon which is an international defense and aerospace company and the University of Arizona Science and Technology Park.
5. Queen Creek
Thanks to local festivals such as the Roots n’ Boots Rodeo and the American Heritage Festival, this area saw a boost in population numbers of 12.1%. One of the highest household incomes of the places on the list, averages for the area is close to $7,343 a month. Most homes are owned and cost of living is higher than other places on this list, but is still relatively low. Residents can enjoy an amazing Parks and Recreation department, with programs and activities for all ages and coming soon will be a new 14 screen movie theater.
Buckeye is located in the Maricopa Valley and supports slightly higher number of renters than the previous location; however it is still primarily homeowners. This suburb of Phoenix has not had as large of population increases either, but has a very decent median household income and low cost of living. The town is famous for its old times western theme and annual Buckeye Days festival and the Helzapoppin’ Rodeo.
A relatively young city, when compared to most of Arizona towns, the population soared by 2012 to reach a little over 34,000, which is a big jump from its previous 1977 count of 1,500. Although the city is not very big, it has its own airport and a decent monthly income close to $6,000. There is definitely room for growth here and the cost of living is low, which makes a potentially ideal spot to settle and buy a home.
A relatively small town of 23,000 residents, this community is still a very busy one and offers a lot to its members. The cost of living here is slightly higher than others on the list, but monthly median incomes are also a little higher. You can enjoy the veterans’ memorial, Liberty Bell Park and the Splash Pad as well as the beautiful 64-acre community park hosted by the Community Council Parks and Facilities.
9. Green Valley
30 miles south of Tucson, there has not been a lot of growth here in regards to population and the median monthly income is significantly lower than the other places listed. Most of the residents are employed in the local copper mines or the Smithsonian Institution’s Whipple Observatory (located in the nearby town of Amado). The lower growth rates, incomes and home values ($182,000 on average) are most likely due to this largely being a retirement community.
The original land for this town was bought by Paul Lichfield (Goodyear Tire and Rubber Company). Affordable to live there with decent incomes and steady growth rates, the town has an excellent economic standing for potential homeowners. Jobs are provided mostly by Macy’s and Amazon fulfillment centers as well as the popular food production companies of Snyder’s of Hanover, Del Monte and Poore Brothers. This town is great for baseball fans, as it hosts both the Cincinnati and the Cleveland Indians spring training camps.
If you are the owner of a rental property, it is likely that you have considered the liability associated with that. If you have real legal concerns, it is best to speak with a lawyer. There are, however, simple tactics that you can use to help protect you and your assets.
Purchasing rental properties is widely considered one of the best investment choices a person can make. Usually, you can buy them below market value which opens up the potential to make real money. There are real risks associated with being a rental property owner, such as being sued for money or because of injuries occurring at your property. Whether a freak accident occurs or someone gets hurt from landlord neglect, the risk of injury is a real problem facing owners.
As an owner, you need to consider if the returns you make on the property are worth the risks. Even if it is worth it, there are still precautions you can take to protect yourself. If your returns are decent, then you can afford to take additional precautions. If you are more limited in your options, it is best to consult with professionals to get the best advice on what coverage and precautions you should take.
Use a property manager
Managing your properties or someone else's increases your liability. There have been cases where an evicted tenant hurt themselves while moving out and turned around to sue the property manager. The tenant claimed that the landlord had broken his TV and left the glass in a window well. When he fell in the window well while moving, he claimed the injury was the fault of the landlord. Tenants can make a lawsuit out of almost anything, so it is best to be prepared.
Even after lengthy court cases and a verdict in favor of you, there is still a valuable lesson to learn. It is critical for landlords to have insurance; with liability insurance to cover issues like this the legal fees would have been covered. Talk to your insurance agent about getting liability coverage. To be a property manager in most states you need to be a licensed real estate agent first, and they require E and O insurance, so this is a good place to start.
As a property manager, you need to be aware of local and state ordinances. Take the time to research which forms and documents. A good example is that some states require you to sign lead based paint forms and to put up a flyer on all properties. You need to be careful because states can fine a great deal of money to get you to pay attention to the laws. You have to consider if you really want to risk losing money on something you had the time to research and take care of.
