CT Homes, LLC.

San Diego's premier real estate solutions company working with homeowners, agents and investors to improve communities. CT Homes, LLC.

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How To Become A Rehabbing Expert With Little To No Experience

New Post has been published on http://www.cthomesllc.com/2017/03/become-rehabbing-expert-little-no-experience/

How To Become A Rehabbing Expert With Little To No Experience

Do you want to be a rehabber but don’t know how to operate an electric screwdriver? As crazy as it may sound you don’t need to be a handy person to be a rehabber. Sure, it is a help but far from a prerequisite in getting started. There are many rehabbers all over the country who got their start without knowing the first thing about home improvement. They gained their skills and experience from every project they were on until they knew enough to run a project on their own. Conversely, most handy people think they know the process well enough to dive right into the world of rehab. What they find is that it takes more than the handy person knowledge to be successful. Regardless if you can operate a SAWZALL or don’t know how to swing a hammer the rehab side of the business is open to everyone. Here are four things you need to do to be a successful rehabber without tool belt experience.

Know The Process. Instead of being an expert on the technical side of things you should start by knowing the process. You don’t need to know anything about home improvement to master the steps of a rehab. While every rehab has their own unique qualities there are similar several steps with every property. You should have an understanding on the big items to look for that are costly and difficult to deal with. Roofs, issues with the structure, windows and electrical items will have a much bigger impact than simple cosmetics. You don’t need to know how to remedy these problems but you should have an idea of the costs. One way to learn the costs is by simply walking around big box retail stores. This will give you some background on the cost of materials and with a few questions what they may be used for. Cost of labor you will learn the more job sites you are on and the more contractors and project managers you talk to. This knowledge will come in time but knowledge of the process is something you can learn before getting started.

Surround Yourself With A Strong Team. If you don’t know what you are doing on a rehab there is a real possibility you can and probably will lose money. Instead of waiting until you master every aspect of the process you can get started by surrounding yourself with a strong team. Start by finding the best contractor you can find. This may not be easy as many contractors only like to work with experienced investors. However, if you reach out to enough you will eventually find one that is a good fit for you and your experience. While you don’t want to blindly give your contractor the keys to a rehab project you should be willing to let them run things the way they see fit. You can certainly get different quotes but let your contractor run the project. In addition to your contractor you should also find a quality project manager, electrician, plumber, drywall expert and painter. Generally speaking, you should try to get at least three quotes on every aspect of the property. This is your rehab but you can make it easy on yourself by having the best possible team around you.

Consider A Partner. If the prospect of talking to people in the trades is difficult without knowing the jargon you can consider taking on a business partner. With a business partner you can handle the financial side of the transaction while your partner runs the rehab project. The upside is that you can feel comfortable knowing that your partner will not get run over by a contractor or handy person. The obvious downside is that you will not make as much on every deal as you expect. As you are just getting going this can be a great way to learn the business without the stress of trying to do everything on your own. You can hang around the property in your free time and see how things are done without everyone turning to you with questions or problems. Your partner will be the buffer and deal with any issues that pop up. A partner may limit your upside on every deal but it can be a great way to learn the ropes and break into the business.

Defer. In real estate it is always best to know what you don’t know. There are many investors who try to fake like they are an expert only to have it come back to haunt them. There is nothing wrong with saying that you don’t know a particular aspect of the business. With rehabbing if you don’t know what you are doing you will eventually get exposed. You are far better off deferring to the people around you as you develop your education. As we mentioned you should seek out a good team or a business partner until you are comfortable with the process. You will still reap the rewards of the deal, maybe not as much, but in the end it will be worth it for you. There is nothing wrong with deferring to the people around you for your first several rehabs.

Some of the best rehabbers got their start without knowing how to swing a hammer. It may be uncomfortable during your first few deals but eventually you will find your way.

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6 Questions To Help Discover Seller Motivation

New Post has been published on http://www.cthomesllc.com/2017/03/6-questions-help-discover-seller-motivation/

6 Questions To Help Discover Seller Motivation

One of the worst things for any business is wasted time. In the world of real estate wasting too much time on one deal can directly cause you to miss out on a future opportunity. Every homeowner you talk to has some idea of what they want to do prior to talking with you. Those investors who can pull this information out in a clear, concise way are often the most efficient and avoid wasting time with a homeowner who is only lukewarm about selling. Prior to any phone call or meeting with a prospective seller there are a few questions you should be ready to ask. Asking the right questions and listening to the answers can help you avoid wasting your most valuable business commodity-time. Here are six questions you should ask to help discover seller motivation.

What Are Your Goals For The Transaction? The more potential sellers you speak with the easier it will be to develop a pattern of asking questions that works for you. Regardless of how you ask them it is important that you leave the conversation with enough information to let you know where you stand. The first important question you need to ask is what their goals are for the transaction. Every seller is motivated by something unique to them. Some want to sell because they are facing foreclosure others want to sell for the highest amount. Whatever the reason is you need to find it out in the initial conversation.

Why Are You Considering Selling At This Time? The goals and the motivation are usually one in the same however that is not always the case. You need to discover why a seller is thinking about selling right now. There are many sellers who simply want to kick the tires without ever moving forward. They essentially use your time and expertise to get some idea of their home value and what they can expect. If you ask them why they want to see now you can get a better idea of where they are with the property. They will tell you if there are facing a foreclosure, a relocation, divorce or some other time sensitive event. By knowing why they want to sell it gives you some insight on their motivation which gives you a better idea of whether they are really serious about selling.

What Are Your Total Mortgages And Amounts? A common mistake that investors make is assuming that the homeowner knows everything about their financial situation. For whatever reason, many homeowners aren’t on top of their mortgage situation and total amounts owed. As you try to establish what the homeowner owes it is important that you ask for all information on every mortgage or item on title. A homeowner may not recognize a home equity line of credit as a mortgage but it needs to be factored into the total amount owed. Instead of taking their word you should ask for the most recent mortgage statement. Not accounting for a second mortgage completely changes everything with an offer and a purchase.

