American Apartment Owners Association

The 10 Most Important Points of Maintenance for Your Rental Property

Thu, 09/07/2017 - 10:28pm

Managing a rental property takes more than just ownership. As a landlord, you’re going to be responsible for keeping the property in livable condition; landlord responsibilities can vary from state to state, but LegalZoom offers a succinct explanation, “Basically, the landlord of a rental unit is responsible for providing a “habitable” unit for a tenant. The term “habitable” means that the rental unit must be fit to live in, be free from hazards or defects, and be compliant with all state and local building and health codes.”

Part of your responsibilities include routine maintenance—inspecting and making changes to the property at least once a quarter (when possible). But why is this so important, and what are the most important areas to check?

The Importance of Routine Maintenance

Routine maintenance is important because it helps you catch problems on your terms, before they become emergencies. According to On Q Financial, “Maintenance is about catching a $5 problem today before it becomes a $500 problem next month.” Your goal here is to proactively spot problem areas and correct them before they become any worse. In doing so, you’ll save yourself lots of time and money, you’ll rest easy knowing your property is in good condition, and your tenants will be happier knowing they’re in a property that’s well-maintained.

Points of Maintenance to Note

So what are the most important points of maintenance to note?

  1. Locks and doors. First, you’ll want to inspect the locks and the doors. Locks can sometimes wear down over time, reducing security and making it harder for you and your tenants to gain access to the property. Misalignment or problems with the door can also affect both security and energy efficiency, so spot these problems early and get them fixed.
  2. Carpeting isn’t necessarily a safety hazard, but inspecting its condition can help you proactively detect and correct problems. For example, if a corner appears to be fraying, you may need to replace the carpeting soon. You may also want to have it professionally cleaned—especially between tenants.
  3. Air filters. If you have a furnace and/or AC unit, you’ll want to change the air filters regularly. Air filters prevent dust, dirt, and debris from getting into your system, and help the system operate more efficiently. According to Angie’s List, “Several factors determine when your filters need to be changed, but the main rule of thumb is if it looks dirty, change it! You shouldn’t wait until the filter is completely filthy though, because that means your heating and cooling system is not running at its full potential.”
  4. Air ducts. The air ducts in your house are similarly responsible for moving air from the furnace/AC unit throughout the house, and back. If they’re dirty, your unit isn’t going to operate at its full potential. Make sure you clean these at least once a year.
  5. Your appliances, such as refrigerators and ovens, shouldn’t need regular replacement, but an occasional glance may allow you to detect potential problems, and prepare for unexpected performance. For example, if you notice the refrigerator making a strange humming noise, you can get it repaired before it stops working altogether.
  6. Next, you’ll want to check the roof and ceiling. This is best done during or after a rainstorm, as leaks and holes make themselves most evident when water trickles through. Water damage to your roof tends to escalate quickly, so the faster you spot this problem, the better.
  7. Check the walls for any signs of damage; if there are any big holes, you’ll need to get them repaired as soon as possible. They’re both a safety hazard and a detriment to your home’s energy efficiency.
  8. Next, check the plumbing to make sure it’s working in proper order. Look out for things like dripping sinks or slow-moving drains, which can be indications of a bigger problem. Otherwise, make sure all your faucets, toilets, and water-based appliances are able to function properly with no leaks.
  9. Check to ensure all your windows are cleaned and opening and closing properly. If a window appears to stick, try to correct the problem early with lubricant rather than allowing it to get worse.
  10. Pest prevention. No matter where you’ve chosen to buy your property, it’s probably vulnerable to at least a few types of pests, including rats, mice, and insects. Check entryways, basements, attics, and other areas exposed to the outdoors for any cracks where pests could enter, and block those holes if you can.

If you don’t feel confident in your ability to inspect the property yourself, you can always hire a property inspector or a property management service to take care of this responsibility for you. These external services cost extra, usually in the neighborhood of a few hundred dollars, but it will save you several hours of work and ensure that you’re adhering to all the right regulations. If you haven’t already been maintaining your rental property, schedule a time for one today—the sooner you scout for these potential problem areas, the better.

 

Source: nuwireinvestor.com

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NAR Urges Congress: Act on Flood Insurance, Fast

Thu, 09/07/2017 - 10:19pm

Amid Hurricane Harvey and now a looming threat from Hurricane Irma, the National Association of REALTORS® warns Congress that letting the National Flood Insurance Program expire at the end of the month could have dire consequences. NAR says thousands of homeowners, consumers, and commercial property owners could soon find themselves unprotected and unable to get a mortgage.

The NFIP is set to expire on Sept. 30.

The NFIP helps to pay for and provide policies for millions of properties in at-risk flood areas nationwide. The program is currently $24.6 billion in debt.

“The country has been here before, and we know what happens if the National Flood Insurance Program expires,” says NAR President William E. Brown. “Home buying activity grinds to a halt, to the tune of 40,000 lost or interrupted sales every month. Meanwhile, existing homeowners as well as commercial entities may find their largest asset unprotected if the Federal Emergency Management Administration can’t renew NFIP policies that expire.”

In July, NAR announced it had reached an agreement with the U.S. House Financial Services Committee on legislation to reauthorize and reform the NFIP. The agreement included retaining a grandfathering clause so that consumers’ policies wouldn’t lapse and also a reduction in rate increases. But Congress has yet to act on the 21st Century Flood Reform Act.

“With Congress returning from August recess, extending the NFIP to avoid a lapse should be a top priority,” Brown says.

If Congress does let the NFIP lapse, FEMA, for example, will be unable to sell or renew flood insurance policies or pay existing claims.

 

Source: realtormag.realtor.org

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The top 10 cities where it’s easiest to rent an apartment

Thu, 09/07/2017 - 10:13pm

Apartment rental approval rates are up in the United States. The percentage of applications that are approved nationally is increasing, from an 81.7 percent approval rate in 2014 to 83.2 percent in 2017.

And, of the 2017 applicants, more than 60 percent are millennials, Nadia Balint, real estate writer and author of the study, tells CBNC Make It. They represent the country’s largest renting population.

With the average 20-to-24 year old earning $27,300 annually and the average 25-to-34 year old earning $40,352, though, it may be tough for them to rent an apartment in the most welcoming places. That’s because the cities with the highest approval ratings also have a marked preference for high salaries.

Here are the top 10 cities with the highest percentage of renters approved and the average income of the approved renters.

Seattle, Wash.

Percentage of applicants approved: 94
Average income of applicants approved: $86,603
Average income of applicants rejected: $67,040

Portland, Ore.

Percentage of applicants approved: 91
Average income of applicants approved: $68,279
Average income of applicants rejected: $44,159

San Francisco, Calif.

Percentage of applicants approved: 90
Average income of applicants approved: $109,946
Average income of applicants rejected: $72,226

Los Angeles, Calif.

Percentage of applicants approved: 90
Average income of applicants approved: $99,127
Average income of applicants rejected: $79,288

Washington, D.C.

Percentage of applicants approved: 90
Average income of applicants approved: $72,798
Average income of applicants rejected: $61,995

San Diego, Calif.

Percentage of applicants approved: 90
Average income of applicants approved: $64,979
Average income of applicants rejected: $60,860

Philadelphia, Penn.

Percentage of applicants approved: 89
Average income of applicants approved: $79,632
Average income of applicants rejected: $55,994

Nashville, Tenn.

Percentage of applicants approved: 87
Average income of applicants approved: $72,121
Average income of applicants rejected: $42,761

Durham, NC

Percentage of applicants approved: 81
Average income of applicants approved: $67,551
Average income of applicants rejected: $40,254

Scottsdale, Ariz.

Percentage of applicants approved: 71
Average income of applicants approved: $63,828
Average income of applicants rejected: $47,739

“In terms of an applicant’s income,” Balint says, “certain rental markets are very competitive. You have to make, on average, $110,000 per year to get an apartment lease in San Francisco and $99,000 per year to lease in Los Angeles. Even in mid-sized markets like Nashville, Portland or Durham, the incomes required are around $70,000 per year.”

But there are ways to increase your odds of being approved, Balint says. For starters, apply in the spring: Your chances are best in May and June.

Be sure to remedy any defaulted accounts, collections or charge-offs you may have, which account for one-third of application denials.

In addition, be aware of civil court lawsuits, judgments or liens, which account for 20 percent of rejected applications. And “aside from all other reasons,” according to the study, “your chances of approval do increase proportionally with your credit score.”

“For instance,” Balint says, “only 48 percent of applicants with a credit score below 500 are approved, but 98 percent of applicants with scores above 750 are successful.”

Source: cnbc.com

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Poor credit isn’t what makes renting hard—here’s the real problem

Thu, 09/07/2017 - 11:19am

The rate at which people in the United States are renting homes is the highest it’s been since the 1960s. For every 1 million rental applications, 15,000 are approved.

Rent Cafe analyzed lease applications submitted between January 2014 and June 2017 in the largest 100 U.S. cities and found that, while the overall approval rate has increased from 81 percent in 2014 to 83 in 2017, some apartment-seekers are still having trouble being approved.

