Today, I can say I stand among my fellow landlords in a gloomy mood. My best tenant has moved on. The tenant that pays on time, never complains, and the one you hope will stay with you forever, but we know will leave us one day. What’s next? How do I replace the perfect tenant? Normally we are looking for a better tenant now I’m hoping to get another one half as good as our previous tenant.
The first step in replacing a great tenant is to realize you had a great tenant and unfortunately good things come to an end. Look back on your relationship and see what can be duplicated. What type of job they had? How you dealt with maintenance issues? How was the relationship so much better than your relationship with your other tenants? Basically, just step back and analyze why this relationship was so ideal for you as a landlord. The Second step is to set up a move out plan with your previous tenants. You should want to end this relationship out on a good note. The worst scenario is to have a great relationship end with a horrible ending. This just leaves a bitter taste in your mouth that never goes away, and can even lead to a tarnished reputation. So sit down and talk to the tenants about returning their deposit, move out dates, and if they would allow prospective renters to view the property while they are moving out. It has been my experience that 9 out of 10 times the tenant will let you show the house to prospective tenants if you are courteous to their time schedule and concerns. A great idea is to always walk with the new clients from room or room so the previous tenant is secured and that none or their possessions are being tampered with. I also let the two talk with one another. Your previous tenant is your best sales person. The new tenant feels as if they have no reason to lie and they actually lived there, remembered they recently have rented out the place. After the showing I’ll talk to the previous tenant, tell them what I think about the prospective tenants, and schedule another appointment that fits their schedule. The third step is to move on and market the property after the move out. Yes that means letting go of the perfect tenant. Don’t compare tenant to tenant. Your relationship with your new tenant and you is a totally new relationship. So start fresh and market for the best tenant you can find. The fourth and final step is renting the house and handing the keys to the new tenant. Start fresh and let the next couple of months flow as they will. I noticed the next couple of months will determine if you had got a great tenant or a what have I gotten myself into tenant. Just do your due diligence and always remember if they don’t pay they don’t stay. In conclusion, after losing your perfect tenant sit in a corner and cry a little lol. I mean let it out it feels like a break up, and in some ways it is. After you get over it, learn what you did right, duplicate it to your best ability, improve on mistakes, and keep renting and making money on the home. As always thanks for reading and successful investing. Jarnell Porter Click here to Read More
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Rumor has it that my picture is on a few dart boards. With plenty of darts stuck in that picture. It would not surprise me. You see when it comes to investment real estate I tend to have very high expectations from the people that I deal with and I have no problem in letting them know what my expectations are.
That can make a guy like me a little difficult to deal with when I have a habit of telling it like it is. Especially when it comes to managing the day to day operations of the investment properties that my investment partners and I own together. I expect a lot out of my management teams because my investor partners expect a lot out of me. Not only that but in most cases my personal investment is also on the line too so I also have a personal interest in making sure the properties are operating at the highest possible level. To do that can make you unpopular with your management staff because you work them hard. That’s the problem. Its not that my management staff does not want to or cannot work hard. It’s that no other owner works them as hard as I do. Compared to many other apartment property owners and investors I am what is called SUPER HIGH MAINTENANCE. And we all know it. Key To Successful Commercial Investments One of the biggest eye openers for investors, especially new investors, is not only reviewing an investment property that they may be thinking about investing in but taking a good look at properties over time. Seeing how the investment process really works and really comes together over time is eye opening too many. The juggling of the following seven areas of property management can leave a new investors overwhelmed:
Don’t get me wrong either. My management staff and I get along fine. There is no bad blood or hard feelings and the dart board with my photo is more for poking fun and knowing that I have a great sense of humor vs. anything bad or having disgruntled staff. We spend a lot of time working on making our properties as successful as possible and through that process you build great relationships. It’s just that they know when it comes to dealing with me, my investment partners, clients and properties that they better be ready to work. Hiring a Property Management company is just another way me any my investment partners profit without dealing with any of the typical hassles of owning investment real estate. No management or property meetings for them, no conference calls with vendors or contractors, no negotiating with banks or credit unions. No dealing with complaints. My ULTIMATE investing goal is to make great returns and profits on my properties with my investment partners and clients even if it means becoming a dart target. Click here to Read More Quick Review: Cap Rates can be used as a quick and easy evaluation of commercial property investment deals. Sellers communicate “Cap Rates” to real estate investors so they can get a sense of how profitable a property in currently operating or will operate in the future. It is also a means to quickly compare deals.