What Is The Estimated Home Value? You should also try to get the homeowners perspective of the property. It is important to remember that they don’t look at comparable sales and current listings as diligently as you do. What they may think their home value is may be completely off. It is ok to come right out and ask them what their home is worth. The follow up question should be what do you think that is based on. They may have done some work a few years ago or simply saw a home for sale the next street over. If their value is out of whack you can show them supporting documenting closer to your number. Without knowledge of what they are thinking you may waste time with a seller who has an unrealistic view of their home.

What Is Your Ideal Timeframe? Some sellers are looking to sell as quickly as possible while others want to wait until the end of the season or after an important holiday. The seller’s timeframe should influence your offer. The value of the property today may not be the same in six months. The odds are things won’t change too dramatically but you never know. It is ok to ask the seller if they were given an offer they liked when they would want the transaction to happen. If their answer is not anytime soon you may need to adjust your thinking with the property.

What Is Your Best Case Scenario Sales Price? What a homeowner thinks their home is worth may not be what they think it would sell for. There are certain situations when they may need to sell in a pinch even for a lower amount. Come right out and ask if they have a best-case scenario sales price. Again, their answer will give you some idea of how you should proceed. If their number is too high you may need to get them back to reality. If they have expectations of getting cash from the closing without equity you need tell them realistically what they should expect. The more information you have the easier it is to proceed.

These six questions you should ask in every new homeowner meeting. Once you discover seller motivation the rest of the transaction will fall into place.

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What Makes A Quality Rental Property?

New Post has been published on http://www.cthomesllc.com/2017/03/makes-quality-rental-property/

What Makes A Quality Rental Property?

There is a lot that goes into finding the right rental property. Many novice investors think they can turn any property in a cash flowing rental property. The reality is that there are a handful of important features that influence just how strong the property will be. It is not enough to make some minor improvements, stick a “for rent” sign in the front yard and wait for tenants to flock to the property. If the market is poor or the demographics are weak any improvements you make could be for naught. On the flip side, if you find the right property in the right area you can earn monthly cash flow and long term wealth for as long as you own the property. Here are four important qualities of any successful rental property.

The Surrounding Area. Simply saying the market needs to be strong is not enough have success. Start by examining the immediate area surrounding the property. With rental properties you need to think like a tenant. You can get a great deal on the purchase price but if tenants don’t find the area appealing you may not be able to rent for as much as you think. It is always better to pay more for a property in a better location than the other way around. By doing this not only can you maximize cash flow but you will also find better tenants that tend to stay in the property longer. This reduces vacancies which allows you to not have to deal with constant tenant turnover. If you don’t find the immediate area appealing the odds are your tenants won’t either.

Local Demographics. There is plenty to consider when evaluating local demographics. It is no secret that there are more renters today than ever before. If your property is in a town with sagging demographics they will surely look elsewhere. Start by looking at the overall strength of the town’s economy. The best way to do this is by looking at the job market. National unemployment rates have improved but it is important to look at this number on the local level. If a large job source has just left the area you can bet that renter demand will eventually be reduced. Another good indicator of demand is the local school system. Renters and buyers want to live in towns that offer the best schools for their children. If the school system is poor or there are rumors of a school closing you may want to look elsewhere. The final major demographic are the crime numbers in the area. Everyone wants to live in a property where they feel safe. If crime has been on the rise and in the news they may automatically eliminate the town. If you are having trouble finding information on demographics ask your real estate agent or go directly to the town hall website.

Taxes, Misc. Expenses. There is more to calculating cash flow than simply subtracting your mortgage payment by the rent received. Inside of your mortgage payment you need to factor in the property taxes and insurance. While these are typically consistent annually they can change at any time. In areas with increased foreclosures you can have an unexpected hike in the property tax payment. It is not uncommon to see an increase of several thousand dollars if the town’s financials are poor. You also need to look at any non-mortgage payments as well. If the property is in a market impacted by winter weather, you need to add snow removal to your budget. This could easily add a hundred dollars or more in the winter months. The same is the case with properties located in predominately sunny areas. With these properties you need to factor in lawn maintenance and exterior upgrades. Wherever the property is located it is critical that you know all the monthly expenses you must endure and which you can pass along to your tenants. These numbers hold the key to your cash flow.

Competition. As you evaluate a rental property purchase you need to keep an eye on the competition. Just as if you were selling tenants will compare your rental with every other rental property in the area. You cannot expect minimal improvements to give you a 20% bump compared to the rest of the market. There are a handful of rental websites where you can look at the competition. Look at how long the properties have been listed for and the volume of listings. If the area has pages full of supply it can be an indicator that demand is poor and you may have a tough time finding tenants. If there is limited supply it can be a sign that rentals are flying off the market. Reach out to the landlords listed and ask if they can give you any insight on the market. In most cases, they will be willing to share whatever they know.

It is important not to evaluate a prospective property on how it looks now but rather the potential. Often times knocking down a wall or adding an extra half bathroom can greatly enhance the value. If you look at where you can add value it will change the cash flow of the property. A rental property purchase is more than buying and waiting for tenants. Look at these four areas to help you find the perfect rental property.

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5 Ways To Avoid Neglecting Your Business Website

New Post has been published on http://www.cthomesllc.com/2017/03/5-reasons-never-neglect-business-website/

5 Ways To Avoid Neglecting Your Business Website

Technology is moving at the speed of light.  Think about how cool and modern your new phone was just a few years ago.  If you look at that same phone today it is probably outdated and in some cases even obsolete.  The same is the case when it comes to your business website.  It is no longer just a nice touch to have a website it is an absolute necessity.  Unfairly or not you are often judged on the content, layout and presentation of your site.  If you haven’t given it much thought recently it may be time to examine the look and functionality.  Making touch ups and changes to your site is much easier than you may think and has a much bigger impact. Never lose a deal because your website is old and outdated.  Here are five areas you should look at when updating your business website.