And poor credit, low income and employment status are not the main reasons why.

“The biggest reason for denying an application, which occurs in one-third of cases, is having accounts in default, collection or charge-offs,” Nadia Balint, real estate writer and author of the study, tells CNBC Make It. That’s roughly 33 percent, ranging from minor to severe cases.

“The presence of civil court lawsuits, judgments or liens carry the second heaviest weight in deciding whether an applicant is eligible for a lease,” she adds, “accounting for 20 percent of rejected applications.”

About 15 percent of applicants are rejected due to negative or insufficient rental history, and 12 percent are denied due to the applicant’s criminal history.

The study found that only 8 percent of rejections are due to a low credit score. A negative or insufficient employment history or income leads to rejection in only 7 percent of cases.

“In some cases,” the study notes, “factors such as a proven record of timely payments weigh heavier than income. The bottom line is that landlords often look beyond the number that is the credit score.

“They look at the applicants’ track record of payments and debts incurred as indicators whether a person will be a good payer.”

Credit score does play a role, though. “Aside from all other reasons, your chances of approval do increase proportionally with your credit score,” the study says.

“For instance, only 48 percent of applicants with a credit score below 500 are approved, but 98 percent of applicants with scores above 750 are successful.”

Source: cnbc.com

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9 Common Apartment SEO Myths and Why They Are Wrong

Thu, 09/07/2017 - 10:50am

Search engine optimization—SEO for short—is both vitally important for most businesses and widely misunderstood. In this sense it’s like many other elements of online marketing—Craigslist, pay per click advertising, website design, etc.

This leads, predictably enough, to radically different experiences with SEO from person to person. Someone who works with a person who knows their stuff will reap considerable rewards from SEO work.

On the other hand, apartment communities that work with a less knowledgeable person will likely come away thinking that SEO doesn’t work and is a waste of time.

Today we want to talk about some of the most common apartment SEO myths, where they come from, and why they aren’t actually true.

Apartment SEO doesn’t work.

Why this myth exists: Many apartment communities that are new to the world of online marketing have tried doing some sort of SEO work. In some cases, this “SEO work” was actually not legitimate SEO but rather tactics that have been condemned by search engines, such as buying links or keyword stuffing.

In other cases, it was valid SEO work that the community didn’t stick with long enough or that didn’t work due to other problems in the community’s overall marketing strategy.

For example, if you create a website that is fast, has a good domain name, and is well-designed, you’ve done good SEO work. That said, if you don’t have any good content on the site, then the work you have done is not going to be sufficient to produce excellent results.

That is just one example, of course. There are lots of ways that SEO work can go wrong.

Why this myth is wrong: The main issue here is that it simply doesn’t make any sense given the business model that search engines are built on.

Search engines are only valuable to their users if they provide them with good results. If you don’t believe me just tell me the last time you looked something up on Lycos. Search engines are run by businesses that are no different than any other business: They have a product and that product needs to be valuable in order to be sold.

So as we think about this, search engines must have some rational way of assessing a website’s quality and usefulness which influences the results they show their users. If a search engine is not able to accurately judge a website’s quality, their product will be bad and they won’t be in business for long. If webmasters can figure out what search engines care about they can also figure out how to rank well on search engine result pages.

And the good news here is that we actually know a decent amount about what search engines care about when ranking websites. This means that if we build websites that do the things search engines want them to do, they should rank well.

Apartment SEO is a one-time task.

Why this myth exists: There are multiple parts to good SEO work. Some of it is something that you do one time like making the site mobile-friendly or setting up your page URLs correctly.

But other parts of SEO are ongoing like producing high quality content, keeping an eye on new developments with major search engines like Google, and updating old pages to keep them relevant and useful.

This myth exists because it’s half-correct: There are certain parts of SEO work that are one-time tasks or are, at least, highly infrequent tasks.

Why this myth is wrong: The thing you have to understand is that the primary fuel for SEO work is content. So you can set up your site correctly, obey all the rules, and so on.

But if you aren’t producing content it won’t really matter. Consider this screen capture from a side project I do during free time. I started blogging on that site in December–look at how the traffic numbers rose when I did that:

So it’s certainly true that some parts of SEO are one-time tasks. But many aspects of good SEO work are ongoing. If you neglect them, your results will suffer.

Apartment SEO is too much work.

Why this myth exists: There are two different concerns standing behind this myth. The first is that, as mentioned above, search engine optimization looks like an impenetrable black box to many who aren’t familiar with internet marketing and so any kind of work sounds like something really difficult. In many cases this has more to do with people simply not knowing how SEO works than it does with the actual difficulty of the task.

That said, there is another sense in which good apartment SEO work does take time and effort that many are not willing to give it. Part of the problem here is actually the fault of some SEO professionals as they (well… “we”) are not always as careful as we ought to be about communicating realistic timelines for search engine optimization work. On this point, this video from Moz is extremely helpful.

If you want to do good SEO work, you need to take the time to create a good website and to make good content to put on that website. All of that takes time. You also need to think about things like URL structure, structured data, and some other more technical points. All of that takes more time.

When you do it the right way the reward is nearly always well worth the work, but it’s not always easy to remember that when you’re actually doing the work.

Why this myth is wrong: Long-term good apartment SEO work will pay for itself in the form of high-quality leads and a more efficient leasing process.

But we should also flip this question around—is it possible that not doing apartment SEO work will actually create more work for your team? We believe the answer to that is an unambiguous “yes.” If you get your SEO work right, then long-term you are well positioned to generate a steady supply of quality leads that should convert at a higher rate, thereby making your leasing staff more efficient.

On the other hand, if you don’t do this SEO work then you’re setting yourself up to be where many of our clients are when they come to us: scrambling around trying to find leads through “outreach marketing,” social media tricks, and expensive internet listings.

These strategies generally offer fewer leads who also tend to be much colder because they haven’t been able to do the kind of research before speaking to your leasing staff that leads generated via SEO have.

So yeah, SEO demands some intensive work and regular upkeep. But the question isn’t whether you can afford to do that work, it’s whether you can afford not to.

Apartment SEO is too complicated.

Why this myth exists: As mentioned above, SEO can sound like some sort of magical incantation to people who aren’t familiar with search engines or online marketing. But often times the things that sound really complicated actually aren’t that difficult to understand.

Take URL structures for example. Though they aren’t a major ranking factor, URLs are factored in by search engines when ranking pages. Additionally, an understandable URL can help human users know what to expect from a page, which is another reason you want to structure them correctly.

Let’s take two examples below:

Which of those two is easier for you to understand? The second, right? In the first case we just have a bunch of random numbers and letters. The second page, in contrast, is clearly about the community’s two-bedroom floorplan.

That’s really all there is to URL structure. Are you creating URLs for your pages that are complicated and confusing or clear and precise?

Many other SEO concepts are similar.

For example, we sometimes run into websites that have canonicalization issues. This is another one that sounds complex because of that huge word we used to describe it, but once again it is fairly simple: If you don’t set up your website correctly when you’re launching it, you can end up with two versions of the same site on almost identical domain names, which confuses search engines because they don’t know which site is authoritative or canonical.

It sounds complicated but really it’s a simple matter of communicating your intentions for the site to the search engine.

Why this myth is wrong: Many SEO concepts are not as complex as they first sound. Indeed, if you work with a capable SEO professional you can usually get fairly easy-to-understand explanations for most SEO concepts that might sound much more complicated when you first hear the term.

Apartment SEO is a scam.

Why this myth exists: This myth exists for a fairly simple reason: There is no shortage of scams out there purporting to be “SEO.”

In many cases when someone says that SEO is a scam they’re saying that because they or someone they know got an email one day promising to do x, y, and for them and they believed it. They likely paid a large sum of money to the person.

And then the person disappeared. Or the work never got done. Or they got a temporary bump in traffic and then got a nasty Google penalty that they still haven’t recovered from.

Here are three simple rules to keep in mind to figure out if someone is a scammer:

  • If what they are saying sounds too good to be true, it almost certainly is.
  • If someone is willing to guarantee a certain outcome, they’re a scammer.
  • If they are talking about buying links or keyword-dense content, stay away.

Why this myth is wrong: The uncomfortable thing here is that the myth actually isn’t wrong depending on what you mean by “apartment SEO.”

If you mean “producing content that apartment shoppers find useful and helpful,” then it’s not at all a scam.

But if you mean “buying up links and stuffing keywords into every nook and cranny of the site,” then yes, that’s a scam and Google will punish you for it.

Apartment SEO is about being first for “apartments in (city, state).”

Why this myth exists: This myth exists for a relatively simple reason: Many people think that success on search engines requires being the top ranked result for one or two high frequency search terms. They imagine thousands upon thousands of people searching for that keyword and think “if only we ranked first for that, then we’d really be doing well.”

But this is almost never how SEO ought to be done and it is certainly not how it should be done in our industry.

Why this myth is wrong: In general, this strategy should be avoided because of what is called the “long tail strategy.”

