American Apartment Owners Association

Practical Tips For First-Time Landlords

Thu, 11/30/2017 - 11:07am

Purchasing your first rental property is both thrilling and overwhelming. Being a new landlord comes with an array of challenges, victories and inevitable mistakes. As someone who became a landlord at the age of 19, I have been through it all — the highs, the lows and the trials all first-time landlords face.

Rental properties can be an outstanding source of income. However, in order to be successful as a first-time landlord, you must constantly learn and adapt. For landlords who are just starting out, I’ve compiled some of my best tips to help avoid common pitfalls.

1. Never Cut Corners On Documentation

Documentation is a critical part of being a successful landlord. If you are new to rental management, you will need to spend some time collecting important documents and forms. Some of the most important forms you will need include:

• Condition reports

• State-specific leases

• Locally required disclosures (e.g., lead, radon, mold, occupancy limits)

• Rental applications

Most of your paperwork you can migrate online, such as rental applications and agreements. However, the important part is to ensure you have a copy of every important document.

Never give away your only copy of a document, or ask a tenant to complete something and just hope you get it back. Make copies of every document or save them electronically so you never wind up in court empty-handed.

2. Become Efficient

One of the biggest mistakes new landlords make is wasting time on tasks that could be made more efficient. In order to not wear yourself out, it is imperative that you streamline your processes.

For example, rather than showing a high-demand property a dozen times in one week, set up an open house for showings. This will allow you to filter through more interested parties with less of your own time invested.

Wasting time equals wasting money and will cut into your ability to make a profit off your rentals. Keep in mind that you should create a system that will scale with you as you invest in more properties.

3. Know Fair Housing Laws

Perhaps the costliest mistake you can make as a new landlord is to not research Fair Housing Laws both federally and locally. These laws prohibit discrimination against protected classes in regards to housing. Protected classes vary by state and city, however, there are some federally protected classes.

A prime example of this is when landlords decide they are “above the law” regarding policies regulating service and assistance animals. In 2014, two landlords and their management agent in Washington decided they would not abide by Fair Housing Laws and refused to waive a $1,000 pet fee to a tenant with an emotional assistance animal. Subsequently, they had to pay $25,000 to resolve the case.

Take the time to learn the laws surrounding the business of rentals and consult with an attorney who specializes in landlord-tenant laws. Keep in mind that just because you’ve written something into your lease, it doesn’t mean it’s a legal agreement or that it will hold up in court. Courts have the power to invalidate leases that violate federal, state or local laws and regulations.

4. Make Sure to Screen Your Renters

As a landlord, one of your top goals will be to find a responsible tenant. Evictions are time-consuming and costly, and late rent can quickly derail your profits. The best way to find a qualified tenant is to screen potential renters.

Your screening process should begin with a rental application and a quick conversation with interested renters. Get a feel for who they are by asking some simple questions about their income, their employment and why they are moving. Be sure your rental application also asks for past/current landlord references, employment references, and personal references.

Not only should you screen tenants through your own questioning and via references, you should also run a criminal background check, a credit report, and an eviction history.

By looking into each of these reports, you can gain a better idea of how responsible a potential renter has been in the past. Keep in mind that you should always have your criteria set before you begin screening tenants to avoid accusations of discrimination. For example, to reduce possible fair housing complaints, decide what your minimum credit score will be prior to running credit checks, and use the same criteria for every applicant.

5. You’re Never Too Young Or Old (Start Now)

Becoming a landlord doesn’t need to coincide with any specific timeline of your life. I purchased my first rental property at 19 and, by renting out rooms while living there, I was able to pay for the property and my own living costs during college. After this, I purchased another property, which I revamped with my own sweat equity. By continuing to put my own hard work into each property, I created a cycle of investments that fueled each other.

This common method for initial rental investments is to “house-hack” — or live in part of the residence. This can be done by purchasing a duplex, a home with a basement apartment, a property with a garage apartment or even by renting out extra rooms.

Alternatively, you could also start out by purchasing properties that need work and using your own muscle power to add value that previously didn’t exist. Even small improvements, such as repainting or adding new fixtures, can make a huge difference in the rentability and profitability of your property.

The takeaway is to invest as soon as you can. Don’t wait to reach a magical time in your life. If you feel overwhelmed by everything it takes to become a landlord, find a mentor who can help. Most cities have local landlord associations that you can join or Meetup groups focused on investing in rental properties.

For first-time landlords, there will always be a few hiccups in the road. Don’t be discouraged, and remember: treat your rentals as a business, not a hobby.

 

Source: forbes.com

 

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Bitcoin slowly but surely gains relevance in real estate

Thu, 11/30/2017 - 10:59am

Bitcoin is fast-gaining the attention of the real estate industry, with several states already changing their laws to allow it to be used to finance property transactions.

The Wall Street Journal reported this week that the industry is already experimenting with using the digital currency to pay for things like rent, services or even whole deals.

“Most of the focus in the real-estate industry is on how ‘blockchain’ technology could affect the way property titles are recorded and transferred in the sales process,” the Journal reports. “Blockchain acts as a ledger for who owns a particular bitcoin or other cryptocurrencies. Proponents say it can be applied to the process for recording and transferring property titles, providing an efficient and secure way to track who owns a piece of land, an office building or a home.”

Meanwhile, other reports suggest that buyers and sellers are just as hungry to use bitcoin as real estate professionals. In a report in the U.K.’s Express newspaper, Ben Shaoul of New York City-based Magnum Real Estate Group related how several of his clients have asked about using Bitcoin to facilitate their real estate transactions.

“We were just shocked to find out how many people have bitcoin,” Shaoul told the Express. “I bought some myself last summer, and now I wish I bought more – who knew how this would explode?”

Mr. Shaoul added that he was first approached by a buyer earlier this year, who said he wanted to use the cryptocurrency to purchase a property he was listing. “He said he really wanted to buy with bitcoin, so I spoke to my lawyers and the powers that be, and they said yes,” he related.

Shaoul added that he has since had two more offers for condominiums in Bitcoin, and that he’s now planning to launch an advertising campaign to make it known that his business accepts the cryptocurrency.

Elsewhere in Miami, real estate professionals are seizing on Bitcoin’s ability to send money overseas at the fraction of the cost of traditional bank transfers as a way of attracting foreign buyers.

Miami realtor Stephan Burke said in an editorial in the Miami Herald that the city is: “an ideal market for Bitcoin, giving buyers and investors from South America, Canada, Russia, Asia, and the Middle East the opportunity to make their purchases quickly and smoothly.” He added that “our city has a tremendous opportunity to be a trendsetter in this regard.”

So what are your opinions on Bitcoin, and would you be willing to accept a transaction in the cryptocurrency? Let us know your thoughts below.

Source: realtybiznews.com

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What do renters want? Survey shows top items people look for in their next place

Thu, 11/30/2017 - 10:58am

Our concern over package deliveries outranks wanting a place to mingle or grow food when it comes to what piques renters’ interest in picking a place to live.

In a survey by the National Multifamily Housing Council & Kingsley Associates, participants in the Seattle-Tacoma-Bellevue area were asked their interest level in various community amenities.

Probably to Amazon’s delight, package lockers ranked above community Wi-Fi, clubhouses, community gardens, on-site car washes and even valet trash service in the survey.

The bulk of respondents said they received from one to 10 packages a month. More than half did not receive perishable items, ever. The appetite for deliveries “inside my unit” appeared low in the survey, which predates the broad launch of the Amazon Key delivery service.

The results, part of a larger nationwide survey, involved 17,861 respondents in the Seattle-Tacoma-Bellevue area in July. The last time the survey was done was in 2015.

Among apartment features, the top amenities/features sought by area respondents, in order of interest. were:

1. Washer/dryer.

2. High-speed internet access.

3. Dishwasher.

4. Garbage disposal.

5. Soundproof walls.

6. Patio or balcony.

7. Bathtub.

8. Stove hood.

9. Energy Star certified appliances.

10. Microwave.

Microwaves barely edged out refrigerators with water/ice dispenser in the top 10. Rounding out the bottom of the list were video doorbell, standalone shower without tub, built-in sound systems, breakfast bars and two master suites.

Source: thenewstribune.com

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New Mortgages Allow Renters to Buy With Tiny Down Payments

Thu, 11/30/2017 - 10:03am

The down payment has been a big obstacle in recent years for renters looking to buy their first homes.

A new mortgage offering aims to ease the burden.

Home Partners of America, a rent-to-own company, is offering a new mortgage product to tenants that apply some of the appreciation in their home’s value during the time they have lived there toward reducing the down payment. In areas with even modest home-price appreciation, that could reduce the down payment requirement to almost nothing.

To qualify, tenants must have paid their rent on time for two consecutive years and be considered first-time buyers, meaning they haven’t owned a home in the last three years.

The program harkens back to the housing bubble when millions of Americans received mortgages for homes they couldn’t afford with little or no down payment.

Bill Young, co-founder and chief executive of Home Partners, said a critical distinction with his company’s program is that prospective buyers have been paying their monthly rent on the same home over a long period, demonstrating they can afford it and are committed to staying there.

“Their skin in the game is they’ve proven they can pay their rent on time for 24 months,” Mr. Young said.

Home Partners, which was started about five years ago and has purchased nearly 8,000 homes in more than 50 metropolitan areas, plans to offer the product to current tenants and those who sign a lease over the next two years, the duration of the pilot program. The company won’t make the loans itself but is working with New Penn Financial, a Pennsylvania-based lender.

The loans will be backed by mortgage company Fannie Mae, which recently has been experimenting with programs designed to ease credit for young buyers who are missing out on a recent surge in home prices because they haven’t saved enough for a down payment. Other pilots include a program under which Lennar Corp. will pay off a significant chunk of the student loan of a borrower who purchases a home from the Miami home builder. In another, buyers can receive up to $50,000 for a down payment if they agree to rent a room in their home on Airbnb.