Create corporations or LLC's
Creating one or several organizations is a great tactic to protect your properties. Each property will need a checking account for all money associated with that location. Setting up a corporation is a simple process, taking no more than thirty minutes and there are several of online companies that will help you get started with the process. You have the option to have a lawyer set this up for you too, but they can cost around $750. This really is too high, considering you can do it yourself. Setting up an LLC can be fun, you can be as creative as you want when it comes to naming them.
You need to check with the bank that finances the property before transferring it to an LLC. The reason being that some bans have due on sale clauses, which means they can call your full loan if you sell the property. Even though the same individual owns the property and the LLC, it can still trigger the clause to be activated. Once a property is transferred to an LLC, it also becomes harder to refinance.
Think of all the things that can cause damage to the property; frozen pipes, backed up sewers, trees falling and even natural disasters or severe weather. Working with agents to get the proper coverage for your properties is a necessity. Discuss all the possible coverage and find out what is not covered; some companies do not include floods and sewer problems. Each property will require different coverage so for each location evaluate the risks against the insurance costs to determine what will work financially and protect you.
Free and clear is not always best
Having a property free and clear with no loans open puts you at greater risk for lawsuits. People will be more inclined to sue when they are assured of a payoff, and if you owe nothing, you will have to pay more for any suits. Opening a line of credit against the property shows up in public records which can help you. Even if you do not owe anything, the full amount of the loan is what is visible, and it could protect you.
Hiring rental property services to take care of your properties and having proper and adequate insurance coverage is the best protection you can give yourself. Always use a reliable and knowledgeable insurance agent who has experience with rental policies. They can inform you of all the potential policies and explain them to you, allowing you to pick what is best for each of your properties.
It is also a good idea to hire an accountant to make sure all taxes are filed and handled correctly and a lawyer to take care of any possible legal protection you may need. It may be expensive to work with these professionals, but if you are new to the rental property owner game, it is a wise choice to get them involved. Understanding the risks and getting prepared early, will make and future problems much easier to deal with. You could stand to lose a lot with one lawsuit, so look into thoroughly protecting yourself, you will thank yourself later.
The article The Arizona Real Estate Market Prime for Rental Investors is available on: Red Hawk Property Management Website Blog
With the Arizona Real Estate market experiencing a strong recovery, it is only to be expected that investors will be drawn into putting money into rental properties. Certainly, real estate investors within the state recognize the potential as the market continues to strengthen, but investors from other neighboring states are also finding the growth in Arizona irresistible.
If you are new to the idea of real estate investing it may not be clear to you all of the advantages of doing so. It takes time to learn the pros and cons, become familiar with the pitfalls and how to avoid them, and then once you begin investing it can take several years to build up a valuable portfolio.
Buying Rental Property: Overview
With diversification being the 'buzzword' in investing many people are taking the time to learn how to successfully invest in real estate. It is likely that you have already purchased Arizona Real Estate at some point in your life i.e. your home. Doing so gives you some idea of what it takes to go through the purchasing process. Buying investment properties is very similar but with some additional knowledge required.
You will go through the same research and assessment of your financial position to determine the value of the property you can afford and your ability to pay back a mortgage, and then armed with those numbers you go ‘shopping’ for funding. Where rental properties are a little different than residential homes is that the goal is to gain the largest return on your investment as possible.
Maintaining high occupancy with reliable paying tenants is critical, and at the same time keeping expenses to a minimum is also of utmost importance. The act of advertising a property for rent, vetting prospective tenants, and other issues that come with the management of real estate is what makes many real estate investors turn to a professional, knowledgeable and well-respected property management company. The value they bring to an investor makes their cost worthwhile.
The article Common Mistakes New Landlords Make & How To Avoid Them was originally seen on: Red Hawk Property Management Blog
New landlords of rental properties need to be aware of the size of the commitment they're taking on, in particular when it comes to financial and legal matters. Inexperience is nothing to be ashamed of, but it should be used not as an excuse but as an opportunity to seek out knowledge and experience from seasoned experts in the property management field and get their advice, so they are better prepared if they have to deal with safety issues or a troublesome tenant.