Home Page. The home page of your website is very much like the exterior of a property.  A viewer will make a snap judgement based on the first thing they see.  This often will influence their opinion of the site and even how they think of you.  You may only have five seconds or less to create a positive first impression.  The home page of your site should be more about generating attention than providing information.  Think about some of the sites you personally enjoy.  If there is too much information to digest you will have a tough time taking everything in.  One way to grab attention is by placing a video in the middle of the page.  This video can be a short introduction or a 90 second daily blog about something pertinent in the real estate world.  Whatever you have on the home page it is important that you think about how it looks and if it is sending the right message.

Personal/Business Info. Regardless of the size of your real estate investing business people want to know who they are working with.  It is important that you have this information readily available.  On the home page, there should be a tab that breaks down your personal and business information.  There are many people who see the value in business info but question why personal is needed as well.  The answer is that business is done by real people with real emotions.  They are interested in what kind of person you are what is important to you.  A few lines about your family, hobbies or education can turn a hesitant party into one that is ready to act.  Under your business info you need to walk the line between providing previous deal history without touting your abilities too much.  You are better off stating how you got into the business, if you came from another industry and when you got started.  The more people know about you the easier it is for them to want to work with you.

Project History. There is a way you can show your experience without directly telling people about it.  If you have pictures or videos of previous projects, you should proudly display them on your site.  A simple tab of “previous projects” is a great way to tell other investors, sellers and even buyers what you can do.  Under each picture, you can put a few lines explaining the situation and even the resolution.  Make sure you attach a date and timeframe for handling the property.  If you have a specific niche you should put them under this section as well.  You never know what niche will generate interest from a fellow investor.  A mobile home deal you closed three years ago, may pique the curiosity of someone that comes to the site.  The same is the case with a deal obtained from a tax lien, probate, condo or anything out of the ordinary you can think of.  Any type of project history you have should be included on your website.

Proactively Answer Questions. What is the goal of your website?  It sounds like an easy enough question but many people struggle with the answer.  Are you looking to generate interest from potential sellers or do you want to create relationships with fellow investors?  How you answer this should dictate what is on your website.  Regardless of your focus it is important that you are proactive in answering questions people have for you.  You want to put any lingering questions to bed about you and how you work.  Providing answers to basic questions shows that are have nothing to hide and sets a good precedent for when you work together. At the bottom of this section you should leave a place to ask questions privately or reach out to you directly if there is something they want to know.

Provide Education Or Something Of Value. People want to work with people they are confident can complete the job they are looking for.  Without physically talking to anyone you can show them you are an expert by providing them with an educational tool.  A link to a free eBook often goes a long way in cementing you as an expert in your field.  A good idea is to give the book away to anyone who provides a name and email address.  This information can be used to help create a buyers list or simply start a relationship.

A good website won’t cost you an arm and a leg.  There are more inexpensive sources that provide quality work than ever before.  Don’t underestimate the importance of your website.

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5 Tips To Help Get Your Offer (Or Counter Offer) Accepted

New Post has been published on http://www.cthomesllc.com/2017/02/5-tips-help-get-offer-counter-offer-accepted/

5 Tips To Help Get Your Offer (Or Counter Offer) Accepted

It is very discouraging tracking a property for weeks only to not have your offer accepted. There are times when you and the seller are far apart and any offer you submit will be quickly rejected.  It is the properties with limited competition where you need to secure the deal.  Sometimes the seller will have to choose between multiple offers with similar price points.  In those situations it is the little things that can tilt the offer in your favor.  The way the contract is worded or the ability to close a week earlier can make all the difference.  Don’t miss out on good deals because your offer is not up to par.  Here are five tips to help get your offer or counter offer accepted.

Update Financials. Regardless if you are working with a traditional seller or a bank the first priority with any sale is to actually close. You can have the highest offer but unless you show the ability to close your offer will be quickly dismissed. Prior to making any offer it is essential that you update how you are funding your purchase. If you are planning on paying cash for the property you need an updated proof of funds. At a minimum this should be updated within the last thirty days, with the date as close to your offer as possible. In lieu of generic statements you should have an exact amount with your name and date on it. The more detailed your proof of funds letter is the more serious your offer shows. The same is the case if you are using lender financing. You pre-approval letter needs to have as much information about the loan as possible. You can ask your lender to include the exact credit score, down payment amount and even debt to income ratio. Lender financed deals have been given a black eye so you need to show as much positive information as possible.

Clean Offers Only. Presentation is very important on properties with high demand. If your offer is sloppy or missing items it will not be accepted. Even if time is of the essence you still need to take your time and make sure everything is in place. One missed initial or signature page is all it takes for your offer to be discarded. It is also important that you and your real estate agent submit everything that is asked for. It doesn’t do you any good to quickly submit your offer without a signed disclosure or proof of funds letter. Your real estate agent should know the correct contract forms and exactly what they seller wants to compare apples to apples. If you can’t get what the seller wants you are much better served waiting a few hours or even a day or two until you have everything in perfect order. You may only get one chance to get your offer noticed. Don’t blow it by hastily submitting sloppy offers.

Justify Price. With any offer it is important to know who you are working with. Sometimes it is easy to distinguish seller motivation or property demand. When there is increased demand you need ways for your offer to stand out besides price. One of the best ways of doing this is by justifying your offer. Whatever you offer you should always have a reason for your price. The seller may not agree with it but at least you can back it up. It is ok to include comparable listings and sales that are more in line with your price. You can also include pictures of the property as well as a bill for the cost of repairs. Be careful not to go too far over the top. You don’t want to make the property seem too bad but you do need to show some flaws and warts. By providing subtle influences you may be able to get the seller to see the property your way.

Respond Quickly. In a perfect world every offer you make will be accepted within hours of submission. A more likely scenario is that the seller will present a counter offer. If you really want the property you need to act as quickly as possible. This doesn’t mean you have to change your price but you should act in a timely manner either way. A letter to the seller stating that you feel your price is more than fair considering the condition and the neighborhood is acceptable as long as it is done quickly. All a seller really wants with a counter offer is a response. They are trying to engage in negotiation and want to know where they stand. If you feel your offer is fair and you can close quickly there is no need to change.