As an investor, you must know which Cap Rate the sellers is quoting when you find an investment deal on sites like Loopnet.com. The returns from a commercial investment deal, for example a 20 unit apartment building, come from: appreciation, cash flow, depreciation (tax write-offs), principal reduction and the use of leverage. Investors, let’s continue where we left in “Checking Out Commercial Deals? – Cap Rate Could Mislead You” and start off with a commercial investment case study. Cap Rates, Sellers & Investment DealsPicking up where we left off – let’s look at that property was listed for $1,000,000 and is currently 80% leased and generates $80,000 NOI. Rents ar $120,000 and expenses are $40,000. Assume that the pro forma income is $100,00 per year when it’s 100% lease at current rental rates and that if rents are increase, NOI could be $140,000. Did you know the seller could display three different Cap Rates for the same property:
Cap Rates should not be the only factor considered to determine whether to buy and how much to pay for a property but it is a good way to quickly weed out investments not meeting the investor’s criteria or to quickly qualify investments that warrant further analysis. You can learn more about Apartment and Commercial investing over on REIClub.com main site with 8 FREE training videos on commercial investing. Have a GREAT investing kind of day! Click here to Read More Rehabbing and selling is a beautiful business with enormous profits that we all love, but to really make it a long term business model, you need to make sure that your homes stand out when they are on the market competing with all of the others.
Nowadays, buyers are looking at lots of homes before they make a buying decision. Some of them go on tours with their realtor on a Saturday and look at 10-15 homes in one day. They want to explore all of their options, which makes complete sense. Why would they settle on anything before they see all of their options. 2 Fix & Flip StrategiesYour Job As a RehabberThis can make life difficult for a rehabber if you don’t know how to make your rehab deals stand out. Your job as a rehabber, is to make sure that they remember your house after they’ve looked at dozens of others. The better scenario is for them to stop shopping when they’ve seen yours, and write you an immediate offer in fear that someone else may get it. Either way, you need to stand out for either of these 2 scenarios to happen. Here are 2 strategies to do that: Strategy #1: Splurge on a very noticeable and unique item that no other comparable homes have.Here’s what I mean… When you go online and look at the photos of your surrounding competition within your price range, notice a pattern of what kinds of features the homes have (especially in the kitchen and bathrooms). Do most of them have laminate counters? Do they have appliances included? If so, are they white? Do the bathrooms have custom tub surrounds or full body shower sprayers? There are plenty of other areas to look, but these are usually the “money” zones. What you need to do is look at the average trend on one or 2 of these items, and then go a step above all of the competitors… If they all have an average kitchen faucet, get a high end one that stands out (maybe one that turns off with just a touch of the hand). If most of them have fiberglass tub surrounds or basic tile, grab a custom mosaic to install through it. A big one that has served me well is the full body shower sprayer. You can buy them on Amazon for less than $250, and EVERY buyer will look twice at it, and remember it. It interrupts what they are used to seeing, and that’s how the human memory works. We remember things that are out of the norm. If all the other houses have white appliances, get stainless steel. Obviously you don’t have to do all of these things, but doing one or two, will give you that memorable edge to get your house sold quicker and maybe for more. Strategy #2: Price your home slightly less than the average home.Yes, you may even have a better home than your competitors, but buyers usually will correct your slight underpricing for you anyway. They will offer over asking in fear of losing out on such a great home at a fair price. I’m not suggesting that you drastically underprice it, but even a few thousand less than anyone else can really spike activity and get people looking at it in herds. Now, there are other methods to stand out, but I wanted to convey 2 simple ones that you can immediately implement and see some nice results. Click here to Read More The economy has certainly been volatile for the last few years. The stock market took a major nosedive, foreclosures have been rampant, and unemployment has risen to all time highs in many areas.