Here are six common mistakes for new rental property owners to avoid.
1. Failing to Screen Tenants Properly
Many inexperienced landlords will think they're saving money and hassle by not undertaking a full tenant screening process. They may be easily convinced by pleasant people with everything appearing right about their application. But it's vital to protect your investment with due diligence, doing a credit report, enquiring about the tenant with past landlords, and assuring yourself there's no history of late payment or aggravation or prior evictions.
Any landlord will want to avoid the eviction process if they possibly can. It's costly, time-consuming and unpleasant. A little extra time spent researching a tenant can save a lot of stress, and any honest tenant won't mind you doing it.
2. Lack of Legal Knowledge
Any departure from local and federal housing regulations from the moment you begin accepting applications from renters can put you at risk of litigation as a landlord. You must have an understanding of local habitability laws and the Fair Housing Act on a federal level, and ensure your property is compliant and legally safe and habitable.
It may seem a daunting amount of legal material to learn, but expert help is readily available, and this should be a priority.
3. Not Following Through On Late Payment Fees
Don't let any tenant get away with exploiting you by not paying rent responsibly and on time. An exceptional hardship as a one-off may be permissible if it's verifiable, but if you allow repeated late payments out of a desire to appear kind, you will be losing out on any return on your investment.
Hold tenants to late fees and ensure they adhere to the terms set out in their lease agreement.
4. Not Having Regular Inspections
Inexperienced landlords of rental properties may be tempted to save themselves the nuisance of arranging a regular property inspection. It's easy to believe the tenant will raise any maintenance issues promptly - but what if they haven't noticed them, or caused the problem themselves, or are trying to conceal something else?
Beginning each tenancy properly by making safety and inventory checklists, and checking all areas are well maintained, can save you costly and unexpected repair bills in future. You can enlist professional help from property managers to make sure the inspections are full and thorough. Seasonal inspections can protect against any faults or negligence escalating into critical problems in hot or freezing weather.
5. Not Having Full Insurance Cover
The worst possible situation for a landlord is to be liable without a sufficient insurance cover. Be sure to include specific landlord's coverage in your homeowner's insurance to cover situations such as somebody suing because they sustained injuries while on your property.
You should also insist on tenants having renter's insurance to cover damage on and off the property, as well as their own possessions. If your tenant accidentally causes water damage to the apartment below, you won't be faced with damages that the tenant is unable to cover. Experienced landlords often require this protection to be in place as a term of the tenancy agreement.
6. Not Using A Property Manager
It's a significant investment to hire property management for landlords to represent you in matters dealing directly with the tenant, but it's one that can save time and stress particularly as an alternative to managing a property for the first time.
If you are not prepared to go into detail with all the required knowledge of landlord and tenancy laws, or you find minor day-to-day rental issues are occupying more time than they should, then it's well worth considering investing in the services of a property manager. There is a trade-off between the management fees and the amount of time and stress property management will save you. If you have multiple rental properties to manage, getting professional help with the day-to-day running can pay off more.
These six common mistakes are part of the array of knowledge you should arm yourself with before investing in a rental property, and are a good starting point towards avoiding legal tangles and enjoying the returns that your investment brings you.
Foreign buyers like to purchase property in the United States because they see the real estate market in areas like Phoenix, Arizona are stable. According to a study by the National Association of Realtors, the international sales of US homes is at the second highest it's ever been in recent years. Owning property in the US is a significant investment. Foreigners are purchasing homes not only to live in them, but to rent out as well.
In the past five years, 70 percent of Realtors have stated that international clients have contacted them looking to potentially purchase a property. From April 2014 to March 2015, international buyers purchased $104 billion in American real estate.
Arizona is the third largest state for international sales. Florida and California are the top two. Texas and New York also sell a lot of homes to foreigners. These states make up 61 percent of international sales.
Arizona real estate is popular with foreigners because of the warm weather. There are some other factors as well. This includes the distance to their home country, if they have relatives already living there, and if there are opportunities for both jobs and education. Out of the 68 foreign countries that purchased homes in the USA, there are five the make the majority of purchased real estate. They are Canada, China, Mexico, India, and the United Kingdom. These countries make over half of all purchased real estate, with Canada and China leading the way.