Briefly stated, the idea is that it’s better to get 10 visits each from 75 different keywords than to get 500 visits from one keyword. The former strategy won’t be widely noticed or attract as much attention, but it actually generates considerably more traffic than the latter strategy. For example, with my soccer site I’ve mentioned before, I could spend tons and tons of time and money trying to rank for “soccer newsletter” or “soccer blog” or some such.

But there’s no way I would be able to win those keywords realistically. However, if I generate lots of good content and start winning keywords like “atletico madrid tactics,” “liverpool 3-4-3,” or “roger schmidt tactics” (and I rank well on all of those right now) then I can generate some considerable traffic from all of those more specific keyword searches.

There’s a second reason specific to multifamily that long-tail thinking should be preferred.

If someone searches “apartments in lincoln ne” that suggests they are at the beginning of the apartment search and aren’t necessarily a great lead for your community anyway.

  • If they have a dog and you don’t allow pets, that lead is useless to you.
  • If your price is outside their range, then the lead is useless.
  • If they want something in another part of town, then that lead is useless.

It’s actually far better to rank for “two-bedroom apartments in uni place lincoln ne” because that suggests the person has fairly specific needs—and if you meet all of those then you are instantly in a strong position to convert that lead into a lease.

The same thinking applies to someone who searches for your community by name. If a person does that then you know that they already know your community exists and are interested in you enough to search for you–so that’s another high-quality lead you want to find your community website.

So the long-tail strategy doesn’t win simply because it probably generates more traffic, it also wins because the traffic it generates is higher quality.

Apartment SEO is magic.

Why this myth exists: When I talk to someone from our development team, most of what they describe to me sounds like magic. I don’t understand what they do, I only see the outcomes.

This is how SEO is for most people. They hear vague references to words that sound like they mean something and simply trust that it’ll work.

Unfortunately, this is where most of the misinformation about SEO comes from. Because most people don’t understand what SEO professionals do it is very easy for less scrupulous people to take advantage of less knowledgeable business owners.

Why this myth is wrong: As we discussed above, there actually is a discernible order to search engine optimization.

Companies like Moz have a fairly developed idea of what goes into ranking well with search engines. Factors ranging from quality content to the authoritativeness of a domain or a page to social signals to more behind-the-scenes technical issues like structured data, user bounce rate, and so on all factor into the ranking formula for search engines.

So it’s simply not true that SEO is some sort of uncontrollable magic. Search engines are understandable, rational products created by real businesses. There is a defined order to them, in other words. And if you know how it works, you can build up a nice presence on organic search.

Apartment SEO isn’t affected by the quality of my website.

Why this myth exists: This myth is closely related to some of the others we’ve discussed.

When you get your SEO information from any of the scam-artists out there today, they are going to tell you that everything depends upon behind-the-scenes technical work that they have to do. They won’t be terribly specific about what any of these actual tasks are. They’ll tell you that they can get reliable search traffic to any site. But they almost certainly won’t get specific about what this means.

When someone cannot explain to you clearly what they are going to do for you and why that will help your site, that should make you suspicious. You should understand what you are paying for. If the vendor cannot explain it clearly, that is not a good sign.

Why this myth is wrong: Put yourself in the place of a company like Google that maintains a search engine. The search engine is the way you establish a relationship with your users and get them to sign up to use your other services, like email, Drive, Maps, YouTube, Analytics, and so on. So you have to make a good first impression or you won’t maintain any kind of relationship with them–so you won’t make any money off them.

Additionally, the vast majority of your revenue comes from paid search advertisements. So if your search engine is bad, you not only lose people who could use your other services in the future, thereby contributing to your business, you also lose paid search clicks that directly generate income for you.

How, then, do you guarantee that people will keep coming back to your search engine? You make sure the results you give them are useful and relevant. And you do that by developing ranking systems that reward high-quality sites and ignore the lower quality.

Simply put, the only way a search engine says in business is if there is a strong relationship between search engine success and website quality.

Apartment SEO is easy.

Why this myth exists: This is the myth you can run into if someone has worked with a good SEO professional, has reaped the benefits, and now thinks they know all about SEO.

They didn’t do terribly much to get the SEO work done, but they are seeing the many benefits from it: Their traffic numbers are up, leads are coming in, they are converting into leases. Life is good.

And they didn’t even have to do that much work.

Why this myth is wrong: This is one of those classic examples of something looking really easy until you try to do it yourself. SEO is a rational process, but that’s not the same as it being an easy process.

In rare cases companies might have a marketing professional who knows a bit about coding who can get everything set up correctly. But that would be an unusual case. And even there you’d need to have a plan for content as well. So while SEO is certainly worth the work and can be understood with a bit of study, that doesn’t mean it is easy to implement.

 

Source: rentping.com

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Rental Inspections: What Landlords Need To Know

Tue, 09/05/2017 - 11:28am

Posted on Sept 5, 2017

If you are only checking the state of your rental unit when your current tenants move out, you risk letting a problem go unchecked until it could cause thousands of dollars to fix. Responsible landlords and property owners should strive to check the condition of their rentals quarterly. Not only can this limit property damage or misuse of your rental property, it can help you plan for upkeep and maintenance. Learn why you should switch to quarterly inspections and what to look for during a property check.

Why Do a Quarterly Rental Inspection?

Often, property damage occurs cumulatively, for instance when a renter’s pet scratches at the door or when a tenant starts to hoard possessions. By the time you get around to a move-out inspection, the damage is already done. The carpet is stained, the rental is filthy or the door is scratched beyond repair. The question becomes, how much will your earnings suffer as a result? What’s more, how long will your rental unit sit vacant while repairs are made?

Renters often treat your property better when they know you’ll be checking in regularly. Why would renters sell drugs or throw big benders when they know you’re keeping an eye on the property?

It’s a good idea to develop a rental inspection checklist and share this with your tenants. This brings your renters on board with keeping your property safe while setting them up for success.

Rental Inspection Tips for Landlords

Your tenants have the right to enjoy their apartment without unauthorized visits from you. So you are in compliance with local laws, give your tenants a 24-plus hour notice you’ll be doing inspections and keeping your visits brief. Share the rental inspection checklist ahead of time, so they know where you’ll be.

While your first inspection may take longer, it should not take more than 20-30 minutes to inspect your rental once you’re familiar with the process. Don’t forget to examine the outside of the unit — gutters, roofs, yards, basements, and porches or decks need your seasonal attention, too.

Along with checking for damage to the apartment, these visits are a great opportunity to perform light maintenance your unit requires. You may wish to replace air filters in the HVAC system, check smoke detectors, or install or remove storm windows during these visits. Lengthier projects can be completed at a follow-up date, or you may wish to hire someone to perform the needed services.

If you find a problem, take photos that illustrate the problem and write notes while everything is fresh in your mind. When you’re calm, discuss what happened and how to proceed. You may wish to give the renter a chance to fix the problem, or you may prefer to hire someone and bill him or her.

Get more advice on preparing for a rental inspection — including tips on what tools to bring with you for a quarterly inspection — from American Apartment Owners Association.

Disclaimer: The information provided herein is for advisory purposes only and AAOA takes no responsibility for its accuracy. AAOA recommends you consult with an attorney familiar with current federal, state and local laws.

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The 8 hottest housing markets in America

Thu, 08/31/2017 - 10:48pm

Sharestates, an online real-estate investing platform, has released its fall report on the hottest housing markets in the US.

The company allows anyone to invest as little as $1,000 in real-estate projects listed on the site, and processes roughly $36 million of investments each month.

Now, it’s putting the data from all that funding to work by ranking the areas of the country that are seeing the most attention from real-estate investors.

Not surprisingly, many of the hotspots are in major metropolitan areas like New York City or Philadelphia, but there are some outliers, too, Sharestates founder and CEO Allen Shayanfekr told Business Insider.

“I was surprised to see Kissimmee, Florida to be included in the top 10,” he said in an email. “I expected to see almost all of the investment potential in markets in the upper east coast, based on the rapid growth that area continues to see year over year.”

Places on the list are ranked by three metrics:

Return on Investment (ROI): The rate of return to Sharestates loan investors.

ARV: The ratio of the total loan amount, including acquisition and rehab financing, compared with the After Repair Value.

Increase in demand from 2016 to 2017: Percent of 2017 Sharestates loans in the listed areas compared with 2016.

“Each of these cities is seeing increased interest from investors,” Shayanfekr said. “The majority of the properties in these 10 markets are considered to be reasonably priced and relatively affordable, providing investors with the potential to make a sizeable return. But what these cities all have in common, in addition to great people, is a competitive and demand-based real estate market that helps drive investment and monetary returns.”