Concessions. That being said there are times when you need to give a little to secure the deal. This doesn’t mean you have to give away the farm but you may need to show a willingness to negotiate. Meeting the seller’s price in the middle, closing quicker or eliminating some concessions may just secure the deal. You always have to be aware of demand balanced with your expectations for the property. If the property can be a home run there is no need to get greedy and risk losing it. Asking for too much or pushing the seller too hard can lead them to look for offers in other directions.

By securing more of the deals you really want you will see a spike in your bottom line. Use these five tips to get more offers accepted.

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5 Hacks To Help Improve Rental Property Management

New Post has been published on http://www.cthomesllc.com/2017/02/5-hacks-help-improve-rental-property-management/

5 Hacks To Help Improve Rental Property Management

Wouldn’t it be nice if your rental property ran a little smoother? The goal of any landlord is to manage their property with as few headaches as possible.  As most successful landlords will tell you there is always something you can do that will make your life easier.  From asking for tenant feedback to updating pictures and videos a landlords work never ends.  By handling these items before you need to rather than when they are required you are one step ahead of the game.  The smoother the transition is from lease to lease the more time you have to focus on finding additional rental properties.  Here are five hacks that will help improve your rental property management.

Get Data From Applicants/Tenants. There is valuable data you can acquire from everybody that enters your property. Start by reaching out to any applicant that turned down your rental. Most applicants will be open to answering a few questions about the property or the process. Doing this will give you an idea of whether or not you need to lower the price or improve the presentation of the property. They will tell you if the timing of the lease is wrong or there is something that needs to be changed. Hearing feedback should help make improvements the next time you have a vacancy. The same is the case with current or previous tenants. You should ask that they are as open and honest with you as possible. This means you have to have thick enough skin to accept any criticisms they will throw at you. Subtle changes in your management or with the property can produce happier tenants which take better care of the property and want to stay as long as possible.

Produce Pictures And Videos On Demand. One of the most time consuming and frustrating aspects of being a landlord is dealing with the end of the lease. Not only do you need to juggle items with your existing tenants but you need to focus on finding new ones. Instead of physically driving to your rental whenever someone has interest you should have a video tour and pictures available. The best time to do this is in the day or two window you have from the end of the lease and the start of the new one. You don’t want to have a video with your tenants mess all over the house. You are better off waiting until they are out. The same is the case with any pictures. Most prospective tenants will ask for pictures or a video before requesting to see the property. Not only does this save you from driving to and from the property but the tenants that do show interest are much more serious about moving forward. You can use this same video as long as there are no changes in the property. Spending an hour or so at the end of the lease will save you hours of time in the future.

Document Everything. At some point in almost every lease there will be a dispute. Most of these disputes are minor in nature but they still need to be dealt with. You always want to avoid situations where it is your word against your tenants. The best way to avoid this is by documenting everything. Instead of having conversations on your personal cell phone you should utilize google voice. This will help you track all incoming and outgoing calls in addition to text and voicemail. Even if you decide to use a personal cellphone you should use text messaging. The same is the case with email. Any significant changes or complaints should be done in a manner where you can record the exchange. That way everything is documented and there is no disputing the situation. If you do have face to face conversations at the property you should write them down as soon as you get in the car and send an email recap. The more documentation you have the easier disputes are to deal with.

Hire A Property Manager. If you have been managing the property yourself you should strongly consider a property manager. Most landlords cite limited cash flow as the reason they self-manage the property. As important as cash flow is if you are barely breaking even you need a property manager more than you think. On properties like this you devote far too much time and attention. Instead of looking for other deals or building your business you are stuck dealing with tenants, finding handymen and working through complaints. A property manager will eat away at your cash flow but will also free up time so you can earn it back on other properties. Just because you can manage the property doesn’t always mean it is the best idea.

Set Firm Guidelines From The Start. You should do most of the work with your tenant before they spend a night in the property. As painful as it may be you need to allocate an hour or two going over the lease line by line. Make it perfectly clear what is allowed and what isn’t. You also need to define the penalty for breaking the rules. The first month they are late on the mortgage send them a request for the late fee. The $25 or $50 fee is not as important as the message it sends that they cannot do whatever they want during the lease. By setting firm guidelines right from the start you reduce the chances of future problems.

The best landlords are the ones that run their property like a business. They are constantly looking for ways to make things easier and more efficient.  Use these five hacks to improve the management on your rental property.

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5 Items That Impact Local Real Estate Markets

New Post has been published on http://www.cthomesllc.com/2017/02/5-items-impact-local-real-estate-markets/

5 Items That Impact Local Real Estate Markets

With all the constant news and information regarding the real estate market it is easy to get confused sometimes. One day you hear that interest rates are going up and housing market is in trouble for 2017.  The next day you hear that there will be an increase in loan programs which will open the door for new buyers.  The reality is that most real estate is done at the local level.  Something happening in Ohio doesn’t have much impact on the market in New Mexico.  It is important that you understand the markets where you invest and more importantly what influences changes in these markets.  Knowing this can put you in front of a growing market or give you the heads up that it may be time to leave a declining one.  Here are five key items that impact local real estate markets.

Demographics. As we mentioned every real estate market has its own unique set of qualities. These qualities often determine just how strong, or weak, it is. Many of these qualities can be defined as demographics. Local demographics can be anything from the mill rate to the strength of schools. It can be unemployment figures, crime rates or average household income. To best gauge the strength of a market you need to look at as many of these figures as possible. Relying on just one of these can give you a misleading portrayal of the area. Finding demographics can be as easy as looking at information provided on the local town website. You can easily find the tax rates, crime figures, unemployment numbers, schools in the area, new housing permits and almost anything else you think is relevant. Real estate is done by real people in real towns. Demographics often hold the key for where the market will go next.