Rent-to-own companies have a poor reputation in the housing industry for taking nonrefundable deposits from tenants who clearly won’t ever be able to qualify for a mortgage or afford a home. Home Partners doesn’t take a nonrefundable deposit, so if the home’s value declines or they decide not to buy for any other reason renters can simply walk away.

Source: realtor.com

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Big Shifts Coming to the U.S. Housing Market in 2018

Thu, 11/30/2017 - 10:00am

Las Vegas to lead the U.S. in sales and price growth in 2018

According to Realtor.com’s 2018 National Housing Forecast, U.S. housing inventory constraints have fueled a sharp rise in prices and made it difficult for buyers to gain a foothold in the market. But that is expected to change next year as part of broader and continued housing market improvements.

The easing of the inventory shortage, which is expected to result in more manageable increases in home prices and a modest acceleration of home sales, is based on an inventory growth trend that began in August 2017, according to Realtor.com. The annual forecast, which is among the industry’s bellwethers in tracking and analyzing major trends in the housing market, also expects an increase in millennial mortgage share and strong sales growth in Southern markets. The wildcard in 2018 will be the impact of the tax reform legislation currently being debated in Congress.

“We are forecasting next year to set the stage for a significant inflection point in the housing shortage,” said Javier Vivas, director of economic research for Realtor.com. “Inventory increases will be felt in higher-priced segments after home buying season, which limits their impact on total sales for the year. As we head into 2019 and beyond, we expect to see these inventory increases take hold and provide relief for first-time home buyers and drive sales growth.”

Top Five U.S. Housing Trends for 2018 Include:

1. Inventory begins to increase – Beginning in August 2017, the U.S. housing market started to see a higher than normal month-over-month increase in the number of homes on the market. Based on this trend, realtor.com projects U.S. year-over-year inventory growth to tick up into positive territory by fall 2018, for the first time since 2015. Inventory declines are expected to decelerate slowly throughout the year, reaching a 4 percent year-over-year decline in March before increasing in the early fall, after the peak home-buying months. Boston, Detroit, Kansas City, Nashville and Philadelphia are predicted to see inventory recover first. The majority of this growth is expected in the mid-to-upper tier price points, which includes U.S. homes priced above $350,000. Starter homes are expected to take longer to recover because their levels have become so depleted by first-time buyers.

2. Slowing price appreciation – Home prices are forecasted to slow to 3.2 percent growth year-over-year nationally, from an estimated increase of 5.5 percent in 2017. Most of the slowing will be felt in the higher-priced segment as more available inventory in this price range and a smaller pool of buyers forces sellers to price competitively. Entry-level homes will continue to see price gains due to the larger number of buyers that can afford them and more limited homes available for sale in this price range.

3. Millennials gain market share in all home price segments – Although millennials will continue to face challenges next year with rising interest rates and home prices, they are on track to gain mortgage market share in all price points, due to the sheer size of the generation. Millennials could reach 43 percent of home buyers taking out a mortgage by the end of 2018, up from an estimated 40 percent in 2017. With the largest cohort of millennial expected to turn 30 in 2020, their homeownership market share is only expected to increase.

4. Southern markets will lead in sales growth – Southern cities are anticipated to beat the national average in home sales growth in 2018 with Tulsa, Okla.; Little Rock, Ark.; Dallas; and Charlotte, N.C.; leading the pack. Sales are expected to grow by 6 percent or more in these markets, compared with 2.5 percent nationally. The majority of this growth can be attributed to healthy building levels combating the housing shortage. With inventory growth just around the corner, these areas are primed for sales gains in years to come.

5. Tax reform is a major wildcard – At the time of this forecast, both the House and Senate had bills up for consideration, because neither had passed at the time they were not included in the forecast. Both proposed tax changes had provisions that are likely to decrease incentives for mobility and reduce ownership tax benefits. On the flip side, some taxpayers, including renters, are likely to see a tax cut. While more disposable income for buyers is positive for housing, the loss of tax benefits for ownership could lead to fewer sales and lower prices with the largest impact on markets with higher prices and incomes.

Next year, home prices are anticipated to increase 3.2 percent year-over-year after finishing 2017 up 5.5 percent year-over-year. Existing home sales are forecast to increase 2.5 percent to 5.60 million homes due in-part to inventory increases, compared to 2017’s 0.4 percent increase or 5.47 million homes. Mortgage rates are expected to reach 5.0 percent by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization in the year ahead.

2018 Top U.S. Housing Markets (based largest sales and prices gains)

1.   Las Vegas-Henderson-Paradise, Nev.
2.   Dallas-Fort Worth-Arlington, Texas
3.   Deltona-Daytona Beach-Ormond Beach, Fla.
4.   Stockton-Lodi, Calif.
5.   Lakeland-Winter Haven, Fla.
6.   Salt Lake City, Utah
7.   Charlotte-Concord-Gastonia, N.C.-S.C.
8.   Colorado Springs, Colo.
9.   Nashville-Davidson–Murfreesboro–Franklin, Tenn.
10. Tulsa, Okla.

 

Source: worldpropertyjournal.com

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Are Tenants Or Landlords Responsible For Maintenance?

Thu, 11/30/2017 - 6:44am

Posted on Nov 30, 2017

Who is responsible for rental property maintenance, the landlord or the tenant? While there are landlord maintenance obligations under state law, tenants also have maintenance responsibilities. Discover what landlords and tenants each must do to keep a rental looking its best, below.

Landlord Repairs Responsibilities 

Landlords are responsible for maintaining “habitable” rental properties. This means keeping the major systems of the rental unit — heat, water, electricity, general cleanliness and sound structure — in good working order. The habitable requirement applies to common areas of an apartment complex as well as rental units. State and city codes define the specific requirements landlords must follow when renting apartments. If there’s a question regarding what a landlord’s responsibilities are, look to these codes to provide exact information for landlords.

If something goes wrong, landlords are expected to resolve the problem in a timely repair. As long as landlords attempt a timely fix, tenants should be understanding. Maintenance personnel are not always available on short-term notice, so delays may be unavoidable.

If landlords fail to make repairs that were requested, tenants can legally withhold money from the rent until the problem is fixed. Tenants can also hire someone to repair the issue, then deduct the repair cost from their next rent payment and provide the landlord with a receipt for the repairs.

If a landlord delays a repair that is subject to state or city codes, tenants can seek redress through local authorities. This could lead to an inspection, which may result in fines being levied on the landlord or an order to make the repair immediately.

Landlords must give notice when they need to enter a rental property. Generally, 24 hours’ notice is acceptable. In emergency cases — for instance, if there’s a broken pipe — landlords can enter without giving notice.

Other than keeping major systems in working order and responding quickly to repairs, landlords must either perform exterior maintenance or specify within the lease that tenants are responsible for exterior maintenance.

Tenants’ Responsibilities for Repairs

Under law, tenants are responsible to repair or replace anything they broke. Examples include broken windows or holes in the wall. If tenants spot signs of damage or pests in the unit — anything from water damage to rodents — they must inform the landlord, so the landlord can mitigate the problem. A simple phone call or email to the landlord can suffice for timely notification of these issues.

Throughout the rental term, tenants must keep the unit in a clean, habitable condition. Tenants must dispose of trash and keep the exterior of the unit tidy. When moving out, tenants must return the property to move-in ready condition.

Rental property maintenance laws vary by state; some states provide few legal obligations for landlord maintenance while other states require landlords to do more. The lease will specify who is in charge of landscaping and snow removal. Landlords may take care of these duties, especially for large complexes. Or, landlords may mandate that tenants shovel the snow or mow the lawn.

Stay Up to Date With Landlord Requirements

To stay up to date with landlord requirements and get advice on how to best manage your rental property, consider becoming an American Apartment Owners Association member. Member benefits include discounted landlord-tenant forms, tenant screening services, educational webinars on property management or landlord responsibilities, and discounts on goods and services. Join AAOA today to find success as a landlord. 

Disclaimer: All content provided here-in is subject to AAOA’s Terms of Use.

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Apartment dwellers seek affordable rents

Wed, 11/29/2017 - 3:06pm

ATLANTIC CITY — Toni Wilson, the mother of four children ranging in age from 15 to 3, moved from Egg Harbor Township to Atlantic City to save $100 on her monthly rent.

Working part-time as a cocktail waitress at the Golden Nugget Atlantic City casino, Wilson, 39, was paying $1,300 for a three-bedroom, one-bath ranch-style home that was at least 40 years old and needed repairs. She also had to pay the water bill.

Wilson, who was married previously, moved to the Inlet section of the city to an apartment where she pays $1,200 in rent in addition to separate gas, electricity and water bills. She has three bedrooms, 2½ bathrooms, a kitchen, a small backyard and a garage.

“They did not want to move at all,” Wilson said of her children. “She (daughter Amirah Elliott, 15) was on the cheerleading team at Egg Harbor Township. They hadn’t lived in Atlantic City for five years. City life is different.”

Wilson is one of many South Jersey residents who live in an apartment with a family and struggle to pay the market rate for rent.

Without financial assistance from her father and her boyfriend, Wilson said, she did not know how she would be able to survive.

“Sometimes, internet is off. Sometimes, cable is off,” said Wilson, who added she learned from her mother that rent and transportation must be paid. “I juggle the rest of the stuff all month.”

The need for apartments — due to delayed marriages, an aging population and immigration — is creating more demand at a faster rate than new apartments are being built, so those that do exist are more expensive.

For years, rent growth has outpaced wage growth, and a severe lack of affordable housing affects many parts of the country.

The number of households that spend more than half their income on rent has grown about 25 percent since 2007 and are considered “severely cost-burdened,” according to an analysis by the Joint Center for Housing Studies of Harvard University.