However, in every market, there are opportunities and for some, now is a good time to buy investment property due to the decline in housing prices. Unfortunately, it can be easy to forget to watch for investment pitfalls even though it is a buyer’s market. If you are thinking of purchasing more rental property. Mistakes Investors should avoid making are to follow. 7 Mistakes Real Estate Investors Should AvoidPurchasing a property without educated research is a major misstep. Consult the professionals – a knowledgeable real estate agent, your property manager, a reliable mortgage banker, and any other party that can give you realistic values. However, you need to do your own research so you can ask intelligent questions and to know when you are receiving bad information. For example, consulting a real estate agent who does not know the rental market is a disaster waiting to happen. It is easy to project a positive return on paper when using inflated figures. Ask us, your property management company, to investigate rents and expenses before you purchase the property. Continuing to wait for the market to bottom can mean missed opportunities. You can make intelligent investments in any market. Unless you have a crystal ball, there is rarely a way to know when the market is going to bottom out or rebound. Even when market prices start moving up, you can still purchase a good investment – you just need to research any potential investment. Not planning on holding a rental property as a long-term investment is not realistic. It is possible to buy a property and flip it in a short amount of time, but it often takes holding the property at least ten years or longer to realize the full benefits. One reason to think long-term is the yearly tax benefits you have while owning the property. Remember, that unless you reinvest profits from a short-term rental, there may be heavy tax consequences. Investing with the wrong financing can easily turn an investment into a nightmare. Beware of balloon payments or illegal financing. Consult a mortgage professional who has experience with investment financing and can counsel you on the different programs available. Expecting minimal or no maintenance while owning an investment property is a sure path to a poor experience. Consider how much maintenance goes into your own residence and you will realize that rental property goes through the same wear. You may have the best tenant on the planet but unless you maintain the property, your investment will suffer. Remember this is normally a long-term project and many items such as roofs, fences, paint, and carpet have their own projected life. When planning an investment budget, consider how you will cover maintenance and necessary replacements. Working without good insurance, reserves, or a financing plan for possible vacancies, maintenance, emergencies, or disasters is like walking a high wire without a net. There are landlord policies available that will assist with vandalism or an emergency/disaster. Talk with an insurance agent who knows what landlord policies will help you in times of distress. In addition, savings for unknown factors, such as a long vacancy or major repair, and contacting financial institutions in advance about emergency funding are important measures to take. Not treating investment property as a business is the biggest mistake of all. It is a business and using a realistic approach rather than an emotional one is a must. Like all businesses, there are ups and downs – accepting this does make a difference. As your property management company, we are here to help you with any questions you may have on potential rental property. The real estate market has proven itself time and time again. In any housing market, there are opportunities for investors as long as you apply sound practices for buying. Click here to Read More If you’re starting out with real estate investing or if you’re just trying a new market or marketing technique, it can get discouraging. Often it means getting rejected over and over again.
None of us like to be rejected. We want to be accepted and liked. So hearing people say “No” over and over and over is something we naturally want to avoid. It’s enough to make most people give up before getting the first “yes”. Types of “No’s”The “no’s” come in various forms. If you’re calling leads on the phone or meeting with people in person, the “no’s” may be literal, where someone is telling you directly that they’re not interested or don’t want to work with you. Other times the “no’s” take the form of silence. You place an ad in the paper or put out signs or some other kind of advertising and wait by the phone and… nothing. It doesn’t ring. You had high hopes for lots of calls and it doesn’t make a peep. Maybe you double check that the ringer is on, double check your ad to make sure there wasn’t a typo on the number, but everything is right and no calls. You know people are seeing the ad, so every moment that passes and the phone doesn’t ring is like being told “no”, leaving you feeling disappointed and rejected. SolutionWhat’s the solution? How