Scroll to check out the hottest real-estate markets in America right now, based on Sharestates’ data:

8. Jersey City, New Jersey Jersey City seen from New York Harbor, with the Statue of Liberty in the foreground.

ROI: 10%

ARV: 57%

Increase in demand: 50%

7. Huntsville, Alabama

ROI: 10%

ARV: 54%

Increase in demand: 100%

6. Atlanta

ROI: 12%

ARV: 61%

Increase in demand: 100%

5. Kissimmee, Florida

ROI: 12%

ARV: 65%

Increase in demand: 100%

4. West Babylon, New York

ROI: 10%

ARV: 60%

Increase in demand: 125%

3. Sparrows Point, Maryland

ROI: 11.8%

ARV: 50%

Increase in demand: 200%

2. Flatbush, Brooklyn, New York

ROI: 10%

ARV: 28%

Increase in demand: 400%

1. Fishtown, Philadelphia, Pennsylvania

ROI: 11.8%

ARV: 14%

Increase in demand: 650%

Source: businessinsider.com

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These Cities Are About to Make It Harder for Landlords to Evict People

Thu, 08/31/2017 - 10:35pm

In 2013, Randy Dillard found himself on the wrong side of an eviction notice.

“I was numb,” he says of the moment he discovered the notice from his landlord. “I was frightened. I was scared. I didn’t know what to do.”

A single parent of five and a bricklayer by trade, Dillard, 62, got the eviction letter not long after he returned home from a months-long stay in the hospital, where he was receiving treatment for emphysema. He was losing his Bronx apartment, he learned, because the Section 8 housing program that subsidized his rent had stopped making payments to his landlord because of the property’s dilapidated condition. Despite the fact that the apartment’s pest infestation and its leaky plumbing were a result of the owner’s own negligence, Dillard says his landlord used the subsidy cutoff as an excuse to try to toss his family into the street.

“No one should have to look in their daughter’s eyes while she’s crying and saying she doesn’t want to go to a shelter, and you have to hold back your own tears and tell her that everything is going to be all right even though you don’t know if it will be all right,” he says. “No one should have to do that.”

For most tenants, this would have been the beginning of an unmitigated nightmare. They could have ended up in a shelter. They could have lost their jobs. Their kids might have had to move to a new school. They might have suffered a heath crisis, or something worse.

Dillard, though, was lucky. A neighbor told him about a local organization that offered free legal counsel to beleaguered tenants, a rare service in a city where only a tiny percentage of renters have customarily had access to housing attorneys. Dillard got a lawyer and a legal battle ensued, one which saw him return time and again to housing court. Finally, after three years of motions and proceedings and paperwork, his landlord sensed defeat and dropped the frivolous case.

The court fight enabled Dillard to stay in his apartment as long as he pleased. It also activated him.

“If I hadn’t had an attorney, I would have been evicted,” he says. “Without legal knowledge, there is no way I would have been able” to fight in court, he added.

After his eviction scare, Dillard wanted other tenants to benefit from the same sort of legal support he’d received, so he became an organizer with a Bronx-based housing-rights organization called Community Action for Safe Apartments, or CASA. He also took on a leadership role with the Right to Counsel NYCCoalition, the motivating force behind a visionary movement to guarantee all low-income tenants in New York City a right to legal counsel.

The coalition, which brings together legal-aid attorneys, tenant-rights groups, unions, faith organizations, and more, formed in 2014 and quickly started recruiting supporters for its cause. Dillard and members held town-hall meetings and panel discussions, threw block parties, and published reports. They took local officials on tours of housing court and pushed their message in TV and print media. They won the support of dozens of community boards, all five borough presidents and a wide range of prominent officials, including Jonathan Lippman, the former chief judge of the New York State Court of Appeals. This summer, they finally prevailed.

On August 11, Mayor Bill de Blasio signed legislation that, when fully implemented, will dedicate $155 million a year to ensure that all low-income tenants in New York City have access to legal representation in housing court. The right-to-counsel legislation is the first of its kind in the country, but it won’t be the last. From Philadelphia and Baltimore to San Francisco and Washington, DC, a diffuse but savvy movement is taking shape to ensure that tenants get the legal assistance they need when landlords try to kick them to the curb. In doing so, it aims to decrease evictions, slow gentrification, and mitigate the devastating social effects of home dispossession. It hopes to help solve the housing crisis that is roiling cities across America.

 

Source: thenation.com

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Why Real Estate, Not Stocks, Is Americans’ Most Favored Investment

Thu, 08/31/2017 - 10:30pm
Americans get more out of real estate as an investment over stocks, and there are a few good reasons for that sentiment.

A new study shows that real estate, as an investment, is more popular and more favored than investing in the stock market among younger U.S. adults.

According to data from RealtyShares, 55% of Millennials want to invest (or are already investing) in real estate. Furthermore, Fannie Mae reports that 85% of Millennials view real estate as a “good investment.”

That interest in real estate investing among younger Americans seems to have popped a big dent in stock market investing overall. Back in 2007, about two-thirds of Americans had money in the stock market. By 2016, though, that figure fell to about 50%, according to Gallup.

Why real estate over stocks? More importantly, what are the key drivers that make real estate investing more popular than stock market investing?

“Real estate is something you can touch and feel, and stocks aren’t,” says Abhi Golhar, host of Real Estate Deal Talk, a daily radio program and once-weekly podcast. “Most importantly, with real estate, you can get income, depreciation, equity, appreciation, and leverage. That’s something stocks don’t offer.”Real estate investors can expect to make 15% on their investment by flipping houses, and can make up to 10% returns on home and apartment rentals, Golhar states.

A sense of reliability also tilts the playing field toward real estate, others say.

“Real estate can be favored because it’s viewed as something tangible,” says Brett Anderson, a financial planner with St. Croix Advisors, LLC, in Hudson, Wis. “Some people may feel a greater control holding real estate versus the stock market where they feel they don’t have any control over the volatility and risk associated with the stock market.”

Tangibility isn’t the only reason for real estate’s popularity among investors.

“You get very favorable tax treatment with lots of deductibles, and you get plenty of leverage from banks,” says Mike Arman, a retired mortgage broker in City of Oak Hill, Fla. “It doesn’t cost a lot to get into real estate, and occasionally you can get in for nothing – something I’ve done myself.”

“Overall, people are comfortable investing in real estate, they have a fairly good idea how it works, and it is tangible, you can touch it, look at it, and say ‘This is mine,'” Arman adds. “Securities are much more abstract, and people are nervous about what they don’t know about.”

“Remember, the vast majority of stocks and bonds in this country are held by a quite small minority,” he says. “80% of the stocks are held by 10% of the people. The top 1% owns as much stock as the top 90 to 99%, and those groups together own more stocks than the remaining 90% of the population. Obviously, that isn’t the case with real estate.”

If you’re serious about investing in real estate, Anderson advises knowing what you’re getting into up front.

“Market risk, liquidity, occupancy rates, loan payments, maintenance, and upkeep should factor into your decision which investment best suits you,” he says. “If you view receiving phone calls about a leaking roof, overflowing toilets or having to find tenants as a cost of investing, real estate might be a good option for you.”

Source: thestreet.com

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What Flood Insurance Does and Does Not Cover

Thu, 08/31/2017 - 10:28pm

The devastation from Hurricane Harvey is far from over, but property owners in Texas and Louisiana are already facing the daunting task of rebuilding.

Beyond the human tragedy, the widespread flood damage caused by the storm serves as an important reminder to homeowners in the region—and around the country—about what is covered by insurance and what you need to know about protecting yourself.

As most property owners know, homeowners insurance doesn’t cover flood damage. And in Harris County, where Houston is located, only 17 percent have flood insurance, according to a study by the Washington Post.

Even then, the policies provided by the National Flood Insurance Program don’t cover everything in your home.

Here’s a rundown of what is—and isn’t—covered, according to the Federal Emergency Management Agency, which administers the National Flood Insurance Program.

What’s Covered

Essential systems in the home. This includes electrical and plumbing systems, furnaces, water heaters, central air conditioners, heat pumps, and sump pumps. It also includes cisterns and the water in them, fuel tanks and the fuel in them, solar energy equipment, water tanks and pumps.

Appliances. Refrigerators, ranges, and built-in appliances like dishwashers, washing machines, and dryers are all usually covered. So too are portable window air conditioners and freezers and the food in them. Food inside refrigerators, however, is not covered.

Carpeting and window treatments. If you have permanently installed carpeting over an unfinished floor, or any other kinds of carpets over wooden floors, your policy should cover them. Your policy should also include window blinds and curtains

Permanently installed paneling, wallboard, bookcases, and cabinets. If you have to replace your cabinets, your policy will pay only for the ones that were damaged. That means that if some cabinets were ruined but others were not affected you might have trouble getting cabinets that match the older ones.

Foundation walls, anchorage systems, and staircases attached to the building. There is an exclusion for “loss caused directly by earth movement even if the earth movement is caused by flood.”

A detached garage, used for limited storage or parking. You can use up to 10 percent of your total building coverage toward your garage, but that amount will be subtracted from the total amount of building coverage available to you.

Personal property. This includes clothing, furniture, and electronic equipment—though only if they’re not stored in the basement.

Certain valuables. Your policy is likely to cover items such as original artwork and furs, up to $2,500 in value.

Other coverage. Some events are covered even if they’re not strictly floods, like groundwater seepage and mudslides. These would include a neighbor’s above-ground swimming pool collapsing and water flows into your home, or a water main break that damages your home and at least one other in your neighborhood. However, damage caused by a sewer backup is only covered if it’s a direct result of flooding.