The rental market has exploded, said Robert M. Shamberg, owner of Berkshire Hathaway HomeServices Diversified Realty in Galloway Township.

“The rental market is as hot as the for-sale market was back in 2005-06. There are 100 people looking for every single rental,” Shamberg said.

Landlords are demanding as much as $900 per month for a one-bedroom condo, $1,200 per month or more for two bedrooms, and $1,500 per month or more for a single-family home, depending on the size, Shamberg said.

Shamberg said there have always been people who rented apartments as opposed to buying a house because they didn’t want the responsibility, didn’t understand the value of owning a home or weren’t ready for the responsibility. Others wanted the flexibility of being able to move.

But since the recession, an increasing number of people have been tagged with a bad credit history, don’t have the money to buy or have lost their previous home due to foreclosure and can’t buy, Shamberg said.

Rising rents are an extreme problem, and many people are struggling, said Matt Shapiro, president of the New Jersey Tenants Organization, based in Fort Lee, Bergen County.

“Low and moderate incomes can’t afford today’s rents, which are astronomical and unbelievably high,” said Shapiro, whose organization is the oldest and largest such statewide organization in the country.

Rent control is an answer, but it is not the answer, Shapiro said.

Even if a landlord raises the rent 4 percent annually, inflation has been as little as 2 percent, so the landlord will make a profit, Shapiro said.

Good rent-control legislation should allow the landlord or owner to set a profit level that could be maintained.

“Instead, in some city markets, landlords are doing extraordinarily well,” Shapiro said. “Mortgage interest costs have been slashed. They (owners) could afford to do rent control and still make good money.”

Rent control is part of the problem in some communities because rent control laws allow landlords to charge whatever they want once a unit is vacated, said Jeff Cronrod, a board member of the American Apartment Owners Association, based in California.

“We have the end of the middle class, which is fairly topical, and that’s really what this is about, and you have the haves and the have-nots. The separation is bigger than ever,” Cronrod said.

One thing landlords in his association are starting to do is adopt what’s called RentGuard, which allows the landlord to eliminate or reduce the money needed for a security deposit, which at least makes the apartment more affordable to move into initially.

In the meantime, Wilson will be doing the best she can, making payment arrangements and providing a little less food sometimes if necessary. She has not experienced a winter in her new place, so she doesn’t know how high her gas bill will be.

“For single mothers and young families to enjoy their children at times, it’s hard,” Wilson said. “They can’t work to save. They can’t work to take a vacation. They work to pay bills and utilities.”

Source: pressofatlanticcity.com

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Nine Steps To Guarantee A Successful Eviction Even If You Are Not An Attorney

Wed, 11/29/2017 - 10:23am

Written by C. Gabriel Lewis

When I first became a landlord back in 2005 I quickly learned the hard way that not all tenants will work out the way I had envisioned.  Fortunately we have a legal system that protects investors from abusive or irresponsible tenants.  Hopefully you will never have to file an eviction but if you do, make sure to follow these steps to avoid any snags, or worse, lose your case.

1) Check Your Lease.  I’m going to assume you have a written lease.  If you do not you will need to give your tenants a written notice and depending on the violation a “reasonable” amount of time to allow them to correct the issue.  If you have a written lease, then follow exactly what it states.  For example, if the lease says “No Pets” and you find they have one, see how much time your lease allows them to rectify the issue.  If there is no such language in your lease, give them a notice and retain two copies, one for you and one to file in courthouse if you plan to move forward with the eviction.  Sometimes you may just want the pet gone and not the tenants.  If they get rid of the pet, problem solved.

2) Make Sure Violations Are Clearly Stated.  Most lease violations are for non-payment of rent, pets or some other common issue.  Always refer to your lease and see what the guidelines are and follow them to the letter.  For non-payment of rent, make sure to file the eviction after the grace period is up.  If the lease (or state law) requires you to give a notice before you file an eviction, make sure to do this. Otherwise your claim will get tossed out at court if it even makes it that far.  While the law is on your side, I have found that judges will ensure fairness to all parties.  Even if your tenants have trashed your home, doesn’t mean the judge will grant an eviction if you have not followed the precise language of your lease.

3) Get Proof.  The “easy” eviction is for non-payment of rent.  If they didn’t pay, you file for such and will testify under oath at court.  I find the judges are good at getting to the bottom of an issue and will ask the right questions to both parties involved.  Bottom line is you just answer their questions and not say more than what is asked.  If the tenant shows up and denies it, the judge will ask them to show proof, and they likely will have none.  If you are filing for a different violation like pets, take pictures of the pet and print copies so you can take these with you to court and present it to the judge.

4) Give Proper Notice Before Filing An Eviction.  Again refer to your lease and see what it requires of you based on the violation.  In Louisiana, we are required to give a five day notice prior to filing an eviction.  However, if you had your tenants waive the “right” you can go straight to the courthouse and file.  In states like California, such a waiver does not exist.  Again check with your state laws and follow what is on your lease agreement.

5) File Eviction Where Your Rental Is Located.  If you live some distance from your rental there is a good chance the place to file an eviction is in a different courthouse.  Always file with the jurisdiction of where your investment is.  You can always start with your city courthouse and ask them where to file as they usually will know and can direct you to the right place to file if it is not with them.  Some courts charge a flat fee regardless of how many tenants are named on the lease.  Others charge on a per tenant basis.  Make sure to ask what the court costs are and who exactly to make it out to before you go to file the eviction.

6) Verify Tenants Received Their Eviction Notice.  When you file an eviction, the court will send a marshal or some other local official to put a notice on the tenant’s door letting them know they have to show up in court to defend themselves and where to go.  Some judges will want you to testify if the tenants received this notice if they are not present in court.  A simple driveby the morning of the court hearing can answer this question.  If the notice is gone, then one can assume the tenants received it and simply decided not to show up for the hearing.

7) Don’t Take The Money.  If you filed an eviction for non-payment of rent, it is extremely important you do not take any rent prior to the court date unless you want to allow the tenants to remain in the home.  I do not suggest you do since the odds of you going back to the courthouse and filing again are likely.  If you do want to allow them to stay, at least make sure you receive all back rent plus late charges and court costs in full.  Taking just one dollar before the scheduled court hearing will result in the cancellation of your eviction proceedings and you will have to file again paying another round of court courts and waiting on a new court date.  Don’t waste your time and turn down their money and start over with a new tenant.

8) Show Up To Court.  Sounds like a no-brainer right?  In my fifty plus eviction court appearances, there were a few times the landlord didn’t show up!  The judge will automatically throw out the case and you will have to re-do the court filings costing you more money out of pocket and more “loss of lease”.  Make sure when you show up in court to have copies of your lease and any proof you might need to show the judge the tenant’s violations.

9) Answer Truthfully.  Judges are smart and they know who is lying better than most.  The law is on your side and if you follow the language of your lease and my guidelines you will win.  Do not screw up your chances of winning by “fudging” the truth – it is not necessary.  Judges cannot stand being lied to and will deny your eviction if they find just one technicality in your claim.

NOTE: The common sense approach will be the same from state to state but the filing of an eviction will not. Check with your courthouse and ask them what you will need when filing.  Examples given in this article were from my filings in the state of Louisiana.

Gabriel Lewis is a real estate agent specializing in residential and association management. He is the owner and broker of Titan Realestate Services, LLC located southwest Louisiana and has been assisting homeowners for the last ten years.  He can be contacted via email at cgabriellewis@cox.net.

 

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3 Pitfalls to Avoid When Purchasing an Investment Property

Mon, 11/27/2017 - 2:36pm

Contributed by: PropertyAdvantage

Becoming a real estate investor is easy — if you believe HGTV. All you need to do is find a property with a little disrepair, add some elbow grease, and you’ll be rich from the extra income. Unfortunately for us, cable television isn’t always accurate.

Many of the U.S.’s hottest housing markets have fully recovered from the housing market crash a decade ago, with prices reaching or surpassing 2007 levels. In Orange County, for example, homes sold for a median of $590,000 this summer; in Denver County, which surrounds Denver, Colo., the median price approached $320,000.

Rising prices can make real estate a winning investment. But with so much money on the line, it’s important to avoid mistakes and do your research.

Here are some common failures that will turn your investment into a money pit:

1. Choosing the Wrong Financing

Many purchasers of investment property can afford to pay cash, eliminating the need for a mortgage. But if you’re new to investing, you may not have hundreds of thousands of dollars on hand. If you need financing to complete your transaction, be careful to find a lender and a loan that works for you.

Many mortgages written in the mid-2000s were issued to people who thought they were making good investments but didn’t really have the means to pay them back. When the bubble burst, of course, millions of Americans lost homes.

Since then, mortgage regulations have gotten stricter — although some rules may be lifted under the current Republican-controlled Congress, some of whose leaders have expressed a desire to deregulate home loans. For now, though, it’s not nearly as easy to qualify for a mortgage as it was 15 years ago.

Borrowers must have good credit and often a down payment of 20 percent. Federally backed loans for first-time buyers and veterans offer smaller down payments or no down payments at all, but investors usually can’t qualify for these loans — they’re usually designed for primary residences.

Talk to a variety of lenders to make sure your financing works with your budget and investment plan. Study markets to find out where you can still be a competitive buyer if you can’t pay cash. If you take out a mortgage, make sure the interest rate and payments are reasonable enough that you can keep up with payments even if the rental remains empty or the flip sits on the market for a few extra months.

2. Skipping the Homework

Real estate agents will tell every buy that all real estate is local — state- and even city-level statistics paint broad pictures, but cities are composed of hundreds of micro-markets that vary from one street to the next.