can you cope with being rejected repeatedly without giving up? I’ll share a technique that can help in just a moment. But first, it’s good to recognize that it’s not you that’s being rejected, it’s your message, your pitch. Being told “no” is a part of being an entrepreneur. You’re always going to get more “no’s” than “yes’s”, regardless of what business you’re in. If you can find a business where the majority of people say yes, I want in! And so does everyone else. But that’s not how business works. Let me share a technique that I heard Bryan Harris from VideoFruit.com talk about. At one point, Bryan was working at a sales job, which means pitching to people and getting told “no” over and over again. Bryan’s manager had him create a spreadsheet with 99 rows that said the word “no”, then row 100 said “Yes!” His manager told him not to focus on getting a “yes” from prospects, but just work the system and get 99 “no’s”. Each time he got a “no”, he was supposed to be put a mark in the box. Why Is This Helpful?Because when you expect to get a “yes” from your first prospect (and each one thereafter), you won’t survive. If you’re prepared for the “no’s”, you can tough it out and make it through to the “yes”. Of course, you probably realize, if you use this system it’s not literally going to be the 100th person who says “yes”. It could be the fifth person, the seventieth, etc. But if you approach it from the perspective of, “I’m going to pick up the phone and get my 99 no’s,” you’ll likely make it farther before wanting to give up. One person saying “yes” out of 100 represents a 1% conversion rate. There are things you can do to greatly increase those odds so that you have to go through a lot fewer “no’s” before getting a “yes”. Watch for my next article called, “Weeding Out Time-Wasting Leads” for tips on how to do just that. Click here to Read More With the declining social benefits, retirement planning has been gaining more attention. Investors are now looking for new ways to invest and save for their retirement future. One of these new ways is investing in real estate with a self-directed retirement account, such as a self-directed Solo 401k or IRA LLC.
Real Estate as a Safe and High-Return InvestmentThe issue with traditional retirement funds is that they are often associated with mutual funds and stock investments. The original idea is to create a safe and passive way for retirees to earn income and sustain their life saving after leaving their jobs. Recent economic events, however, show that the traditional investments are no longer doing what they are designed to. Many retirement portfolios that invested in the stock market took a big hit just a couple years ago. Others stay safe with target-date funds and bonds, only to earn minimal returns that are dwarfed by the rising inflation rate. Considering this reality, many investors are now seeking better investment opportunities in real estate, one of the oldest types of investment in the history. Real estate is often considered more secure than stock investment as it is a form of tangible assets. Investors can also count on a higher return from rental properties or mortgage notes. The property price and rent can also rise along with inflation, ensuring a sustainable portfolio for investors. The passive nature of the rental business and note investing also make real estate a good choice for retirement planning. The Use of Self-Directed Retirement AccountsEven with a strong interest in real estate, many investors are still unable to explore this option for their retirement funds. The main reason is that traditional retirement plans may not allow investment in alternative assets, including real estate. Even if the plan allows it, investing in real estate can get troublesome with the process of getting approval from the plan administrator or custodian. Hence many investors are now looking at self-directed retirement options, such as the Solo 401k or Self-directed IRA LLC, for a solution. These self-directed retirement plans present investors the opportunity to take control of their retirement funds, so that they can invest in anything they want, while still enjoying the tax benefits of a retirement plan. In an IRA LLC, the custodian will take a passive role and invest your retirement funds into a special purpose LLC, which is managed by you, the plan owner. With a Solo 401k plan, there is no custodian required and the plan owner can directly take control. With either structure, investors can make quick decisions when opportunities present themselves. Aside from the ability to invest in real estate, a Solo 401k also gives real estate investor an important tool: the ability to leverage Solo 401k real estate purchases. Unlike an IRA, a Solo 401k is not subject to Unrelated Business Income Tax. This means that investors can use nonrecourse financing to fund large purchases. Click here to Read More Fix and flip financing, also called hard money loans, sometimes conjures up images of boogeymen in pin-striped suits making obscure threats about what will happen if they don’t get their money back on time.