What’s Not Covered

Flood insurance does have eligibility requirements and numerous exclusions. For example, furniture or other personal property located in a basement, crawl space, or “walkout” basement isn’t covered, including bookcases, window treatments, carpet, TVs, audio systems.

Federal flood insurance coverage is also capped at $250,000 per building and $100,000 for contents, though you can purchase policies with lower limits.

There are separate deductibles for your dwelling and contents coverages. Higher coverage limits are available for nonresidential structure and contents policies.

Source: consumerreports.org

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How Technology Is Changing The Housing Industry

Thu, 08/31/2017 - 10:22pm

Although there will always be some who would rather stick to tradition, there’s no denying technology’s role in today’s world, and that includes our housing infrastructure. Personal computers and the internet make it easier than ever before to browse new listings, apply for unique housing opportunities and even build your dream home. Couple this with the rise in mobile connectivity and it’s clear that technology is set to play a substantial role in the future of the housing industry.

How We Acquire Homes In The 21stCentury

The traditional process of finding and purchasing a home involved a lot of legwork. Not only did it require lots of effort from a dedicated real estate agent, but much of the buyer’s time would be wrapped up in the deal, too. It was an arduous method that could take months to complete.

Despite the reluctance of some, technology is changing things for the better. Instead of taking the time to visit different neighborhoods and attend various open houses, prospective buyers can review most of their options online. Not only does this give new customers the chance to view homes they might have otherwise missed, but real estate agents can also utilize the internet to maximize the exposure of their properties and minimize their overall time on the market.

Modern technology will also lead to an increased need for local market research. With so many options available, realtors will be pushed to narrow down the field and locate better properties in the first place. Improved tenant-screening technology, which will help property owners maximize their profitability in the new market, will also see increased usage.

How We Enjoy Technology Inside Our Homes

While it’s easy to see how technology has enhanced the process of searching for a home that’s already on the market, many buyers don’t realize the level of sophistication in newly built homes. The advent of the smart home, which lets appliances communicate with you as well as each other, is redefining how we live in our homes on a day-to-day basis.

Even student housing is benefitting from recent technological advancements. Numerous websites now exist to make life easier on behalf of college students all across the nation, including mobile apps that streamline processes like paying rent and requesting special service or maintenance. Advanced security measures such as near field communication (NFC) and radio frequency identification (RFID) are also improving campus safety nationwide.

But there is a downside to all of this new technology. In densely populated areas like San Francisco, some professionals attribute the skyrocketing cost of rent to the sudden proliferation of next-gen hardware and software. The fact that the southern side of the city is home to Silicon Valley isn’t making matters any better, but local proponents of technology are optimistic about the city’s future. Instead of shying away from the current digital revolution, some are committed to embracing these breakthroughs and using them to better the community as a whole.

How We Build New Homes

The way we build new homes is also seeing new technological advancements. Instead of visiting potential sites and surveying property by hand, builders are already using aerial drones to determine the feasibility of future projects before setting foot on the ground. They are also suitable for remote job site monitoring and inspection, which saves project managers and superintendents the hassle of visiting multiple sites on a daily basis.

Construction materials are becoming less hazardous and more eco-friendly. Innovative builders are trying out new and experimental structures, designs and floor plans that are all meant to reduce the carbon footprint of the modern home. Innovations in renewable energy and waste management are also increasingly common in the current housing industry.

How We’re Embracing The Modern Smart Home

Most consumers are familiar with the concept of the modern smart phone — you probably have one in your pocket or within arm’s reach right now. It’s a breakthrough that has revolutionized daily life as we know it, and many are expecting the same from current and next-gen smart homes that have hit the market as of late. Promising greater accessibility, connectivity and energy efficiency, the smart home is expected to have a significant impact on the future of housing in the U.S. and across the world.

 

Source: techmalak.com

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Maintaining Your Investment Property Value Over Time

Thu, 08/31/2017 - 10:18pm

Several Value-Conserving Strategies There are a lot of ways to save money as you manage your property; you might install sustainable energy infrastructure of the “green” variety, as a for-instance. While this is a great way to conserve resources, and it does expand property value, there is perhaps a better way. Property that sits derelict slowly degrades over time. Maintained property lasts much longer.

If you rent out your property, you’ll be able to draw a regular income from your renters while simultaneously ensuring the property doesn’t degrade slowly over time as it sits unused. If you’re living on the property, but can partition a portion off to a renter, you can likewise save on recurring costs over time.

Another solution would be to institute a cost-effective remodel which brings more value to your property than the actual cost of the remodel. If you’re not careful though, you’ll end up being in a very trying situation which may be ongoing. Oftentimes it takes a while to complete a remodel, and they’re famous for being more expensive than projections.

The Dark Side Of Renting But there are downsides to renting, also. One of the biggest ones is the fault of technology. Sites like Airbnb allow those who have access to a space to list that space on the internet for travelers. This is technically subletting. Even if your tenant only does it once or twice a month, the consequences could be disastrous.

All that needs to happen is for some itinerant traveler to come through Airbnb and decide your property is expendable. You never know what kind of people are renting through such sites, and neither do your tenants. Odds are, if they’re subletting via Airbnb, they’re having their own financial troubles.

It can be hard to tell whether or not a tenant is doing something like that, however. You can’t just keep a vigil on the street corner with coffee and donuts in your car like some detective on a stakeout. You’ve got a life to live, too. Also, tenants subletting via Airbnb are likely discreet, meaning they’ll be on the lookout for you.

So, use the service provided by SubletAlert.com | Get Notified When Tenants Sublet On Airbnb option will help you discover if a tenant is illegally subletting one of your properties and notify you quickly by email if it turns out to be true. This can give you legal grounds for eviction, and you can find a better tenant for your property.

A Golden Opportunity As a landlord, you’ve got the opportunity to experience serious, steady, sustainable income over time with even a medium-sized property. But to see that, you’ve got to be proactive about how you manage the property. You’ll need to find sites that can help you monitor tenant actions, you’ll need to perform regular maintenance, and you’ll need to find the right tenants.

While in most cases it’s better to have any tenant than no tenant at all, there are situations where you’d be better advised just to let your property contend with the elements solo. Regardless, there is definitely a balance to be had.

Still, renting property can be just the right financial push you need to be in a position where you can acquire other, better properties, and branch out into full-time management. You’ve got to start somewhere. If you go into it with protective measures beforehand, you’ll be able to nip little problems in the bud and experience greater success.

Today’s real estate market is uncertain, and this has prompted many to live a monthly lifestyle that usually relies on rental property for housing. If you’re proactive enough, you can naturally capitalize off this in a safe way that ultimately costs you very little.

 

Source: realtybiznews.com

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The Top 10 Rental Features That Attract Cream of the Crop Tenants

Thu, 08/31/2017 - 10:15pm

Let me share with you the cornerstone principle of long term real estate investing:

The success or failure of your real estate investments depends on your ability to consistently attract and retain great tenants.

In the end, it doesn’t matter how great of a deal you got on the property or how strong your projected cash flow and return on investment are. Without great tenants that pay rent on time and take care of your property, the equity, cash flow and returns all evaporate into thin air.

So the question that naturally follows is: How do you find great tenants for your investment property?

The answer is so simple, yet so powerful.

The quality of the asset you buy determines the quality of the tenant you are likely to get.

Therefore, if you want to find excellent tenants for your investment property, you should first purchase an investment property with the qualities that attract excellent tenants.

So a better question to ponder would be:

What do excellent tenants look for in an rental property?

To answer that question, I would like to provide you with the ultimate checklist for finding great investment properties, a lens you can use to filter properties, attract excellent tenants and make more money with your real estate investments. Fortunately, over the last decade, we have worked with hundreds of tenants on behalf of our clients. Many were “just ok” tenants, some were trouble—and some were excellent. Instead of guessing, we surveyed them and asked about what matters to them most.

The checklist you are receiving today contains the top 10 factors that excellent tenants look for in a great rental property in order of importance.

The Top 10 Rental Features That Attract Cream of the Crop Tenants 1. School Quality

The quality of schools zoned to the property was the primary deciding factor for over 85% of great tenants we interviewed. Schools are extremely important to families and single parents with school-aged children, and those tenants use this factor as an acid test. To these prospective tenants, if schools aren’t good, it’s as if your rental property didn’t exist. Furthermore, school quality is the best predictor of neighborhood quality—something ALL great tenants seek (even those without children). Therefore, to ensure your success, only purchase properties zoned to high-performing, desirable schools.

2. Safety

Safety is our most basic human need and a powerful motivator for excellent tenants. One of the main reasons why your prospective tenant decided to spend more to lease a home (as opposed to an apartment) is to provide a safe environment for themselves and their family. Therefore, research crime statistics and only purchase properties in safe neighborhoods.

3. Move-In Ready Condition

The condition of the property—and more specifically the ability to move right in—is very important to excellent tenants. You can rent out a property that’s not quite move-in ready (requires paint, flooring, cleaning, etc.), but I assure you it won’t be to an excellent tenant. Your target tenant plans to take care of your property and has high standards of cleanliness and maintenance. If you provide a move-in ready home, you are communicating that you share those same standards.