Part of choosing the right home and the right financing is doing your homework on the neighborhood you’re entering. Before you purchase an investment property, understand how hot the local sales market is, what local rental rates are, how many residents rent or own, and what the culture of the neighborhood is like.

Once you’ve identified an investment-worthy neighborhood, and acquired the property, renovations begin. Remodeling, of course, costs money — often more than flippers have budgeted for. On top of construction costs, there are permit fees, inspections and ensuring compliance with tenant laws. If you choose to work with a real estate agent and stage the house for sale, or if you decide to work with a property manager to find tenants, those professionals charge fees as well.

Whether you’re undertaking this investment as a DIY project or paying professionals, make a careful, conservative budget with plenty of room for unforeseen expenses. In this world, failing to do your homework doesn’t just mean you fail a test — it could force you to take on additional debt or create cash flow problems that will follow you much longer than you want.

3. Thinking You Can Do It All Yourself

Many real estate investors get into the business thinking they can purchase, remodel, flip and rent a property themselves. (That’s what our favorite HGTV power couples do, right?)

It’s true that some investors can undertake some of the process themselves. But everyone is bound to have an area that requires expert assistance.

When you’re looking for good investments, you’ll likely need to work with a real estate agent, an appraiser, and a home inspector. You may also consider asking an attorney to look over some of your work.

Once you’ve found a property, you may know how to re-tile a kitchen and install light fixtures, but are you up to date with electrical codes? Do you know how to make sure the roof and foundation are safe? If the property isn’t approved by a home inspector at the end of the renovation process, it could set you back weeks and thousands of dollars.

When it’s time to sell or rent, you may be turned off by the idea of paying commission to a real estate agent — but what if they can sell your property three months faster? And you may think you can write a lease and manage tenants — but how familiar are you with tenant law and maintenance and repair compliance?

Feel free to take on the parts of the project you know you’re good at, but don’t be afraid to hire experts in areas in which you have less knowledge — plumbing, roofing, HVAC, landscaping, property management, whatever that may be. Doing things right the first time will almost always save you money.

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Long-Term Lease or Vacation Rental? 3 Points to Consider for Your Property

Mon, 11/27/2017 - 2:28pm

Contributed by: PropertyAdvantage

Everyone has that friend of a friend who converted their prime real-estate into a vacation-only rental and made lots of money.

“Leasing for a single season pays for the whole year!” is a common assertion property owners associate with vacation rentals. However, the reality is much more complicated.

Yes, vacation rentals can and do make money, in select markets and in highly-prized areas. But the stories of people making boatloads of money is overblown.

Some people make money, but many do not.

The problem with converting a property to short-term vacation rentals only is that you are still on the hook for all the costs, regardless if your unit is full or not.

Moreover, vacation properties are in highly-prized areas which subjects them to higher property taxes, high HOA fees, and other costs associated with being a prime property.

In general, short-term rentals, like hotel rooms, cost about 60 to 70 percent of revenue in operating costs. Conversely, a well-managed long-term lease will cost about 35 to 45 percent of revenue in operating costs.

Investors and real estate moguls in San Diego are catching on, and many of them flocked to acquire properties on the coast. Prized neighborhoods such as La Jolla, Del Mar and Solana Beach saw dozens of properties purchased, renovated, and resold for massive profit. One consistent theme you did not see, converting the properties into vacation rentals.

Arguably, La Jolla, Del Mar, and Solana Beach occupy some of the most sought-after beachfront property in the world and would, in theory, make excellent candidates for vacation properties.

Before you decide what to do with your investment property, consider these points.

Are Vacation Rentals Legal in Your City?

Short-term rentals, thanks to the rise of Airbnb and the shortage in housing, are under regulatory attack all over the country, including San Diego.

Earlier this year, the City Attorney issued a memorandum arguing that Airbnb and other short-term rentals be prohibited by the municipal code. Since that memorandum, the City has begun cracking down on short-term rentals from Pacific Beach to Solana Beach.

San Diego may be attractive for vacation rentals because it is one of the biggest Airbnb markets in the country, thanks to the weather, the beaches, its proximity to the border, and more. However, there are numerous risks that could endanger your property and subject you to fines and cost you thousands of dollars.

What are Your HOA Restrictions?

Neighbors don’t like living next to vacation rentals. Vacationers, unlike people who live there, do not take the same care with the property, the neighborhood and their neighbors. Vacationers are loud, more likely to damage the property and disrespect the continuity of the neighborhood because, frankly, they don’t live there and are on vacation.

As a result, many HOAs adopt strict restrictions on how you can lease your property. Many prohibit short-term rentals. Furthermore, violations could also spark significant HOA fines and possibly even a forced sale of the property.

What is Your Tolerance for Risk?

A higher potential income makes for higher risk, and vacation rentals are no exception.

If you rent to a long-term resident, you might have a handful of crises a year. When you rent only to vacationers, you could face a crisis every week or even more.

Vacationers may not care for the property as a resident would because they don’t have to live there. This doesn’t mean vacationers will trash the place. Instead, the higher turnover means maintenance and cleaning costs are higher. Every time a resident leaves, you’ll need to clean the unit and repair any damages.

Additionally, more people using the furnishings and appliances means you’ll need to replace them more often. Overall, a vacation rental is more time, more work, and more attention.

Finally, your income is chaotic. In good years, you could make a lot of money. In bad years, you could endure year-over-year losses. Vacation is one of the first things people cut back on when money is lean, therefore, your income stream is one of the first to get hit in an economic downturn.

On the other hand, people always need a place to live, regardless of the economic situation. A vacation rental might sound like a good idea but only to round out a well-developed investment portfolio, not to replace a long-term lease property.

Rather than converting your property to short-term vacation rentals, consider retaining the assistance of a property management company. A property management company can take care of the crises, run maintenance, collect lease payments and help you find reliable residents. Property management companies, unlike vacation rentals, save you time, stress and allow you to keep more of your money.

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4 Trends Shaping the Rental Housing Market in 2018

Mon, 11/27/2017 - 1:54pm

Contributed by: PropertyAdvantage

Relentlessly rising rents and tight supply creating housing crisis conditions in many major cities dominated headlines in 2017.  But as we move into 2018, the rental market is showing signs of change.

Recent research from Zillow shows housing growth is starting to catch up with demand, meaning more opportunity for property owners. Changing demographics of renters will also benefit landlords and property managers in 2018 and beyond.

Let’s take a look at 4 trends that are shaping the rental market heading into 2018 and beyond.

1. Supply of Rental Units

Real estate market experts predict that three groups of people will drive demand for rental units in the coming years: young Millennials who are in prime renting age, older Millennials who are saving for a down payment, and aging Baby Boomers looking to downsize.

Additionally, most market analysts agree that currently, the short-term rental market is bearish due to a shortage of units. But that’s starting to change.

It often takes time for the housing market to catch up to built-up demand, but it is starting catch up. In 2017, apartment construction reached its highest level in the past 20 years. Many of these new apartments will be available in 2018, creating a greater supply for renters and an opportunity for property owners.

2. Slowdown of Rental Increases

The relentless shortage of housing has lead to dramatic increases in rental rates. However, market analysts predict that these dramatic price increases will likely slow in the coming years as housing becomes more available.

While vacancy rates remain historically low, these figures hide the true issues. Landlords, especially those who own units in the high-end market, are offering more concessions to keep units filled. These figures indicate that double-digit rent increase is likely to slow down in the coming years.

But, that does not mean that there aren’t opportunities for property owners. As the housing supply increases, prices will drop, allowing property owners to acquire more properties for rent at reduced prices.

3. Increased Ownership and Acquisition Opportunities

The lower property prices will allow older Millennials to purchase their first home, however, in the long-run, the demand for rentals is expected to increase. The reduction in prices is good for property owners looking to expand their portfolio and first-time homebuyers.

Most market experts agree that the long-term prospect for the rental market is that it is going to increase in demand. Millennials are only now earning sufficient income to leave their parents and start leasing their own places (especially younger Millennials). In fact, the economy is only now beginning to pick up enough heat to benefit this demographic.

4. Long-Term Increase of Rents

For example, rents have slowed in the high-end market but not in the low to mid-range rental market. Market experts believe that the disparity in price increases is due to the lack of development for low and mid-range units.

Therefore, there is an opportunity for property owners to fill that niche. Developers are focused on building fancy, multi-story residential towers that are fabulously expensive.

However, there are only so many six-figure earning Millennials to rent these units. The largest growth is expected in the low to mid-range market which is underserved.

For many property owners and investors, these shifting demographic trends represent a prime opportunity to fill in that service gap. As more boomers become renters and Millennials start looking for their own place, landlords will benefit from these shifting demographic trends.

 

 

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How to Avoid the Common Pitfalls of Real Estate Investing

Mon, 11/27/2017 - 9:06am

Learning to invest in real estate is just like any other business or career: It takes time to get good at it. Too many people get frustrated very easily and give up, and this is not only the case with real estate.

Study and learn as much as you can about the process, the industry and the areas in which you’re interested in investing. As I’ve watched clients create, as well as lose, rental real estate fortunes, I’ve learned common strategies that have helped more succeed with fewer mistakes. Here are six concepts I encourage you to consider when investing in rental properties:

1. Have a master rental property analysis spreadsheet.

Create an Excel spreadsheet to analyze any and all possible deals. That’s right — you’re not going to buy the first rental property you see this year. Start with the Fair Market Value (FMV), money down, improvements and mortgage/carrying cost — then move it through rental income, expenses and wrap it up with a cash-on-cash ROI figure. Run every property through the gauntlet of your spread­sheet. If, after putting the numbers into all the columns, the ROI isn’t good or it’s not in your favor, move on to the next property. Base your decision on the key factors generated by your spreadsheet. This is why you took fifth-grade math — embrace it.