Inventory. Real estate is also based on supply and demand. This certainly isn’t an earth shattering observation but is important to remember. If there is increased supply buyers are in a stronger position. They can pick and choose the ideal property for them. Since the buyer pool is reduced sellers are more open to negotiation. Buyers in markets with increased inventory can make the offer they feel comfortable with and if it is not accepted move on to something else. The trickledown effect to this is that home prices tend to be lower. Areas flooded with foreclosures and bank owned properties may seem like a goldmine but can actually be fool’s gold. You may be able to get the property at a discount but you will also have trouble getting it sold. On the flip side in markets with limited inventory sellers have the upper hand and can increase the list price of their properties. Buyers know that there are only so many houses to choose from if they want to stay in that market. Before making any offer always ask your real estate agent about the current inventory and changes over the last twelve months.

Foreclosures/Short Sales. The overall number of foreclosures and short sales has been greatly reduced over the last five years. That being said there are still many markets that are not completely out of the woods. All it takes is one foreclosed property to have an impact in the market. When a foreclosed property sells it lowers the comparable sales for every other property. This has an impact on properties trying to sell or even refinance their homes. If there are multiple foreclosures it makes it difficult to pull values up. You can find current foreclosure numbers in town hall. Always look to see foreclosure volume as well as changes over the last six months. It is also a good idea to ask your real estate agent to provide you with a foreclosure sales chart. If the sales prices are greatly reduced it can have an impact in the town even if the foreclosures are nowhere near your subject property.

Days On Market. Trends are nothing more than a snapshot of what has happened in the past and not a predictor of the future. Flat sales volume over the last year has nothing to do with the next twelve months. What you want to look for is the average number of days on the market. This tells you just how long, or quickly, homes have sat on the market before getting sold. Some of this is influenced by the current state of lending but most on buyer demand. If the average days on market have been shrinking it is a sign that buyers are coming out in full force. If the days on market are getting longer inventory could be poor or buyers are looking elsewhere. Either way it is a poor indicator of things to come.

Price. Price is typically the bottom line for any market. As simple as it sounds if prices are rising the market is more desirable. If prices are falling sellers are looking to get out and buyers are looking elsewhere. When investigating price adjustments you need to look at as much data as possible. It is not uncommon for one or two high end sales to completely change the average sales price. This is why a median or a mean price number is more reliable. With these methods they throw out the lowest and highest sales and provide you a more realistic snapshot of the market.

Before diving into any market you need to know where it stands and where it may be headed. Use these five items to help determine the strength of your market.

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The Basic Steps Of A Real Estate Transaction

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The Basic Steps Of A Real Estate Transaction

Every new investor wants to dive into the business as quickly as possible. They watch their favorite investing show on TV and think things will be just as easy.  Without knowing what steps to take you will run yourself into circles and not get very far.  Regardless of what type of investing you want to pursue the steps to purchase are basically the same.  It is important that you follow these steps and avoid taking shortcuts on a given deal.  All it takes is one oversight or incorrect figure to turn everything upside down.  Whether you are looking for your first deal or simply need a refresher here are the basic steps for any real estate investing transaction.

Property Information. Numbers and data should dictate your buying decisions. You may personally fall in love with a property but if the numbers don’t make sense you need to pass. The first step of any deal evaluation is the actual property. You need to assess the current condition as well as what improvements are needed to maximize your return. Some of the improvements can be cosmetic while others will be more large scale. You need to put a price tag on whatever updates you plan on making. If you are not versed in estimating these numbers you need to reach out to a contractor that can provide real figures. If you notice we did not mention the current list price. That is because this is often just a starting point and not a final number. A homeowner can list for whatever they like but ultimately the market will determine how much it sells for. Only when you are finished evaluating every aspect of the property can you move on to step two.

Seller Motivation. There is often a big difference in what you think the property is worth and the estimation of homeowner’s value. Ultimately the homeowner is the only opinion that really matters. You can support your argument with facts and data but if they don’t want to hear it they don’t have to sell. Generally speaking the best real estate deals are done with motivated sellers. These are sellers who have a desire to sell based on a pending short sale, foreclosure, divorce, death in the family or change in employment. As you evaluate the property you need to gauge the motivation of the seller. If they are not ready to sell now there is nothing you can say or do that will change their mind. You can follow up with them from time to time but you shouldn’t devote all of your efforts in trying to get them to change their mind. They will respond when they are ready and you can’t get too caught up or angry with their inability to act. Without motivation you should move on to the next deal.

Financing. How you plan on financing the deal often has a huge impact on your offer. There is something to be said for the ease of transaction. If you have access to capital or hard money funds you can offer a little less with the ability to close quickly without having to wait for lender approval. On the flip side if you are using a lender you need to have all of the items for the loan ready to go upon submission of the offer. In most cases you only have 30 to 45 days to get your offer approved and cleared to close. Without financing in place you cannot make an offer and even if you can the seller will not accept it.

Offer Amount. Your offer amount should be based on three factors: seller motivation, market demand and comparable listings and sales. You should always know who your competition is and what the demand is like. On properties with little demand you never want to bid against yourself and offer too high. You can always come up but it is difficult to go down. Properties with high demand your offer needs to be as close to asking price as possible. Always run your own numbers and come up with a price that works for you. Keep in mind that you need to have enough room to make a profit. Make your offer and if it is not accepted move on to the next property.

Closing Process. Getting your offer accepted is only the first part of the process. Many would argue that your work starts after your offer is accepted. Regardless if you are using hard money or lender financing you need to get an inspection done immediately. Never skip this process just to secure the deal. Even the trained eye of a contractor can miss something with the foundation or structure. If you skip the inspection you are opening yourself up to risk. If you are using a lender you need to submit all loan items as soon as possible. The quicker you supply your lender with tax returns, full bank statements, business licenses and anything else they need the quicker they can start the process. It is important that you find an attorney who practices real estate and knows how to work with other attorneys and lenders. You never want to lose a deal because your attorney dropped the ball.

You should see the deal all the way through closing and be as involved as you need to be. There are always unexpected curveballs in real estate but these are the five basic steps towards closing.