4. Proximity to Employment

Let’s face it, no one likes to commute! So proximity to employment centers is very important to great tenants. You can have a great, move-in ready home zoned to great schools, but it won’t matter if your tenant has to drive an hour to work each day. As you look at potential properties, think about where your target tenants are likely to work and how close the property is to that area.

5. Upgrades

Most inexperienced investors subscribe to the myth that their investment properties just need to be “good enough for a rental.” Therefore, they purchase starter homes with cheap finishes and rent them to mediocre tenants for mediocre results. Don’t do that; instead, purchase homes that have strategic upgrades that move the needle with excellent tenants: hardwood flooring, granite counters, stainless appliances, covered patios, etc.

6. Appliances Included

At the very beginning, your tenant incurs a large expense when leasing your property. They have to pay a month’s rent for the security deposit plus the first month’s rent. If your property does not include a refrigerator and a washer/dryer, the tenant would then have to purchase those items, increasing their upfront cost. So remove the friction to make their decision easier by providing those appliances on the front end. Often your tenants won’t mind paying a little more for a property that includes all appliances.

7. Neighborhood Quality

Neighborhood quality determines lifestyle quality. Think about the community you live in—didn’t the neighborhood amenities play a major part in your decision to live there? Wouldn’t your lifestyle be different in a neighborhood with running and bike trails, lakes, community pools, tennis courts, a gym, etc.? Quality tenants care about neighborhood quality. A community doesn’t have to have ALL those amenities, but the more the better.

8. Access to Transport & Basics

Access to modes of transportation and basic necessities like grocery stores, restaurants and shopping is very important because it affects other important factors such as commute to work and lifestyle quality. When you’re looking at investment properties think about: How easy is it to get to the main highway/park and ride/public transportation? Are there basic services within easy reach?

9. Age

Here’s one thing investors and their tenants have in common: They both don’t like hassle. The main factor that determines how much hassle either will experience is the age of the property. If you purchase older properties, they will have older systems (plumbing, electrical, HVAC) that break often, inconveniencing both you and your tenant. Purchase newer properties instead. A good rule of thumb is no older than 15 years, less than 10 if you can.

10. Rent and Price

Last but not least, your investment is ultimately a business decision for you as well as your prospective tenant. Your tenant will be concerned with the rent, and you will be concerned with the relationship between the rent and the price you pay for the property. Make sure the projected rent isn’t so high that it limits your tenant pool and so low that it lowers the quality.

 

Source: biggerpockets.com

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Why Renters Insurance Matters for Landlords

Thu, 08/31/2017 - 10:11pm

Do you know someone who owns a house and doesn’t have homeowners insurance? Most likely, you don’t. That’s because if someone has a mortgage, their lender requires the home is insured. Which makes sense. If the house burns down, the lender’s money goes up in smoke.

In the world of renting, renters insurance is just as important, but few people understand exactly why.

Let’s start with the basics. Renters insurance protects renters and landlords.

For starters, renters insurance covers a renter’s personal belongings, something a landlord’s property insurance doesn’t cover. Without renters insurance, a renter would have to pay to replace everything stolen in a burglary or damaged by a fire. Renters insurance will also cover the cost to replace a stolen bicycle or laptop, even if the theft happens someplace other than home.

It also protects renters from liability if they accidentally damage their place. If a renter accidentally starts a kitchen fire or overfills the bathtub, with renters insurance they won’t be liable for the damages, even if they damage a neighbor’s place.

What many people don’t know is that the liability coverage benefits landlords, too. Without renters insurance, a landlord could be responsible for the cost of damages and repairs if their renter accidentally damages the property.

It’s important that renters carry renters insurance. Just like mortgage companies require homeowners insurance, most landlords require renters insurance in their leases. If possible, landlords should verify that renters have a current policy.

With renters insurance, both renters and landlords can relax knowing they’re covered. That means less stress all around!

Source: huffingtonpost.com

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10 Lessons this Entrepreneur Learned from Flipping $100 Million in Real Estate

Thu, 08/31/2017 - 8:51pm

The U.S. housing market has been on a steady tear for the past century. While there have been blips on the radar, especially recently with the Great Recession, real estate remains one of the best performing investment vehicles in the world. For entrepreneurs who understand the mechanics of how to successfully profit from a real estate transaction, the sky is quite literally the limit.

However, it’s not always sunshine and rainbows. People do lose their proverbial shirts in real estate, just as they do in all other forms of business. Nonetheless, it offers up one of the most future-proof mediums for earning a substantial amount of money. The truth is that people will always need a place to live and businesses will always need a place to work. For that reason, real estate won’t decline, but rather, continue its slow and steady climb.

Of course, the recent housing bubble stings just a little bit. If you’re one of the unlucky people who bought near the peak and were forced to sell, or even let your home go in the bloodbath that ensued the 2007 market crash, then you’ve likely built some aversions towards investing in any form of property. Yet, for those that know how to weather the storm, even the recent downturn isn’t a powerful enough deterrent when you weigh the risks versus rewards in real estate investing.

How to succeed in real estate.

Market ups and downs are to be expected in any indusry. For real estate, the waves come every few years. However, the contrarians know that the best time to invest is when everyone else is selling and the best time to sell is when everyone else is buying. And no matter what the market climate, anyone can succeed in real estate as long as they harbor a few tried-and-true lessons that can only come from the in-the-trenches battle for fiscal survival.

For Justin Colby, a wildly successful real estate investor from California who’s flipped well over $100 million in real estate, success didn’t come easy. In fact, when Colby first decided to enter into the real estate industry in 2007, he had just lost his home to a foreclosure, his car was repossessed and he was living on a friend’s couch in San Francisco. He was a victim to the market frenzy and bubbling valuations that had him in way above his head and he simply let it all go.

If that kind of failure doesn’t stop a person, then nothing ever could. In fact, Colby, while living on his friend’s couch, was so determined to enter into real estate that even though he had no money and no credit, he committed to one simple thing that helped him eventually succeed. He decided to call 100 real estate agents every single day and tell them who he was, what he wanted to do and why they should work with him.

Naturally, Colby got a lot of hang ups. But he persisted. Out of the 100 agents he would call every single day, on average, 90 would hang up on him. Eight would have a brief exchange with him. And two would be interested enough in what he had to say that they would agree to a sit-down. Colby did this every single day for nine months. Somehow, somewhere, deep down inside, he knew he was destined for this.

He would hold those meetings at Starbucks. At the time, around the Great Recession, Starbucks had been offering free coffee refills as long the coffee was consumed in the shop. So he sat there and met with those realtors and tried to convince and sway them to work with him. Eventually, he found one that had agreed. The question was, how was he going to conduct a real estate transaction without having any money or any credit?

Colby’s first flip happened with the realtor’s help. Colby found the property and the realtor lined up a buyer. For the cash, he turned to a transactional lender, which is effectively a hard money lender but charges much higher interest rates. For a 48-hour lend, the company charged him two points in interest. But it worked. He flipped that house in 72 hours and made his first $7,000 in real estate, which he had to split with his business partner.

For the next flip, he did the same thing. Afterwards, out of sheer luck, he managed to meet an old friend from high school who showed up at a 49’ers game. That friend had just come into an inheritance and after a brief conversation, decided to invest $100,000 with Colby. That was the turning point. That’s when he put pedal to the metal and things really took off.

However, surprisingly, with that investment, Colby did something contrarian. Realizing that he needed guidance and leadership from an expert in the field, he invested in a $25,000 real estate mastermind, which, after two phone calls, helped him to hone his direction. That’s all it took. While Colby’s first year had only seen two deals push through, in his second year, he did six. These were traditional rehab flips. The next year, an astounding jump to 46 flips, then 96 the year after. Afterwards, he moved into large-scale real estate development.

After flipping $100 million in real estate, Colby learned 10 very important lessons that any entrepreneur who’s interested in real estate should heed. No matter what your present stiatuion, people like Colby are a true testament to what’s possible when you’re so committed and devoted to doing something, that nothing will stand in your way. Imagine having no money, no credit and no personal network that you can lean on, and turning around and becoming a wildly successful real estate investor. That’s where true champions are formed.

 

Source: entrepreneur.com

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U.S. Cities Have A Glut Of High-Rises And Still Lack Affordable Housing

Thu, 08/31/2017 - 8:48pm

Perhaps nothing thrills mayors and urban boosters like the notion of endless towers rising above their city centers. And to be sure, new high-rise residential construction has been among the hottest areas for real estate investors, particularly those from abroad, with high-end products accounting for 8o% of all new construction.

Yet this is not an entirely high-end country, and these products, particularly the luxury high-rises in cities, largely depend on a small segment of the population that can afford such digs.

No surprise, then, that we see reports of declining prices in areas as attractive as New York, Miami and San Francisco, where a weakening tech market is beginning to erode prices, much as occurred in the 2000 tech bust, John Burns Real Estate Consulting notes. There have been big jumps in the number of expired and withdrawn condo listings, particularly at the high end; last year, San Francisco saw a 128% spike in the number of withdrawn or expired listings for condos over $1.5 million.