2. Remember, you are buying “numbers.”

Too many investors get emotional about their purchase and even envision themselves living in the rental property they’re ana­lyzing. This is a terrible mistake. In these situations, the investor often over-improves the property, investing far too much time or capital and blowing their ROI out of the water. Don’t think your rental property needs granite counter­tops; instead, realize you aren’t buying a property, you’re buying numbers. What do your dollars get you in “dollars and cents?” Remember, it’s not about your personal wants and needs; it’s about how much you can make off the property. Pouring a lot more money into the property to get a higher rental rate can backfire.

3. Do your research.

Let me say that again: Do your research, then do it again. I see so many new investorsbuy the first rental they see. Take your time. Also, don’t look at a property as to “Why shouldn’t I get this?” Look at it as to “Why should I get this property?” Make the numbers prove it to you. Don’t assume you’re going to buy it unless you find something wrong with it.

4. Buy local if you can.

The words “if you can” are the key. Don’t get hyperfocused on buying local so you can check on the property. It’s far more important to buy quality rental properties (good bones, reputable location, ease of upkeep, etc.) rather than local. But, if you’re living in an area where there’s a strong rental market with legitimate returns on investment (that aren’t dependent on putting down a fortune), consider yourself lucky.

5. Learn to manage your property manager.

Unless you’re a full-time real estate investor and one tough SOB, get a property manager. If you don’t have the temperament to be tough and start eviction proceedings three days after a tenant is late, have a personal intervention with yourself. You may not be cut out to be a property manager even if the property is local. You may not have the time, skills or system to be your own property manager. Be a realist. Your time could be better spent looking for other rentals, doing the books or running your businessWith that said, always — and I mean always — have a budget in your rental property analysis for a property manager (approx­imately 10 percent of gross rents). Even if you have visions of grandeur and start managing, you want the budget to stick in a property manager.

6. Bundle.

I recently met with a client who had five properties in four states. They were great properties, but look at the inefficiency (and headaches) of registering an LLC in four states, doing four state tax returns, having four different prop­erty managers, four different trips to at least occasionally check on your rentals and four different rental markets to understand and follow. Perhaps when you have 25-plus rentals and can afford to make your full-time job managing your rentals and property managers, then you can tackle four or more markets. For now, purchase rental properties in just one or two markets, or “bundle” as it’s called. Using this type of bun­dling, your property managers can handle a few properties at the same time. You’ll also save travel time and expenses. Plus, you can familiarize yourself with a few good locations rath­er than having properties scattered all over the place. You can also be more efficient with your tax and legal planning and save a lot of time and money by bundling.

 

Source: entrepreneur.com

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15 Minutes & $50 to Help Avoid the Nightmare House Investment

Mon, 11/27/2017 - 9:05am

You’re a real estate investor, and you’re either doing a walk-through of a potential rental investment that’s ready to rent or a house that needs renovation and repair. Fix & flip investors are more attuned to being very observant about potential condition defects, but rental investors need to be so as well. It doesn’t matter if the home looks great, as you don’t want big problems to crop up after you have a tenant in the home.

It would be great if the problems that can bite you are as visible as the electrical outlet image above. However, this article is about hidden defects that can be quite costly if they’re not discovered before closing on a purchase. Even if you’re doing a fix & flip or fix to rental, not finding some defects will keep them out of your repair budget and cut profits or increase the costs to get a tenant into the unit.

Yes, you can have a contractor with whom you have a relationship come in and check out the house for you. You can also have an inspection contingency in the purchase agreement so you can have the home professionally inspected. However, what can you do in a preliminary walk-through to avoid some of the most common defects that are not necessarily visible?

Electrical Defects

Especially in older homes, sometimes the old two prong ungrounded receptacles were replaced with three prong grounded ones, but without a proper ground. Basically, it’s a visual fix that does nothing. Drop into Home Depot and spend around $5.00 for a small tester you can carry in your pocket.

Take the tester with you and plug it into receptacles in various rooms. With indicator lights, it will let you know if there are grounding problems. If you find issues, then it may be worth more detailed inspection by an electrician if the house still looks like a good buy, but at least you know to look.

Moisture Problems

A one-time expense of $30 to $50 at a home improvement store will buy you a digital materials moisture meter. It’s easy to use, selecting the type of material, wood, sheetrock, etc., and pressing the electrodes into the material to get a moisture reading.

The guide with the tester will let you know if there is excessive moisture in the material, a sign of possible major problems down the road. You don’t know at this point where the moisture is coming from, so checking for leaks in plumbing is a necessity. Failure to find and correct the underlying problem will definitely cause expensive corrective action down the road.

Some investors are picking up bargain foreclosures in storm-damaged areas, and renovating for profit or rental conversion. Moisture detection is extremely important in these situations, especially when there has been storm water intrusion.

Mold

Both of the previous defects have almost zero cost tests once you buy the inexpensive testers. Mold is a different matter, as other than visually seeing it, only lab tests can definitely state its existence and the type of mold.

Lowe’s sells a mold test kit for around $10. You take a test receptacle and attach it to a portable vacuum and gather dust around walls and under tubs and sinks around the home. Then you mail it to the lab. For a $40 fee, in around 7 days you get a report of whether mold exists and what type of mold is in the home. This is another very important test because mold remediation is extremely expensive, in some cases homes even being abandoned due to mold infestation. If you have the time, especially in storm-damaged areas, this is a test that can save you a fortune, especially if you avoid a tenant lawsuit over health problems.

Sure, you can hire professionals for all of this, but especially for the first two, you can take a couple of minutes during your walkthrough to see if you need to do more inspection.

Source: huffingtonpost.com

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Townhouse Construction Growth Continues

Mon, 11/27/2017 - 9:02am

According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, townhouse construction starts continue to post gains.

Over the last four quarters ending with the third quarter of 2017, townhouse starts totaled 98,000, 4% higher than the four quarters prior. Townhouses, or single-family attached housing, represented 26,000 starts during the third quarter of 2017, 18% higher than the total during the third quarter of 2016.

Using a one-year moving average, the market share of new townhouses stands at 11.8% of all single-family starts. After a soft patch, the market share is rising again.

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when the share reached 14.6% of total single-family construction. This high point was set after a fairly consistent increase in the share beginning in the early 1990s.

Despite the drop in market share during the Great Recession, the share for townhouse construction is expected to increase in coming years – with occasional ups and downs. The long-run prospects for townhouse construction are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.

 

Source: eyeonhousing.com

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Preserving History Boosts Local Economies

Mon, 11/27/2017 - 8:59am

Across the U.S., designated historic districts attract more business, jobs and tourists than nearby neighborhoods.

In San Antonio, history pays.

The city has 29 local historic districts, including the area around the Alamo. The designation protects a neighborhood with a high number of historic buildings or sites by restricting development and demolition.

“Our districts are not frozen in time. They’re vibrant and changing,” says Shanon Shea Miller, historic preservation officer for the city of San Antonio. “We just have the regulations in place to make sure they’re changing in a way that’s positive.”

San Antonio did a 2015 study showing that its historic districts not only generate more tourism dollars but also more construction jobs than other parts of the city. Continuing its historical preservation efforts, the city designated in September its most recent local historic district, an area known as East French Place with Craftsman bungalows built in 1922.

Homeowners sometimes scoff at strict regulations, but it’s precisely those rules that make local historic districts across the U.S. – from Greenwich Village in New York City to Savannah, Georgia – economically outperform other areas within the same city.

A neighborhood can obtain a historic designation at a federal or local level. The National Park Service maintains the National Register of Historic Places, a list of federally designated historic places worthy of preservation. If the federal government undertakes a project, such as building a highway, it must go through a process to consider any National Register sites in its path, says Tom Mayes, vice president and senior counsel at the nonprofit National Trust for Historic Preservation.

But local designations offer more protection, since that’s where most development happens. Different cities and municipalities have their own designations for local historic districts. Each locality’s definition and regulations are different, but the rules are usually stricter than that of the National Register.

“If I like what Greenwich Village looks like, the fact that it’s designated means that more of that fabric and character will remain,” says David Listokin, professor at Rutgers University’s Bloustein School of Planning and Public Policy.

Local historic districts can focus on the minute details, requiring a homeowner to get approval for an addition to a house or even the paint color. In San Antonio, a design commission reviews 2,400 cases a year in the city’s historic districts, which include about 10,000 properties, Miller says. The cases include new construction, demolitions and exterior modifications.

“[With the] National Register, tear down the house tomorrow and nobody can do anything about it,” says Donovan Rypkema, principal of PlaceEconomics, a Washington, D.C.-based historic preservation and economics consulting firm. “The only protection comes from those local districts.”

An area doesn’t need to be on the National Register in order to be a local historic district, and vice versa. Standards for local districts often grow out of national ones, but what constitutes a local historic district depends on the place. The age of the property plays a part, Listokin says.

“’Historic’ is often broadly defined,” he says. “It’s not ‘George Washington slept there’ necessarily, but looking at architectural achievement, cultural significance, et cetera.”

Protecting the character of a neighborhood can have economic benefits. No matter the region of the U.S. or the wealth within a neighborhood, rates of real estate appreciation in local historic districts outpaces comparable neighborhoods and the city as a whole, Rypkema says. Local districts’ property appreciation even outperforms those on the National Register.

“It’s almost counterintuitive, but it’s really because of the protections that a local district provides that the National Register does not provide,” he says. “The first response is, ‘Well, you’re going to have more regulations, ergo that’s going to hurt property values.’ In fact, in at least this instance, the opposite has been true. The reason is not that people pay a premium for the right to go and appear before some goofy preservation commission. It’s they’re paying the premium with the confidence that the lunatic across the street can’t do something to his property that has an adverse effect on my property.”