Not all people from different countries like to make purchases in Arizona. Chinese buyers do not rank very high in the purchase of Arizona homes. Chinese buyers make the bulk of their purchases in California. They also like to make purchases in Washington State, New York, Massachusetts, Illinois, and New Jersey.
In the state of Arizona, Canadians make up 46 percent of the foreign home buying market. They are likely to purchase a home for a vacation use or as a rental property. They also are buying condos and apartments instead of single family home. Many Canadians are also purchasing homes in the state of Florida. They prefer the Sarasota and Venice areas as well as Palm Beach as opposed to Miami.
Foreign buyers are important in the real estate market. They spend on average just under $500,000 on a home. Other buyers average a purchase price of $255,000. In addition to paying more for a home, they also spend more money on furniture, eat out more often at restaurants, and attend more sporting events. This is good for the economy. They are not only spending more on the home but spending more in general. Businesses are seeing an increase in their profits due to international buyers.
Realtors need to improve their skill sets when they work with foreign buyers. They need to have a global perspective of things and have experience working with those from a different culture. They need to learn different real estate practices to get along with others as well. The NAR will help realtors expanding their skills and work with those on an international level. A realtor can train to be a Certified International Property Specialist. Be sure to visit this association online to find out more information.
The article Why It Makes Good Sense To Hire A Property Management Company is republished from: http://www.phoenixpropertymanagementcompany.com
Owning a rental property is one of the strongest investment options available for generating long-term income. There are naturally day-to-day duties and responsibilities connected with maintaining the property, dealing with tenants, and any other issues that arise. These are usually manageable and not too time-consuming when it involves only a single property. But once you get into the upkeep of a portfolio of multiple properties, the responsibilities can become more onerous. Your investment creates more stress and worry than you had bargained for, and the project is no longer enjoyable. Before things ever get that bad, it's time to engage the services of a professional property management company.
Typically, the property manager takes responsibility for the routine tasks that take up the most time and hassle for a property owner, so you are free to reap the rewards and enjoy your investment. Screening potential tenants, dealing with contracts, collecting rent and dealing with problems with tenants, repairs on site and ongoing maintenance are can all be handled impartially by property management companies. Many property managers are flexible and can offer a partial service for a negotiable fee if you or your contacts are willing or able to do some of these tasks.
Usually, the property manager will interact directly with rental applicants and tenants on behalf of you, the property owner. They can arrange the marketing and advertising of rental properties, hosting of viewings and meeting interested candidates, screening prospective tenants and collecting deposits and rents. Property managers can be the first point of contact for ongoing repair issues or emergency maintenance. They are also responsible for dealing with tenant complaints and can assist you in legal and practical terms if you ever have to deal with an eviction.
It is a significant investment to employ a property management company, and this is a factor which leads so many property owners to attempt to take full responsibility themselves. But for property owners with a full-time job, having the time and availability to look after a portfolio of more than three rental units can become too much of a challenge. The management fees make more sense when compared with the potential income from a larger stable of properties, and the relief of leaving the hard work to a professional manager.
Absentee owners, or owners of a widely distributed portfolio of properties, may find that hiring a property manager in the local area is the only sensible option.
If you'd prefer not to have to attend a plumbing crisis at 3 AM, repair and decorate woodwork or manhandle leaking washing machines, then a good property manager will have the know-how and a network of trusted professional backup to tackle these and all manner of problems daily. If you feel property maintenance and calling on skilled people to organize it is beyond your skill set, then enlisting a property manager is a sensible option.
There's a long list of issues that may arise with rental property. Using a property manager who's seen them all before and dealt with them is the best way to prevent problems from becoming nasty, expensive or stress-inducing surprises, and ensuring that your experience of owning and letting a property remains an enjoyable one.
The following article Residential Rental Property: Is It A Good Investment? was originally seen on: Red Hawk Property Management Website Blog
If you have money to invest and you are considering investing in residential rental properties, you may be wondering whether or not it is a good idea. In this article, we will go over the things that you should consider before deciding to invest in rental properties.