Several factors suggest the high-rise residential boom is over, including a growing recognition that these structures do little to relieve the housing affordability crisis facing middle-class residents, the inevitable aging of millennials and their shift to suburbs and less expensive cities, and the impending withdrawal of some major foreign investors who have come to dominate the market in many cities.

Cost And Affordability

One common refrain among housing advocates and politicians is that high-rise construction is a solution to the problem of housing affordability. The causes of the problem, however, are principally prohibitions on urban fringe development of starter homes. Critics also note that high-rises in urban neighborhoods often replace older buildings, which are generally more affordable.

One big problem: High-density housing is far more expensive to build. Gerard Mildner, the academic director of the Center for Real Estate at Portland State University, notes that development of a building of more than five stories requires rents approximately two and a half times those from the development of garden apartments. Even higher construction costs are reported in the San Francisco Bay Area, where the cost of townhouse development per square foot can double that of detached houses (excluding land costs) and units in high-rise condominium buildings can cost up to seven and a half times as much.

Almost without exception, then, the most expensive areas are precisely those that have the most high-rise buildings: New York, San Francisco, Seattle and Miami. More to the point, these buildings don’t tend to be occupied by middle-class, much less working-class, families. And in many cases, these units are not people’s actual homes; in New York, as many as 60% of new luxury units are not primary residences, leaving many unoccupied at any given time.

Even worse, a high-density strategy tends to raise the price of surrounding real estate. As Tim Redmond, a veteran San Francisco journalist, points out, luxury apartments often tend to be built in areas with older, more affordable buildings. The notion that simply building more of an expensive product helps keep prices down elsewhere misses the distinction between markets; the high-rises in Washington, DC, are not the affordable units that the vast majority of city residents need.

Other cities favored by luxury developers – like Vancouver, Toronto, Seattle and San Francisco – have also seen deteriorating affordability and, in some cases, a mass exodus of middle- and working-class residents, particularly minorities. San Francisco’s black population, for example, is roughly half of what it was in 1970. In the nation’s whitest major city, Portland, African-Americans are being driven out of the urban core by high-density gentrification, partly supported by city funding. Similar phenomena can be seen in Seattle and Boston, where long-existing black communities are gradually disappearing.

The New Demography Works Against This Trend

It is common in retro-urbanist circles to maintain that more Americans, particularly younger ones, will opt to remain customers for ever-greater density, a preference that could sustain an ever-growing market for high-rises. Yet that notion may be past its sell-by date, with demographic evidence suggesting that most Americans, including younger ones, are looking less for an apartment in the sky than for a house with a little backyard.

Suburbs, consigned to the dustbin of history by many urban boosters, are back. Demographer Jed Kolko, analyzing the most recent Census Bureau numbers, suggests that population growth in most big cities now lags that of their suburbs, which have accounted for more than 80% of metropolitan growth since 2011. Even where the urban core renaissance has been most prominent, there are ominous signs. The population growth rate for Brooklyn and Manhattan fell nearly 90% from 2010-11 to 2015-16.

The real trend in migration is to sprawling, heavily suburbanized areas, particularly in the Sun Belt. To be sure, there are high-rises in most of these markets – quite a gusher of them in Austin, for instance – but the growth in all these regions is overwhelmingly suburban.

The most critical factor over time may be the aging of millennials. Among those under 35 who do buy homes, four-fifths choose single-family detached houses, a form found most often in suburbs. Surveys consistently find that most millennials see suburbs as the ideal place to live in the long run. According to a recent National Homebuilders Association report, more than 66%, including those living in cities, would actually prefer a house in the suburbs.

The largely anecdotal media accounts of millennial lifestyles conflict with reality, Kolko notes. Although younger millennials have tended toward core cities more than previous generations, the website FiveThirtyEightnotes that those ages 30-44 are actually moving to suburban locales more than in the past.

The China Syndrome

Given the limits of the domestic market, the luxury high-rise sector depends heavily on foreign investors.

Already, harder times for some traditional investors – Russians and Brazilians, for example – have hurt the Miami market, long attractive to overseas buyers. There is now three years’ worth of inventory of luxury high-risesthere, with areas such as Edgewater, Midtown and the A&E District suffering an incredibly high inventory of seven and a half years. Miami Beach is faring a bit better but is still a buyer’s market at a little over two years of inventory.

Still, the greatest threat to the luxury high-rise market may come from the Far East, the region of the world with the most surplus capital and, given the rapidly aging society, often the fewest profitable places to put it. Korea and Japan have lots of money sitting around looking for a home. Japan and its companies, according to World Bank data, are hoarding more than $2 trillion in unused liquid assets.

But as in all things East Asian, China stands apart. Last year, the country had a record $725 billion in capital outflows, according to the Institute of International Finance. China is now the largest foreign investor in US real estate.

But now the Chinese government has placed strong controls on these investments, which could leave some places vulnerable. In Downtown Los Angeles, according to local brokers, many of the new high-rise towers are marketed primarily in China. (LA claims to had the second-highest number of cranes, behind only Seattle.)

These expensive units are far out of reach for the younger people who tend to inhabit the neighborhood, instead serving as what one executive called “vertical safe deposit boxes” for people trying to get their money out of China. If the new crackdown on such investments is strongly enforced, this could leave a lot of expensive units without buyers. Prices have already softened, and with several new luxury buildings coming up, Downtown is likely to experience a glut.

Even in Manhattan, another market long dependent on foreign investment, projects are now stalled, including some once-hot properties in Midtown that are delaying their sales launches. Overall sales of condos over $4 million dropped 18% last year from the high levels of the previous three years. The ultra-premium market for condos over $10 million saw a 5% sales decrease in 2016.

 

Source: forbes.com

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Growth Lessons For Real Estate Investments In The Desert States

Thu, 08/31/2017 - 8:42pm

The historical West was a place of feast or famine, mainly the latter. Deserts, snow, water, mountains, mining, gambling – the West either had too much of them or too little. The dry climate prevented settlement because farming was too difficult, limited to narrow strips along rivers that could flood or run dry from one year to the next. Towns only appeared in places where other natural resources were found.

The modern West isn’t really that different. Growth is no longer limited by local food production, but the harsh climate – too hot or too cold but always too dry – still concentrates population in a few large centers where demand for housing can change from high to low in the blink of an eye.

For real estate investors, this easy cyclicality is both good and bad. If you have a long-term perspective you can always expect things to get better; but if you want short-term gains you need to know exactly where in the cycle you are right now. As in other parts of the country, local markets lend themselves best to several different investment strategies.

Local Market Monitor, Inc.

High Ratio Markets

That is, a high ratio of home prices to rents. In these markets, like Denver, Boulder, Santa Fe and Fort Collins, the difference between home prices and rents is so great that investments in straight single-family homes is difficult. You can always do it, because there will always be some people who prefer to rent a single-family home even though they can afford to buy one – buying would actually be cheaper – but there aren’t very many of them, especially at the upper end of the rental range. Renting at the lower end is a specialty you want to stay away from. Be sure you aim for a rent that will give you a good return even if your property stays empty for a few months between renters.

In high-ratio markets your best bet is to subdivide a large single-family property into several rental units. Location is key here, because Westerns markets usually are sprawled over a large land area – a location in the middle of nowhere won’t attract as many renters as one near a hospital, university, or town center.

For short-term investors (a five year horizon?), it’s important to compare home prices to what the average local income can buy – the “income” price. In Boulder and Denver, for example, home prices now are more than twenty percent higher than the income price. These markets are almost over-priced, and that can mean that prices will surge for a few years and then stall – or continue upwards like a runaway train and then plummet; in either case, the risk of an eventual fall in home prices is high and you want to be out before that happens. If you invest now, you have a good opportunity for a strong increase in the value of your property, but you must have an exit plan.

Source: forbes.com

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Five Ways a Property Management Company Can Save You Time and Money

Thu, 08/31/2017 - 8:39pm

If you’re a landlord, you know that managing rental properties is more than just collecting the rent. You have to think about finding the right tenant, dealing with maintenance issues, complying with the law, and so much more.

Managing properties gets very complicated, very quickly. If you manage multiple properties, you know how the complications can multiply.

A full-service property management company can substantially reduce the time you spend thinking about mundane tasks like rent collection, maintenance requests, and finding new tenants. The property manager automates many of these tasks, allowing you to focus on what you care about the most — your job, your family, even purchasing more rental properties.

Understanding Compliance

Understanding state laws, codes, and compliance issues is one of the most complex areas of owning rental properties. A professional property management company has set procedures and manuals to ensure you’re in compliance with the law — so you don’t have to reinvent the wheel.

Property managers also understand the issues surrounding taxes, fair-housing and anti-discrimination laws, and eviction procedures. Companies can address these concerns by leveraging their collective knowledge to deal with these various issues and provide you with the information you need to file your taxes — or even evict a troublesome resident.