San Antonio has seen the effects. In 2013, the average price per square foot for a single-family home outside of the city’s historic districts was up about 68 percent from 15 years prior. Meanwhile, homes in historic districts had increased 139 percent, according to the 2015 report.

The downside to rising property values is that it can price out residents, so cities turn to property tax relief for a designated historic property and community land trusts to help properties stay affordable, Mayes says. Portland, Oregon, has a plan to manage the effects of gentrification. A community land trust exists in Greenville, South Carolina. And California has a tax abatement program for the restoration and preservation of historic buildings by private property owners.

Miller says in order to combat large real estate price increases, San Antonio’s historic districts offer local tax incentives for substantial rehabilitation and for owners to live in their property.

Besides property values, historic preservation can boost business.

The creative economy, especially independent businesses and startups, tends to flock to historic districts, Mayes says. These neighborhoods also have a higher proportion of women- and minority-owned businesses.

“Whenever you drive into a city, the cool place where a lot of people want to go is almost always a historic district where there’s a mix of businesses,” Mayes says.

Rypkema says many small companies want their building to reflect the character of their business. Historic districts make sure those buildings aren’t torn down.

“There’s this kind of qualitative character attraction of historic buildings that will attract the startup business, the new business,” he says. “That’s where the real kind of economic growth and employment growth is. It’s the little guys, not the giants. And if we can have a local economy that is fostering startup businesses and new businesses and small business expansion, that’s a real swing for that local economy. Often it’s those older and historic buildings that are the magnet for those kinds of businesses.”

That’s what happened to Gene Kansas when he searched for a location in Atlanta to open a shared workspace. He says the Southern Schoolbook Building, built in 1910, called to him.

“I came to the building and was like, ‘My God, this would be an incredible place for this concept,’” Kansas says.

The building is in Sweet Auburn, a district known for its history as a black commercial center and the birthplace of the Rev. Martin Luther King, Jr. Kansas moved his commercial real estate company into the space in April because he liked the neighborhood’s history. Constellations, the shared workspace where he serves as founder and president, will open there in May 2018.

“There’s the charm and the character of old buildings, which is incredibly nice from an aesthetic standpoint, but the real reason is the culture, the history and the consequence of Sweet Auburn in particular,” Kansas says. “You’re talking about the birthplace of the civil rights movement.”

Miller says historic preservation creates jobs, including in San Antonio. The rehabilitation and preservation of buildings is more labor intensive than new construction, leading to more money spent on workers rather than materials.

“People get paychecks and they go out and they get their hair cut and they buy groceries and they spend more money in the local economy,” she says. “Spending the new construction on materials doesn’t have the same economic impact.”

Local historic districts have a hand in preventing foreclosures on those buildings. The rate of foreclosures in these districts is one-third to half of the rates in the rest of a city, Rypkema says.

“It’s not that if I live in a historic district that I never get fired or never get divorced or never run up my credit card bill so much. That of course happens every place,” he says. “The difference is that there is a latent strength in demand for properties in those local districts that if I do get in financial trouble, I can get that property sold before I go into the foreclosure side.”

Local historic districts also lead to more money from tourists. Heritage tourists tend to stay longer, visit more places and spend more per day than tourists in general. For example, Charleston, South Carolina, which became the U.S.’s first local historic district in 1931, attracts tourism and the culinary sector, Mayes says. In Pittsburgh, the extra money that heritage tourists spend compared to other tourists leads to nearly $64 million per year in additional economic activity, according to a 2015 report from PlaceEconomics.

“There are plenty of places that have no historic districts, but a good heritage tourism business,” Rypkema says. “The issue is: Is that sustainable when the market decides that’s a nice, old four-story hotel, but we could use that site and build a 30-story hotel because we’ve got all these tourists coming in?”

Local historic districts also improve quality of life since they tend to be more walkable to schools and public transit, leading to less traffic, Miller says.

It is hard to define what makes up the character of a neighborhood, but residents, businesses and tourists alike often find it preserved in a local historic district – even if they aren’t aware of the designation.

“Very few people seek out the suburban mall to go on vacation. We seek out the authentic, local experience and what makes places unique,” Miller says. “A historic designation is a great tool for accomplishing that.”

Source: usnews.com

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Baby boomers, like millennials, are flocking to rentals offering a ‘hands-free’ lifestyle

Mon, 11/27/2017 - 8:52am
  • Baby boomers are the fastest-growing group of renters, Census figures show.
  • More than 5 million baby boomers are expected to rent their next home by 2020.
  • Many boomers want amenity-rich full-service buildings like millennials, brokers tell CNBC.

Russ Chung once lived in a sizable Midwest home, but he recently downsized to a luxury one-bedroom rental in Midtown Manhattan just blocks from Central Park.

Now, rather than mowing a lawn, the 60-year-old higher education administrator spends his free time visiting museums and taking in New York’s other cultural offerings.

“As you get older, there are only so many things you want to concentrate on. Apartment life lets you focus on things that matter and get rid of stuff that takes up a lot of time,” said Chung. His building’s concierge signs for his packages, and arranges for housecleaning.

Chung is one example of a subset of baby boomers who have become the fastest-growing group of renters across the nation. Since they tend to have more money to spend than their millennial counterparts, developers are actively figuring out how to lure them to into one of the luxury buildings sprouting up across the city.

Both boomers and millennials are flocking to areas like downtown Brooklyn, where a flurry of new full-services high-rises are springing up — and they sometimes compete over units, Citi Habitats agent Jason Burke told CNBC.

According to Burke, even though there is a glut of these new apartments, there is only a limited number in certain price ranges. Most people want to get in first when the developers are offering the best discounts, he said.

“The boomers are the biggest demographic that can afford it,” he said. “But tech levels everything. We’re seeing a lot of engineers come to New York, a lot of people in tech who don’t work from an office.”

“A lot of millennials are moving into brand-new rentals, and a lot of boomers are saying ‘That’s what’s I like too.'”-Phillip Salem, Triplemint

‘We chill, it’s a community’

Between 2009 and 2015, the number of renters aged 55 or above rose 28 percent, while those aged 34 or younger only increased 3 percent, according to Census data recently crunched by search engine RentCafe.

Meanwhile, more than 5 million baby boomers across the nation are expected to rent their next home by 2020, according to a 2016 analysis from Freddie Mac. Some boomers want to stay close to the neighborhoods they have lived in for decades; others are following their children to cities, experts said.

Like millennials, many boomers want amenity-rich apartments in good neighborhoods.

“You would think they would be buying and investing in property, but a lot of people like the convenience and ease of renting,” said Phillip Salem, an agent at real estate brokerage firm Triplemint.

“A lot of millennials are moving into brand-new rentals, and a lot of boomers are saying ‘That’s what’s I like too,'” he added.

Salem’s own Manhattan high-rise — with a gym, yoga studio and three outdoor lounges — is comprised of about 70 percent millennials and 30 percent baby boomers, the 30-year-old estimated.

“When I’m on the roof deck grilling, there are a lot of baby boomers,” Salem said. “They come and sit with us. We chill. It’s a community.”

Chris Bledsoe, co-founder of the national co-living brand Ollie, told CNBC that boomers account for one out of every four email inquiries.

Ollie offers an all-inclusive living experience in micro-unit studio apartments (under 400 square feet), or micro-suites where renters have private bedrooms while sharing kitchens, bathrooms and other common spaces. Roughly 80 percent of tenants in Ollie buildings are in their 20s and 30s, but just under 20 percent are over the age of 50 — and about a third of those are in their 60s, Bledsoe said.

In fact, Ollie renters only need to bring their toothbrushes. The units come with modern multipurpose furniture to make the most of small living spaces. A butler service called Hello Alfred sends home managers to pay weekly visits to water plants and make beds, while each building organizes social events like ski trips, whitewater river rafting and guacamole-making contests.

“I say millennial is a mindset not an age group,” he said. “Boomers are seeking something urban. They want cultural vibrancy, the theater. They want to be close to where their kids and grandkids are.”

A sign advertises an apartment for rent along a row of brownstone townhouses on June 24, 2016 in the Brooklyn borough of New York City.

Zach Ehrlich, of New York-based brokerage Mdrn. Residential, recently launched a concierge-like rental service called Stoop that offers short-term leases. It’s attracting interest among boomers looking for a “hands-free lifestyle” and to sample living in new places.

“There are a lot of seniors finding they want to have more flexibility,” Ehrlich said. “They also want to have some sociability, whether they lost a spouse or are separated or just don’t have a family unit.”

Wendy Sanders, a Long Island, New York-based broker with Douglas Elliman, said that downsizing boomers often sacrifice space to live in something that’s brand new.

“They’re looking for maintenance-free living. When the toilet overflows, they want someone to take care of it,” she said.

For Chung, whose job brought him to New York this spring while his wife spends more of her time in their 2,500-square-foot home in Ohio, it is important that he feels well cared for — yet not part of a senior residence, he said.

“As I’m getting older I’m stressed about this: If I fall down and hurt myself here, what do I need to do?” said Chung. “Why am I even worried? I’m going to pick up the phone and call the front desk. I just have to get to the phone.”

Source: cnbc.com

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What Happens When A Tenant Breaks Your Lease

Wed, 11/22/2017 - 10:39am

Posted on Nov 22, 2017

After accepting a tenant for a vacant apartment, you move to decline all other applicants. However, if your tenant wants to break your lease before moving in, what happens to your vacant unit? Find out how to move forward in this unpleasant situation to protect your interests and recover quickly.

What if tenants change their minds before signing your lease? If your tenant changes his or her mind before signing a lease, all you can do is advertise your vacancy immediately and hope to attract another tenant. It might be worth reaching out to previous applicants, who may still need a place to live. A verbal promise to occupy the apartment, or a verbal lease, is not binding. 

What happens if you accepted a security deposit? If you accepted a deposit to hold the apartment for the tenant, you can keep this deposit.