Real hard money loans, though, are simply investments given to a real estate buyer by a business person who expects to make a profit off of that funding. There’s no broken knee caps, pinky rings, or other Hollywood elements involved. A hard money lender is just a private lender who often steps in when the bank won’t offer the financial support a property flipper needs. The Number One Benefit of Fix and Flip FinancingThere are a lot of benefits that come with fix and flip financing. There’s the speed of getting the loan, for example. These loans often have a smaller amount of paperwork involved, and the straightforward terms of what is owed and when (the average rates for fix and flip loans are 2-4 points and 9-12% interest) make them easy to understand before signing on the dotted line. The number one benefit of fix and flip financing, though, is that the lender isn’t just focused on the person he or she is giving the loan to. The lender is interested in the project. What that means is that fix and flip loans are typically given on the strength of the real estate market, and the projections for the property, rather than on the credit history and personal resources of the person asking for the loan. This allows real estate flippers to get the money they need to bring out a property’s real potential, and make a hefty profit without the usual red tape involved when trying to secure a traditional loan. Hard money lenders are only interested in their profits, and that makes for a cut-and-dry business relationship. Fix and Flip Loans Doesn’t Have To Be Your Only FinancingWhile there are decided advantages to fix and flip financing (speed, personal agreement with an independent lender, reasonable terms, etc.) there is nothing that says fix and flip financing has to be the sole source of financing in a venture. If you want to buy a house, make repairs and additions, and then sell it for a profit you can approach both traditional lenders like banks, as well as private, hard money lenders. This way a property flipper can be sure that he or she has more than enough money behind a project to handle any setbacks without having to cut corners. Click here to Read More Real Estate training books do not have to be expensive; in fact all of REIClub’s Real Estate Investing Books are located on Amazon and are FREE.
Have you asked yourself any of these questions recently: “How Do I Find Money to Get Started in Real Estate Investing?”, “How Do I Become a Real Estate Wholesaler”? or “What Other Ways Can I Make Money in Real Estate Investing?”. REIClub.com created a set of FREE e-books that investors can use to get started in real estate investing. Our goal is for investors to learn about new creative investing strategies to help them close more deals, close them faster and become successful real estate investors. Start making money with real estate investing as early as next week just by downloading one of our specialty real estate investing books and study from your Smartphone, Kindle, iPad, Google Playbook, Blackberry, or Computer – virtually anywhere and anytime of the day. Click here to Read More Paramount Miami Worldcenter, the upcoming condo tower attached to the massive Miami Worldcenter development, has begun converting its reservations to contracts. So far 40 percent of the 60-story building’s 513 units have been sold, developer Daniel Kodsi told The Real Deal during an interview at the tower’s sales center Wednesday. Contracts are being mailed out to buyers, who have primarily hailed from countries like Brazil, Venezuela, Turkey and Russia. Developer Daniel Kodsi “We feel that we’re going to have a really strong conversion,” Kodsi said. “We’ve had brokers who have made a commitment to revolve their business around Paramount Miami Worldcenter.” The project’s sales model follows the 50 percent deposit structure that has been popularized during this cycle. Payments are staggered with 10 percent down at varying stages, from reservation all the way to topping off. Units will range in size from 1,180 square feet to 2,300 square feet, with an average price of $700 per square foot. Interestingly, Chinese buyers make up 13 percent of the building’s current sales. Realtors and developers have been looking to Asia for sales after weakening Latin American currencies have softened those countries’ involvement in the South Florida market. Kodsi told TRD that his development is no different: Peggy Fucci of OneWorld Properties, which is marketing and selling the project, has been traveling to China for years. And the group has even brought on a Feng Shui consultant to bolster the building’s appeal to clients from China. The first buyer to receive and sign a contract at Paramount Miami Worldcenter is the same Colombian investor who purchased basketball star Kevin Durant’s penthouse in downtown Miami earlier this year. His agent, Michael Light of Miami Luxury Homes, echoed Kodsi’s statement that buyers at the property have hailed from around the world. “I’ve had people com from Egypt, Colombia,” Light said. “I have the ability to sell at any building I want; this is the very first building I suggest.” On the construction side, Kodsi said that he has most of the required demolition permits to begin clearing the site at 950 Northeast 2nd Avenue, which houses the now-closed Mekka nightclub. That work will begin within the next two-to-three weeks, followed by foundation pouring and an official groundbreaking ceremony. Estimates put completion at 36 to 38 months after groundbreaking, which equates to late 2018 or early 2019. Meanwhile, the 30-acre Miami Worldcenter project as a whole is gearing up to break ground on its first phase next week, according to reports from Miami Today. Click here to Read More |
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February 2016
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