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Business Development: Why Every Good Investor Needs A Plan

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Business Development: Why Every Good Investor Needs A Plan

If you are considering getting involved in real estate you need to have a plan. Your plan doesn’t need to be elaborate or even overly formal but you should have some sense of where you want your business to go.  Where most investors get in trouble is thinking they know the business simply by watching a few shows or reading as few books.  As they quickly discover the business has a way of taking them to places they would have never expected.  Without a solid business plan it is easy to bounce around from lead to lead without any real direction.  Prior to looking at your first property or researching your first deal you need to start with a plan.  Here are five aspects of writing a good business plan.

Know What You Are Getting Into. You should never start investing without some idea of what you are getting into. Without the aid of experience you should start your plan by doing your homework. Most investors in today’s market are infatuated with rehabs and quick flip deals. While these can certainly make sense in the right market they may not work for you and your goals. You don’t need to be an expert in every aspect of the business but you should have some idea of what you want to do and how you plan on doing it. There is a big difference in what is needed for a rehab as opposed to a buy and hold rental. When you do get involved in your first deal it shouldn’t catch you off guard. You will never know everything prior to getting started but you should always do as much research as needed to make you comfortable.

What, Why, When, Where. Your business plan should serve as a roadmap for where you want to go and how you plan on getting there. Start by accessing what kind of investing you want to pursue. Do you want to get in to the world of rehabbing or are you looking for long term rental properties? How you answer will partially determine which markets will be your focus. Some markets work better for rehabs while others make more sense for long term acquisitions. You also need to determine the timeframe for your first purchase. Are you looking to buy tomorrow if something presents itself or do you want to wait a few months? Under each answer you should play out the best and worst case scenarios. Most new investors think everything will fall in line just the way they plan. When they are presented with the slightest issue it throws everything off. The more you consider all of the negatives that can happen the better you are at dealing with them.

Time Commitment. One of the great aspects of real estate investing is that you can do it on your own terms. If you want to buy one property a year there is nothing keeping you from doing so. Part of your business plan should be recognizing how much time you can commit to the real estate business. There is a lot that goes into being part of a successful transaction. Even though there are websites and apps that make the process easier there are no shortcuts to success. You need to do your due diligence on every deal if you want to truly know what you are getting into. It is important to ask yourself how much time you have available during the work day to focus on real estate. This can be a challenge if you want to hang onto your full time employment. If finding time during the day is tricky you need to be able to work at nights or on weekends. There are ways to invest even with just a few hours a week but you need to map out exactly how you plan on doing it.

Strengths & Weaknesses. What parts of the business do you feel you have a pretty good grasp on right now? While you really never know until you get started often times you know which areas you are comfortable with and those you need to work on. You should play to your strengths and look for ways to compensate for your weaknesses. Whatever field you come from should be your focus. If you come from finance, real estate or the mortgage business you should be able to understand the numbers and jargon on a new deal. If you have a tech background you can use that strength to help generate leads and promote your business. Getting into any new business requires some self-assessment. As you write you plan you should take the time to consider your strengths and weaknesses.

Lead Generation. Regardless of your background the strength of your initial lead generation often determines the strength of your business. A major part of your business plan has to be how you plan on getting leads. Fortunately it is easier than ever to promote a business and reach people. The internet, particularly social media, make it easy to reach hundreds of people every day. However reaching people is not enough. You also need to think about how you will generate leads. You don’t need to spend thousands of dollars on lead generation but you should have some strategy in mind. Finding the right strategy will take some trial and error but you need to have a plan prior to getting started.

Your business plan can be as short as a paragraph or as long as you want. Having a plan of attack is the best way to approach a new endeavor.

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5 Ways To Promote Your Business

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5 Ways To Promote Your Business

In today’s day and age of advanced technology there are dozens of effective ways to successfully promote your business. While social media is currently the most popular it is far from the only option.  The increase in technology has made it easier than ever to spread your message and get your businesses name out.  With any marketing strategy the more diverse your reach is the more potential contacts you can make.  It may take some trial and error finding the strategy that works best but you probably won’t go in the red getting there.  There is more to generating interest than making a few random posts on social media.  Here are five out of the box ways to promote your business and get your name out to the masses.

Reach Out To Inner Circle. As remarkable as it may seem there are many individuals and business who fail to start with their inner circle. Regardless of the business you should always reach out to the people closest to you first. Even if you only plan on investing part time the people around you need to know you are involved in real estate. In most cases a simple email can do the trick. Without even realizing it you probably have dozens of email addresses of friends, family members, co-workers, school parents, dance studio mothers and soccer team dads that you can reach out to. An email explaining your position in the business along with a link to your website or social media pages can go a long way in generating interest. You also never know who the people around you know. Working with friends and family can get awkward at times but is also a great source of lead generation and potential deals.

Incorporate Passion. It is ok to incorporate whatever you are passionate about in your business. If you have a passion for animals, sports, fitness, wildlife, veterans, world hunger, motorcycles, or anything else you should promote that on your website or in your social media postings. Your passion should always be pro something instead of against it. It is no secret that we currently live in a delicate political climate. You may want to stay away from anything that will alienate one side or cause you to react out of character if someone else shares an opposing view. If you use your passion wisely you can develop a brand and a niche in your market. Being known as the real estate investor who donates a portion of all business profits to a specific cause can give you the inside track on a few deals you would not have otherwise had. Even if it is simply a conversation starter it can push you to work with new people who share a similar interest and passion. Don’t be afraid to get behind a cause that you believe in as long as you know your bounds.

Validate Expertise. People in business want to be around others they are confident know what they are doing. One of the best ways to stamp yourself as an expert is by putting something in print. This could be something as small as a blog or as grand as a book. Writing a book may be a little out of your reach but there is nothing to say you can’t write an eBook. Think about an area of the business you have worked and excelled in the past. Knowledge of the tax lien auction process or how to negotiate a short sale can be a valuable piece of interest that you can share with others. Your blog post or eBook can be visible on your website, posted on social media or shared with the people in your network through email. The more people see it the more likely that someone will be impressed with your knowledge and eventually want to work with you.