Once a tenant signs a lease agreement, he or she has entered into a binding contract with you. If a tenant changes his or her mind and decides not to move in, the tenant effectively breaks that lease. What happens next depends upon the specific language of your lease.

What happens if your lease has an early termination clause? If your lease has an early termination clause, then it spells out what happens in the event the tenant breaks the lease early. This clause might say that the tenant can be assessed a one-time fee equal to one month’s rent, for instance. A security deposit protects damage to the apartment and cannot be used to cover a lease’s early termination. If you collected a security deposit from the tenant, you must refund it.

What if you didn’t include an early termination clause? If your tenant signed a lease that doesn’t have an early termination clause, he or she is liable for the entirety of the lease term (e.g., 12 months or one month for a month-to-month lease). However, you, as a property owner, are obligated to try to find a new tenant. If you are able to find a renter within two months, the tenant who broke the lease is only liable for those two months, not the 12-month period.

Depending on your state’s laws, the tenant who broke the lease may have to pay your costs for advertising the rental.

How to Protect Yourself From a Tenant Breaking a LeaseWhile you can’t prevent a tenant from breaking a lease, you can protect yourself in two ways: Documenting everything — in case the issue goes to court — and making sure your leases protect your interests. 

If a tenant verbally tells you he or she won’t be moving in, ask him or her to send you a written 30-day notice for your records. Maintain the written notice as well as your signed lease and any email correspondence with the tenant. Remind the tenant that he or she is liable to pay the rent until you’re able to re-rent the apartment. Then, focus on finding a qualified replacement tenant.

As you screen potential tenants, review your lease agreement. Did it offer protection against a tenant breaking a lease, or did it lack an early termination clause? If you need to update your lease, you may be interested in becoming an American Apartment Owners Association member. Our members receive the lowest price on landlord-tenant forms, updated landlord-tenant laws by state, and access to tenant screening services.

 Disclaimer: All content provided here-in is subject to AAOA’s Terms of Use.

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3 Ways RentGuard Can Improve a Security Deposit

Mon, 11/20/2017 - 4:35pm

After years of hearing landlords complain about losing money from lost rent, damages, evictions, and legal fees, AAOA introduced RentGuard to provide coverage for these common worst case scenarios. As of last month a RentGuard Analyzer is included in every tenant screening package to determine whether your tenant qualifies for RentGuard protection. If they qualify you can get coverage ranging from $2,500 to $10,000 for as low as $299 annually. You might be wondering how this could help or affect your security deposit policy. Here are three ways landlords are using RentGuard to improve their security deposit.

  1. Use RentGuard to Reduce Your Security Deposit

You might be thinking “Reduce the security deposit? Are you crazy?!”… Well with RentGuard it’s definitely not crazy – you’ll get more protection than a security deposit alone and your tenant will have lower move-in costs. Here’s why this matters. For many tenants coming up with a security deposit can be out of reach or may leave them stretched thin. Also, a security deposit may not be enough to cover the cost of damages or lost rent later. For example, if rent is $1,000/mo and the tenant provides you with a $2,000 security deposit and later your lost rent or damages total $4,000, you will likely be paying out of pocket for the difference.

So how can you increase the protection you’re getting without increasing the security deposit? You can reduce the required security deposit and have your applicant purchase RentGuard for a low annual fee. For only $299/yr you would get $2,500 of coverage plus whatever security deposit you collect. It’s a win-win for you and the tenant.

  1. Use RentGuard to Add to a Security Deposit

You probably have a set of requirements for applicants interested in your rental, such as a certain credit score or rent to income ratio. If the applicant doesn’t meet those requirements you might automatically decline them or ask for additional requirements like a cosigner, higher rent, or more security deposit. The problem with declining a tenant is that your vacancy will be extended and the applicant is left looking for a place – this is a lose-lose situation. It’s also likely that some of your additional requirements might be out of reach for your applicant and none of these requirements will get you that much coverage.

By using RentGuard instead you can get up to $10,000 annual coverage that either you or your tenant can purchase for a low cost. This means substantially more coverage for you and a home for the tenant.

  1. Use RentGuard to Instead of a Security Deposit

On average a security deposit is usually $5,000 or less. RentGuard has coverage options of $7,500 and $10,000 starting at $897/yr. Although RentGuard doesn’t get refunded to the tenant at the end of the lease as a security deposit would, the tenant may prefer to pay only $897 upfront instead of a big security deposit to lower their move-in costs. This would make a move much more comfortable for them and you would get much greater protection.

 

If you have questions about using RentGuard please call the AAOA team at (866) 579-2262 or visit 

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Tenant Turnover Can Wreck Your Profits: Here’s the Simple Solution to This Costly Issue

Mon, 11/20/2017 - 3:05pm

Turnover is when one tenant of a rental property moves out and the next one moves in, sometimes with time in between. Whether you own one rental or a thousand, A-class or D-class properties, one thing that all rental real estate has in common is turnover. Most, if not all, rental owners will agree turnover can be the biggest operating expense. A bad turnover can literally wipe out years of profit in a real estate investment. If turnover is something every rental owner deals with and is such a huge factor of investment success, don’t you think it would be a good idea to figure out 1) how to minimize turnover and 2) how to make it as efficient as possible?

When a rental property turns over, the owner has to fork up the cash to do all needed repairs and updating to the property to make it rentable and desirable again. This can include catching up on any deferred maintenance, cleaning the entire property, freshening up the landscaping, advertising the unit, answering inquiries, showing the property, screening applicants, signing leases, getting fees to property managers, and watching the days tick by as your property sits empty with zero rent coming in. It can be painful if you don’t know how to minimize this profit-draining event.

Why Am I Writing This?

Before I jump right into the how to of the article, let me tell you a little about why I am writing this and my own experience. When we first started in real estate, we bought C-class single-family homes to rent out. Like many, we didn’t want to pay the 8-10% property management fee, so we decided to self-manage. With our background in construction, my education in sales and marketing, my partner’s real estate license, our available time, and our desire to build a real estate investment company, we thought it will be good to learn how the process worked while also keeping our costs low.

All went well—we made mistakes; we adjusted and continued to grow. Like many investors, we hit a ceiling at about 20 units, where the property management began to take up too much time. It was interfering with continuing to grow the company and portfolio. Because of this, we took the typical route—we decided to start looking for professional property management companies to hire. The big difference was that we didn’t look on Google and call the sales department of the property management company. Instead, we looked on Zillow, Apartments.com, Craigslist, etc. We looked for listings similar to the properties we had, and we called the listings as if we were prospective tenants. We wanted to see how the property managers were actually handling the real world process of leasing rather than just hear from a sales rep in their main office.

The results were dismal. Phone calls were ignored and emails not responded to. We witnessed unprofessionalism on the phone and even blatant breaking of the Fair Housing laws. After weeks of bad results, we decided not hire outside management but instead took the processes we had learned and vertically integrated a management company and staff into our business to oversee our portfolio. I am pleased to say that with over 200 residents currently living in our properties and hundreds more over the years, we have never had an eviction and we have never paid someone to leave. We run between a 95-100% economic occupancy. And most importantly, we minimize turnovers and make them as efficient as possible when they do happen.

While reading this article, think of some of the landlords or property managers you know. Maybe if you self-manage your rentals, you can even self-reflect.

The reason we started to look for property management companies by calling listings as if we were prospective tenants is because we knew that the life blood of our investments was the customer service from our property management and our resident’s overall experience while living in our homes. What we found was other property management companies and landlords, especially in C-B class properties, obviously did not feel the same.

I don’t know if the term “landlord” makes people feel like royalty and like their tenants are peasants or what. In almost every other privately run company, the terms “customer experience” and “customer service” always are always in the topic of conversation, but hardly ever do landlords and property management companies even think of their residents as customers. Unfortunately, it’s more like “get them on the lease and hope you never, ever hear from them again.”

This is a huge mistake on the part of the average landlord—and a tremendous opportunity on your part. Business is business. Call them whatever you want—tenants, residents, customers, whatever—but these people are the life blood of your investment, and if their overall experience is good, they will stay longer. If it is bad, they will leave sooner. If their customer experience is good, when they do leave, they will typically leave with respect for your business.

So, How Do We Minimize Turnover?

This gets me started on my first key point. How do we minimize turnover? So often we hear more about how to make a bulletproof lease, as if the goal is to lock someone into your property. I have news for anyone renting out B, C, or even D-class properties: If your resident leaves, it’s usually not even worth the time and cost to take them to court to recoup whatever your “bulletproof” lease says they owe you. Even then, there is the strong possibility they don’t have anything to take. So rather than trying to lock people into your homes, why not make it so they enjoy renting from you, prefer it, and want to be there paying for the product and service you provide?

You do this by creating a positive customer experience for your residents. Every other industry has this figured out, but for some reason, we royal landlords can’t get this. Even hotels and high-end rentals are pros at customer experience. Think about the last hotel you stayed in. If you checked in, signed the papers, and went up to your room to find a flickering light bulb, TV remote batteries missing, and a chirping smoke alarm, you would likely call the front desk. If they didn’t answer the phone or told you the paperwork you signed says that they don’t have to fix that, do you think you would be hanging around for long? Of course not. You’d walk over to the next hotel. Now, if those issues never existed or were promptly addressed, you would continue to stay at that hotel. Your rental property is no different.

This shows us that the answer to how we minimize turnover is simple. All we have to do is create a good customer experience for our residents. The million-dollar question is how do you do that in a financially feasible way for your investment and/or company?

The good news is that the typical management company or landlord has set the bar so low that it doesn’t have to be extremely time-consuming or costly to provide a customer experience that shines brightly above all others and leaves your residents knowing they are important.

Here are few ways you can make a big difference to your resident’s customer experience.