What Should You Consider Before Investing In Rental Properties?
The first thing you should decide is whether or not you are going to live in the building that you buy. If you rent out the entire property and you reside elsewhere, you would be able to deduct all expenses related to the building from your income. If you decide that you are going to move into the building, you would only be able to deduct the expenses related to the units that you are renting out. Should you decide to sell your property at some point, The portion of the building that you were living in would be exempt from the capital gains tax. If you rent out the entire building and you live elsewhere, all of you taxable gains would be taxable.
If you have a specific piece of property in mind that you are hoping to buy, you should make sure that the realtor's listing is correct. If the number of units in the listing is inaccurate, it can change the terms of the sale considerably. To get this information, check the assessment roll. For example, if the building has a basement and it is considered to be a livable dwelling, it will count as an additional unit, which means that you would need to put down a larger down payment.
How Much Of a Down Payment Can You Expect To Pay?
If you are planning on renting out every unit in the building that you purchase, you would need to make a minimum down payment of 20 percent of the price of the building. If you are planning to buy a duplex and you intend to live in it, you would need to make a 5 percent down payment of the purchase price as long as you have mortgage loan insurance. If you are buying a three or a four family building and you are going to live in it, you would need to put down at least 10 percent.
These down payment rules are the same universally for all American financial institutions.
What Are Other Fees Associated With The Sale?
There are several fees that you would need to pay besides the down payment. These charges include:
To cover all of these fees, your American loan insurer would calculate a standard amount, which is 1.5 percent of the purchase price of the building that you are planning to buy. In some cases, unexpected issues can arise, which would cost you more money. To cover you if something like this should happen, many financial institutions including Wells Fargo recommend changing the number from 1.5 percent to 3.5 of the price of the building. The additional money would be put in a line of credit or a savings account that is easily accessible.
Besides the Building's Condition, What Else Should You Look For?
There are plenty of things that you should look for other than what the building looks like on the inside and out.
If you want to find tenants as easily as possible, you should look at how close stores, schools, and other important businesses are to the building.
If you aren't planning to live in the building, you should consider the proximity of your home and your rental properties to make it easier to collect the rent each month.
If you want to be sure that you are not overpaying when you buy the building, you should take a look at how much similar buildings were sold for in the last year. This is something that a realtor can help you with.
If the building already has tenants, you need to find out about them. Find out how long each tenant has been living in the building and when their lease expires. Also, find out how much the tenants are paying for rent.
Tips For New Landlords
You should make sure that the lines of communication are open between you and your tenants. You want to include every little detail in the lease and make sure that you put everything in writing.
Many financial institutions allow you to schedule the due date for your mortgage payments. You should schedule them for the middle of the month. This will give you the leeway you will need if some of your tenants don't pay their rent on time.
You should open up a separate bank account strictly for managing the building. If you have one account for rents, mortgage payments, and expenses, it can make accounting much easier.
What Does It Mean To Leverage Real Estate?
Leveraging your property is when you take out a second mortgage on your first investment property to purchase a second building if you don't have the capital to do so. In most cases, you can get up to 80 percent of the worth of your first building to put toward your second.
The Pros Of Investing In Real Estate
The reason that most people invest in rental properties is that they like that they can see and spend the money that comes in each month. If you have other investments and you want to diversify your assets, real estate is a great way to do this. If you want to own your own home but you are living on a tight budget, The rent that you collect from your tenants will help you make your mortgage payments.
The Cons Of Investing In Real Estate
Real estate investing isn't for everyone. If you like being a manager, it could work. To be a good landlord, you will need to have a lot of patience with your tenants, and you need to be available at all times to fix any problems that come up in the building. If you don't think that you can handle something like this, real estate investing may not be the best thing for you. If this is the case, you should meet with a financial planner to discuss other investment options.
Red Hawk Property Management is a professional property management company located in the Metro Phoenix, Arizona area in Mesa. Our goal was and still is, to provide the latest technology, have cost effective and transparent rates, and be an accurate and professional property management company servicing all of Maricopa and Northern Pinal Counties. Red Hawk Realty started with about 10 properties, and is currently successfully managing approximately 400 properties.