Local Radio/Print Publications. Promoting your business often means thinking outside the box. An area that you may not personally like can work much better than you think for your market. Local radio shows and print publications are a great way to increase your exposure. In most markets, there is a local weekly real estate and finance radio show. Start by calling into these shows every week and either asking a question or sharing a scenario that worked for you. After a few weeks, the producer will begin to recognize your name and you can inquire about possibly hosting your own show. A similar approach can be taken with print publication. Reach out to the editor and ask if you can submit a weekly real estate investing post. They will probably ask for some previous work but this can be a great way to reach thousands of readers every week.

Step Out Of Comfort Zone. Reaching new people means trying new things. You may not feel comfortable speaking in front of people but it can be a great way to promote your business. The same can be the case with submitting videos on YouTube or talking to people at networking meetings. Like anything else you do for the first time there will be some trepidation and awkwardness. However, over time you will begin to see results and eventually look back and wonder why you were ever nervous in the first place. The most successful networkers and marketers aren’t afraid to try new things and step outside of their comfort zone.

Every day you should do something new to promote your business.  With all the options available you can do something different every day of the week.

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5 Simple Things You Can Do To Improve Your Rental Property

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5 Simple Things You Can Do To Improve Your Rental Property

Successful rental properties are all about finding the right tenants. Once you find tenants that truly enjoy your property you can expect the lease to go as smooth as possible.  To find the right tenant your rental needs to stand out from the crowd.  There is plenty of rental demand in most markets.  It is not enough to have the best location or even the lowest price.  Your rental needs to offer certain amenities that other rentals in the area do not.  Without these tenants will look elsewhere and you will be stuck scrambling to fill a vacancy.  Here are five simple things you can do to add appeal to your rental property.

Washer/Dryer.  With any rental property it is important that you study what else is on the market. A student housing rental does not need the same amenities as a rental you would rent to a small family. Regardless of the rental there are a few amenities that make renting much more appealing. An in house washer/dryer and dishwasher can completely change the perception of the property. Nobody likes lugging laundry to and from the laundromat. This can be a time consuming expense that will push renters in another direction. If you have room in the basement you need to find a way to hook up a washer and a dryer. For around $1,000 you can install a washer and dryer that you will have in the property for years to come. Another good amenity to have in the property is a dishwasher. You don’t need a brand new stainless steel model to attract tenants. As long as you have something in the property it will make things easier on the tenant and feel more like home.

Extra Storage. No tenant wants to feel crammed in their rental property. Adding square footage to your property may not be realistic but there are other things you can do. You can look at add storage space in the attic and basement. It is not uncommon to ignore your attic for years. You may think a tenant has no use for the attic and it has become your personal storage bin. It is important that you take a few hours and clear the attic out. This may force you to get rid of some things but it can work to free up storage space for your tenants. The same is the case with the basement. Regardless if the basement is finished or not you need to make it as clean and presentable as possible. There is often a room in the basement that can be used for storage if it is clean enough. Most tenants aren’t going to store dozens of boxes in these areas but room for a bicycle or toy set can be important.

Garage. If you have a garage on site you need to take advantage of it. As hard as it is to believe there are many landlords who don’t utilize the garage. It may be little run down and instead of using it for parking they use it for storage. There are some tenants who will only rent properties that offer secure parking. Regardless if the garage is attached to the property or not you need to make it useful and functional. You may spend some money restoring it and cleaning it out but it can be an important part of attracting tenants. This is especially the case if the property is located anywhere that can get wintry weather. Tenants do not want to deal with defrosting their windshield and removing ice and snow every storm. If all things are equal they will choose the rental that offers a garage. There is no reason not to take full advantage of an onsite garage.

Amenities. As a rental property owner it is important to always consider the big picture. There are plenty of occasions when paying a small expense has a much greater return. Take a look at what amenities and expenses you can pay that will allow you to justify a higher rental price. Seemingly minor items like snow & trash removal, lawn care and certain utilities can add instant appeal. Most tenants want to have their lives as easy as possible. Bundling these items allows them to live worry free and not have to worry every time there is a storm or how they are going to cut the grass. As far as utilities heat and hot water are fairly standard but if you find a bundled cable deal you may be able to pass this along to your tenants.

Furnish Unit. There is a large segment of tenants who do not have couches and other furniture to call their own. By furnishing your unit with these and other items your property becomes much more rentable. Instead of moving a desk, coffee table and other large items they can simply use what is already in the property. Furnishing typically works best for student housing rentals or in properties where moving in and out can be challenging. If there are tricky corners and tight spaces you can partially furnish the property and leave the rest vacant.

It is important to view your property as a prospective renter. Whatever items you find appealing your tenants will probably feel the same.

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5 House Flipping Mistakes Newbies Must Avoid

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5 House Flipping Mistakes Newbies Must Avoid

Not every rehab and flip deal you get involved in will be successful. With poor planning and unrealistic numbers you can and sometimes will lose money.  As much as investors don’t want to hear this they need to recognize the possibility.  All it takes is a few small mistakes to turn a profitable looking property on paper to one you struggle breaking even on.  In a perfect world the mistakes you make will be small enough in nature that you can use them as a learning experience.  However the bigger the mistake the more costly it will be.  Instead of making mistakes on your own it is best to learn from the mistakes of others.  Here are five house flipping mistakes you need to avoid.

Planning As You Go. Once you make your plan you need to be committed to it. It is ok to make minor tweaks as you go but you have to avoid wholesale changes. The middle of the project is not the time to decide that you want to switch up the layout of the property. Not only does this add days to the process but money to your budget. Adding amenities does not always improve your bottom line. It can be easy getting influenced by what your contractor or someone else says you should do with the property. These are simply suggestions and should not be taken to heart. If something does not work out you are the one that will feel the repercussions. Adapting to an unexpected item is different than scrapping your original plan and starting from scratch. If you spent time planning for the property you need to trust your gut and stick with your plan.

Unrealistic Budget. Your budget can be anything you want it to be. It is not uncommon for novice rehabbers to fudge the budget to make the deal appear more attractive. By doing this all they are doing is creating a bigger problem down the road. There is nothing wrong with passing on a deal if the numbers don’t make sense. Getting into a deal is not the goal. The goal of any rehabber is to make a profit on the end sale. If you are over budget your bottom line won’t be as high as you anticipated and you will regret getting into the property. Your time could have been better spent on another property with much higher upside potential. On your budget you should always go with the worst case scenario. If things work in your favor you will be pleasantly surprised but at least you protect yourself from the downside. The budget and numbers should guide every decision you make with the rehab. Only use numbers you are confident in.