1. Welcome Gifts

So often after the lease is signed, the vibe often goes to “gotcha,” and those in charge of property management think their job is done. A very simple way to start your customers’ experience off on the right foot is a welcome gift. We can get this done for under $10 while also having other positives. You can even brand your company and build rapport with your residents.

Let me get specific. It’s a little cheesy, but place items in the unit before the resident moves in and put little tags on them with phrases. Some examples would be placing a few bottles of waters or sodas in the fridge with tags on them that say, “It’s so refreshing to live in a [your company name]property.” Or place a bag of candy on the counter with a tag that says, “It’s sweet to have you as our resident!” Or leave a plunger in the bathroom with a tag that says, “Stuff happens. If you have a maintenance request, call 555-5555 to schedule a [your company]trained maintenance tech to assist.” Or you could put a dog bone out for your residents with pets that says, “[Your company] even loves our furry residents.” We have many more, but you get the point. These are very minor things that cost so little but can start the customer experience off on the right foot and get you on your way to minimizing costly turnovers. I would rather spend $10 on this than $3,000 on a turnover.

2. Quarterly Checks

Going into your property a few times a year to check on things is a must! You have to keep an eye on things, but instead of busting in like a S.W.A.T. team and pointing out everything that’s wrong, why not check smoke detectors and change furnace filters while you are there? You can call it “quarterly safety and energy efficiency maintenance.” While you or your staff is there, compliment your resident on something—how the unit is kept, the nice picture of their family, the newer-looking couch. Even ask them if there is anything else you can do for them. These are not groundbreaking tips, but for some reason, the norm is more like a quarterly raid.

3. Anniversary Presents

What do most landlords do when their resident’s lease is about to expire? They send them a notice to renew the lease or call them and notify them of their contractual obligations for notice.

What if instead you sent them a letter at month 10 of a 12-month lease that generally says, “Can you believe it’s been 10 months? Time flies when you’re with people you like. To thank you for being one of our favorite residents and ensure we are continuing to provide the best living experience we can for you, we would like to celebrate your (XX) year anniversary with a gift. Feel free to select one of the following items, and we happily take care of it on (xx/xx/xxxx)”? This date will land shortly after their anniversary (lease expiration). After they make their selection of gift, then follow up with the new lease. The point is to make the lease another positive of living at your property, not a bulletproof contractual jail cell they will have to abide by—or else.

Those anniversary gifts can be whatever you want, but we offer items that add value to both us and our residents. A few specific examples are:

  • “You work hard. This week, let us take care of the housekeeping. We will hire _______ cleaning company for a whole home professional cleaning on us.”
  • “Feel like the carpets need a refresher? We will have your carpets professionally cleaned by ___________.”
  • “Smudges and dings driving you crazy? Let us help you out and repaint one room of your choice.”
  • “We’d like to offer you $X off your month’s rent for the month of __________”

You get the point. Or if you don’t want to be self-serving, you can simply give more gifts like a gift card or the $X off rent, etc.

Another small tip would be to include on the list what the anniversary gifts are for 5 or 10-year residents. It could be things like appliance upgrades, full home painting, new flooring, etc. This will have residents already thinking of year 5 and 10 at your properties. Of course, this is all relative to your resident base. We own C-B class properties, so this list is appealing to our residents who may not have the luxury of having a professional cleaning company ever clean their home. Do what fits your business and your residents, but the point is that lease renewal can be a fun thing—something exciting, something that even builds your resident’s positive customer experience.

These are just a few of the unique examples of how to build a positive customer experience for your residents and minimize turnover. There are of course many, many more, including more obvious examples such as being responsive to maintenance requests, upkeep common areas, etc.

By keeping customer experience in mind, you will minimize turnover and as a result, increase your bottom line.

Turnover Happens

No matter how good you are at creating the best customer experience for your residents, you will have turnover. Life happens, people have children or children move away, jobs transfer, and so on. Still, all you have done to give a good customer experience will even pay dividends at this time. When residents have been respected and respect their landlords, they are far more likely to give adequate notice of moving, not break leases, and leave the property as clean and rent-ready as they can.

Even then, turnovers can be expensive. There is still a time where that unit is not making income, and you still have fixed expenses on it. Normal wear and tear and outdatedness will need to be upgraded or repaired. You’ll likely need to clean, list, and show the property, as well as screen and sign new tenants, which all takes time and money.

Because this process is inevitable if you rent out property, it’s a good idea to get as efficient at it as possible. Get your timing down to a rhythm, know who does what and have them scheduled, get the right materials there at the right times, and get the unit filled to produce income as soon as possible.

Although we are a little fanatical about making our turnover efficient (and this may be overkill for many), I will share one piece of our turnover process to help show how you should be striving to cut down on lost income and expenses. In our company, we have what we call our “turnover checklist.” This has been evolving for years and is now in app form (sorry, everyone, the app’s not for sale). Our managers can walk around a unit with their tablets and are prompted room by room to address specific items and check to see if they are needing to be repaired or replaced—or whether they are clean and good. If they click “replace” or “repair” for a specific item a comment box, it offers them an option to take a photo, annotate the photo, and select out of a preloaded list the correct material items that fit that specific unit and item.

For example, if you were in the bathroom of our Spring Valley apartment unit #1 and you selected that the door needs to be replaced, it would prompt you to select the needed materials, which are pre-loaded for our specific company property and unit. This means because you are in Spring Valley apartment unit #1 in the bathroom, we know that is a 30” left-hand swing six-panel door. So this would be your only option. Once the door type is selected, there is a prompt asking if you need a doorknob, hinges, a door stop, or any other corresponding material needed for this task. Think of it as Amazon where it says “People who bought this also bought this.”

After walking the entire unit, the manager clicks submit, and automatically our maintenance tech receives a detailed scope of work, the corresponding material list, and a schedule indicating when the repairs need to be made. Our Home Depot rep receives a materials order with all prices and SKU numbers included, as well as needed delivery date and time (inputted by the manager). A list of materials gets sent to the bookkeeper to make sure he is pushing forward depreciation on any capital expenditures we may have replaced during the turn. And finally, all of this gets auto-saved into drop box under that specific property and unit folder for reference.

Now, this is overkill if you have a few properties, but because we invest in large multifamily properties where lots of units can be identical, this makes us extremely efficient in our turnovers. We’ve cut down on our communication errors, trips to Home Depot, and time that units stay vacant. I realize this level is not practical for everyone, but I share our system to inspire those of you who use a simple checklist to figure out ways to make this process more efficient so when your units do turn over, you can boost your bottom line significantly.

Turnover and vacancy are some of biggest expenses rental investors pay. Many times, they can make or break an investment. The good news is if you know how to minimize these things through customer experience and operational efficiency, when they do happen, your company will thrive.

Landlords: How do you keep turnover to a minimum? Do you focus on customer service or another aspect of your business? Why?

 

Source: biggerpockets.com

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8 markets where housing inventory is actually growing

Mon, 11/20/2017 - 3:00pm

Nationally, available housing inventory’s latest year-to-year drop of 12.2% is the steepest since 2013, but the supply of homes for sale is actually increasing in a handful of markets.

“Despite strong buyer demand, sales are sputtering due to low inventory,” said Redfin Chief Economist Nela Richardson in a recent report by the online real estate company. “The last time we saw a substantial increase in the number of homes for sale, Donald Trump was a candidate in a Republican field of 11.”

But while inventory has contracted for 25 straight months in the United States as a whole, there are exceptions to the rule in parts of the South and Midwest.

In October, inventory grew year-over-year in eight of 74 metropolitan areas Redfin tracked over the last 12 months.

In contrast to hot home-sales markets like San Jose, Calif., where inventory plunged nearly 52% in the year-over-year and the median home price is over $1 million, houses available for sale in these eight regions increased by nearly 3% to 13% and have prices closer the U.S. median of $288,000.

There are anywhere from 3,000 to 14,000 homes for sale in each of these eight markets, and in most cases they tend to have sales that have slowed by 1% to 10% year-over-year. However, prices are up year-to-year by 1% to 10% in these areas.

Half of the eight regions are seeing month-to-month declines in inventory ranging from a fraction of a percent to almost 11%, but the other half are experiencing month-over-month gains in the supply of available homes for sale ranging from 4% to 11%.

No. 8: Allentown, Pa.

Total Inventory: 3,455 (2.50%)

Homes Sold: 711 (-9.80%)

Median Sales Price: $186,000 (9.40%)

No. 7: Nashville, Tenn.

Total Inventory: 9,664 (2.70%)

Homes Sold: 3,050 (-6.00%)

Median Sales Price: $268,000 (7.20%)

No. 6: Dallas, Texas

Total Inventory: 13,147 (4.10%)

Homes Sold: 4,658 (-3.00%)

Median Sales Price: $279,000 (8.20%)

No. 5: St. Louis, Mo. 

Total Inventory: 13,868 (4.80%)

Homes Sold: 3,305 (-3.90%)

Median Sales Price: $168,000 (1.80%)

No. 4: New Orleans, La. 

Total Inventory: 6,155 (7.50%)

Homes Sold: 1,004 (-6.30%)

Median Sales Price: $202,200 (12.30%)

No. 3: Austin, Texas 

Total Inventory: 7,501 (8.80%)

Homes Sold: 2,329 (-0.90%)

Median Sales Price: $290,000 (3.90%)

No. 2: Baton Rouge, La.

Total Inventory: 3,346 (12.90%)

Homes Sold: 807 (-20.30%)

Median Sales Price: $205,000 (8.00%)

No. 1: Raleigh, N.C.

Total Inventory: 7,771 (16.10%)

Homes Sold: 2,022 (2.00%)

Median Sales Price: $265,000 (6.90%)

 

Source: nationalmortgagenews.com

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