Finding The Most Qualified Tenants

I have been managing properties and overlooking operations for a San Diego property management company for 13 years now. I can tell you from experience that vetting residents is one of the most important and time-consuming activities you will undertake as a property owner. Finding reliable tenants can mean the difference between making money or losing money on your investment property.

Reliable property management companies have time-tested procedures to screen out the troublemaker residents from the ideal tenants, while complying to all the laws and regulations previously mentioned. A property management company knows how to handle tenant screening to find residents for your property.

How do you find those qualified tenants? It all comes down to marketing your rental.

To begin, invest a little into the presentation of your property. This extends beyond just cleaning your property into identifying the character of the neighborhood, understanding the type of residents who come to that neighborhood, and what they want in a rental. For example, when we’re working with properties downtown, we know people renting want easy access to their job, a parking space, and information about public transit to get around San Diego. The more you can talk up the nightlife and things to do, the more valuable your apartment building becomes.

Similarly, renters in more residential areas like South Park, Bankers Hill, and North Park here in San Diego are more likely to be interested in settling down. These neighborhoods are populated by single-family homes, parks, and other family-friendly activities. An experienced property manager can leverage this information to secure residents in a timely manner for you.

Day-To-Day Property Management

You will note a common theme in these sections. Property management companies come with a library of knowledge and experience that they can leverage into all aspects of day-to-day operations. The right property management company will have set procedures on when to conduct safety checks, maintenance, and other scheduled inspections and affairs. Most managers will also have a set system for responding to resident concerns, securing a handyman, and collecting rent.

Developing these processes can be extremely time consuming as an owner. You’d need to understand, first, the basic dos and don’ts of tenants rights, and then find the right paperwork or vendors to help you with each stage of move-in or move-out. When things go wrong, it can be quite expensive to find the right people to help at the drop of a hat. Property management companies work with specific vendors across all their properties. Typically this means that they can negotiate better rates than just one property alone can get.

Value for Price

Most property management companies will charge between five to ten percent of the rent. If you only have a few properties, these rates are far cheaper than hiring your own managers.

The management company handles all of the costs associated with managing a team and provides you with the benefits of having an experienced staff. Moreover, property management companies can leverage economies of scale which enable them to retain an experienced, professional team who will provide the best possible service to you and your tenants.

Tenant Services

Finally, property management companies are invaluable if you don’t live near your property. One of the biggest issues confronted by property owners is the ability to move.

Maybe you have a new opportunity or want to change locations. If you’re handling the day-to-day services for your rental property, your options are limited — unless you want to sell.

A full-service property management company removes some of these worries by handling your rentals on your behalf. If you are the primary point-of-contact, you need to be available to work with your residents.

However, a property management company can free you up to move wherever you want (or even purchase properties wherever you want) because the company can collect the rent, maintain the properties, and every other aspect of day-to-day management. Hiring a company to manage your properties is not only convenient but also a great choice for property owners looking to increase their portfolio without having to get tied down. Investing in the right property management company can pay off.

About Micki O’Toole:

Micki is the general manager of PropertyADVANTAGE, a San Diego property management company that specializes in single-family homes and HOA management. They provide comprehensive, full-service packages as well as tenant placement to property owners and communities in San Diego and Riverside counties. Get in touch at info@propadvantage.com.

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A guide for investing in rental property

Mon, 08/28/2017 - 10:56pm

Investing in rental property.

Rick Nayar bought his first rental property at the age of 27 – and had 25 by the time he was 30 years old.

The owner of Orlando, Florida-based Centurion Realty Group, Artesian Title and Full Circle insurance companies, Nayar saw investment real estate as a good opportunity to build wealth and achieve monthly cash flow.

Since 2003, Nayar has bought, rented, sold and flipped more than 1,000 homes.

nvesting in rental property isn’t for the faint of heart, however, but with adequate due diligence and the following tips is worth considering.

Pick a great location. For long-term equity growth, a residential rental property in a good location is key.

“Look for proximity to major roads, public transportation, and most importantly, schools,” says Abhi Golhar, host of Real Estate Deal Talk in Atlanta.

Research rents in the area you want to pursue, both in as-is condition and with repairs or improvements, adds Chris Taylor, a broker with Advantage Real Estate in Boston.

“I find the biggest mistake investors make is overestimating what their property is worth, which results in vacancies and below-market rents,” Taylor says.

You also want to get inside the minds of your audience: If you are in a college town, for example, it’s important to know how students think, the maximum distance they’re willing to be from campus and the locations they consider ideal, Taylor says, so you can buy a property that will be in high demand.

Start small. Start with an affordable initial investment like a single unit or a duplex versus a whole apartment building, says Ryan Coon, founder of Rentalutions, an online property management platform for do-it-yourself landlords.

“That way if things go south and you are unable to afford to pay for mortgage or maintenance, you are not running the risk of going bankrupt,” he says.

Because you’re just getting started, avoid properties needing significant repairs, since these could cause you to overextend yourself.

Consider using a property manager and ask friends for referrals for attorneys, contractors and other real estate professionals who can help you and will become valuable contacts over time, Coon says.

Run the numbers, then run them again. It’s important to treat each rental property like its own business to serve as a good investment.

“The most important consideration for prospective landlords is to accurately estimate rental income and the costs associated with leasing,” says Lucas Machado, president of House Heroes, a South Florida real estate investment company. “Until a landlord has a precise grip on these issues, they risk owning a property that – rather than a profitable investment – is a net loss every month.”

Betting on appreciation alone is not a good idea.

“Rental purchases should have positive cash flow and good rate of return,” Machado says. That could be anywhere from 8 to 15 percent in a residential market. Investment real estate is often valued by its capitalization (cap) rate, which is computed by taking the net operating income divided by the going cap rate in the neighborhood to come to an appropriate price.

Your monthly expenses will include the mortgage or debt service, taxes, insurance, lawn and pool maintenance, property management (optional) and insurance. At least 20 percent down payment will likely be required if financing the purchase.

Vacancy, turnover and eviction are realities of leasing any property, so wise landlords must assume at least a month’s rent loss annually, Machado said.

Don’t over-improve the property.To keep your cash flow at optimal levels, don’t spend too much on upgrades for a rental property that will likely need maintenance and repairs during turnovers anyway.

“The best advice I ever got was to imagine a box of minimum standards and never go outside that,” Nayar says.

This keeps your monthly rent at an appropriate ratio of about 1.2 to 1.4 times the monthly cost of the property, with plenty of cushion.

Because maintenance is also a given when owning rental property, Nayar buys a home warranty that costs $500 per year to better spread out the cost of repairs.

“I give the information to the tenant and let them know they will have to pay a $35 deductible directly to the company every time they need something done,” Nayar said. “You will be shocked how much this takes off the plate in terms of maintenance. It’s important you are upfront with tenants about this and set this expectation.”

Consider what type of maintenance is required based on the type of property you purchase. For a single-family home, the landlord is generally responsible for things like lawn mowing and snow removal, but if you buy a condo or townhouse, that maintenance is included in the condo fee, resulting in a more hands-off process, Taylor says.

Choose tenants wisely. Dealing with tenants can be stressful, but it doesn’t have to be. “A final critical evaluation is if the buyer intends to manage the rental herself or himself. Are you prepared to thoroughly screen tenant applicants, and assert yourself in difficult tenant situations?” says Elizabeth Gibson, chief content officer for ezLandlordForms.com.

“A landlord needs thick skin,” she says. “If you’re likely to waver with applicants who are not qualified, or with late rent payments and other lease violations, you may need to hire an agent [property manager] to protect your investment.”

Tenant income should be at least three times the rent and verified by having their employer sign a form, Nayar says, which will hopefully keep vacancies and eviction losses to a minimum.

Source: CNBC

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Open House Thefts Putting Agents on Alert

Mon, 08/28/2017 - 10:02pm

A string of thefts in Wisconsin is serving as an important reminder for real estate pros to stay on guard during open houses.

Wisconsin brokerages are warning their agents about three cases of thefts at open houses and a private showing in Middleton. The suspect allegedly stole laptops and other valuables during the showings.

Charlie Wills, a real estate pro with First Weber Realty, told ABC News 18 in Eau Claire, Wis., that his brokerage is releasing a publication to all of its clients that includes some security practices in the real estate market.

Some tips referenced in the publication include:

  • Conduct open house showings during daylight hours only.
  • Review the property’s condition to ensure all utilities are working.
  • Advise sellers to remove valuables or to place them in safes or other secure locations.
  • Staff open house events with additional agents if a large number of visitors is expected.

Wills also notes that the tradition of the listing agent remaining in the kitchen or another spot of the home during an open house is starting to change.

“We don’t stay in one location,” Wills says. “What you do is canvass, and you walk the property and check in with people.”

Wills says that real estate pros must remain vigilant during open houses.

“I feel like most of us have that gut feeling if someone should or shouldn’t be in the house,” Wills says. A suspicious visitor should not be confronted, he says, but engaged instead. “Now, you’re trying to redirect their energy, and instantly, if they’re not very interested in buying, they’ll leave.”

In the recent Wisconsin thefts, police have identified a possible suspect, a 52-year-old Madison woman. No arrests have yet to be made.

Source: Realtor

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