Overinflated ARV. Your budget and after repair value (ARV) typically go hand in hand. Getting a good deal and staying under budget only helps if you can sell the property the price you anticipate. A common mistake rehabbers make is thinking that the work they do will have a greater impact on the value than the market suggests. When estimating value you need to look at the property from potential buyers prospective. Giving the property a complete makeover will give your value a boost but maybe not as much as you think. Doing work just for work sake does not make sense in every market. If there are no substantial comparable sales or listings you could be throwing money away. Buyers do not care about the condition you bought the property in or all the great work you may have done. All they look at is the finished property and how it stacks up to other homes in the area. Having an overinflated value will cause the home to stay on the market longer than it needs to ultimately sell for much lower than you thought.

Holding Costs. There is more to your bottom line than simply the purchase and end sales price. On every rehab deal there is the time from acquisition to the end sale. The hidden fees during this time can greatly impact the profitability of the property. In addition to the interest repayment of the loan there are also payments for the insurance, property taxes, licenses and utilities. You are on the hook for these every day you own the property. Some of these will be more costly than others but over a few months these can easily equal thousands of dollars. It is important that you fully know and understand all of the potential expenses prior to making an offer.

Lost Work Days. As we mentioned time really is money in the rehab world. It is critical that you keep things moving throughout the process. Before you take ownership you and your contractor should sit down and make a work list and schedule. Reach out to everyone you plan to work on the project and confirm the dates you are requesting. Reiterate the importance of sticking to these dates and ask if they anticipate any conflicts. It is up to you and your contractor to keep things going so you hit the dates on your end. Waiting a week for materials may not seem like much but pushes everything back accordingly. One lost week can turn to two and before you know it you are 30 days past your projecting finish date.

Flipping a house means staying on top of the little and not so little things. Whatever you do avoid these five common mistakes at all cost.

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4 Daily Habits Every Investor Should Adopt

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4 Daily Habits Every Investor Should Adopt

Good habits are the foundation of any good business. If you put a camera on most successful people you will see their day is filled with habits that save time, improve focus and ultimately help accomplish more daily tasks.  These habits are engrained in their mind and are non-negotiable regardless of whatever else is going on.  Successful people realize that once they become lax with their habits small issues turn into much bigger ones and before they know it their business becomes inefficient.  Breaking bad habits or starting new ones is never easy but can be done by focusing on what needs changing one day at a time.  One day of change turns into two which becomes a week and before you know it you will have a whole new way of doing things. Here are four habits that every investor should incorporate into their business.

Start The Day With A Bang. The first two hours of your day are the most important. Not only will they set the tone for the day but they will give you a game plan for everything else that follows. As an investor there is nobody telling you when to wake up or what time you need to be in the office. It is up to you to establish the discipline to wake up early and hit the ground running. Almost everybody would rather sleep an extra hour or two if given the chance but by sacrificing morning sleep you add working hours to your day. These hours can be used for exercise, meditation, catching up on old emails or finishing off a project from the previous day. The early morning is void of distraction allowing you to do more of whatever it is you are doing. Starting your day at 5:30 AM instead of 8 may seem like a stretch but after a couple of weeks you will not look back. Give yourself one weekend day to sleep in but every other morning get up early and hit the ground running.

20 Minutes Of Education Daily. In any business it is important that you know what is going on at all times. As a real estate investor there are constant changes to interest rates, programs, niche markets and ways of generating deals. Trying to master every aspect of the business may seem daunting but is less difficult if you spend some time on it every day. Regardless of who you are or how busy you may be you can squeeze twenty minutes of education into your daily routine. You can find this time on the treadmill as you are getting some exercise in or from an audiobook as you are driving to an appointment. Instead of checking your social media accounts you can spend that time reading articles on real estate and business websites. Just twenty minutes a day can lead to hours of extra education every week. Whether you realize it or not that education will help when talking to a networking partner, trying to secure a deal from a homeowner or rolling out your next marketing plan. The real estate business is constantly changing. You need to stay on top of these changes or face being left behind.

Make Goals & Lists. Success if often easier if you know exactly what needs to get done. Every NFL team installs a game plan at the beginning of the week that serves as a blueprint for what they want to do and hopefully how they are going to do it. The same approach should be incorporated into your daily routine. Before you go to bed you should make a list of everything you want to accomplish the next day. When you wake up give your list a second look and make any additions or tweaks you feel is necessary. Once finished use this list to guide your actions. Start by tackling the toughest task first and go from there. Without lists you will often wonder from task to tasks usually without accomplishing much of anything. The more detailed your list is the less you leave to chance. Accomplishing your goals not only makes you efficient but gives you a sense of accomplishment. This feeling is used as further motivation to work even harder the next day.

Track Progress. Have you recently started something new in your business? Whether that is a direct mail program or simply trying to wake up earlier it is important that you track your progress. If you don’t know how you are doing it is impossible to make any changes or gauge the results. At the end of every day you should take some time to evaluate what you did to build on your progress. If you failed to do anything you need to ask yourself why. Does the plan of attack not work or is the problem with your implementation and work ethic. Taking a hard look at yourself is never easy but can often lead to greater success. Sometimes you need a kick in to butt to help you work harder. Tracking progress is also one of the best ways to monitor expenses in your business. Spending money on areas that produce results helps you make the best use of your capital. Without data to support your results you may be throwing money away every month.

You control which way you want your day to go. Changing habits is never easy but it can be essential for growth.  Start by incorporating these four habits to your daily routine.

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Don’t Forget These 5 Hidden Rental Property Expenses

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Don’t Forget These 5 Hidden Rental Property Expenses

A buy and hold rental portfolio is one of the building blocks of long term real estate investing success. Regardless if you have one single family property or a pool of apartment buildings it is critical that you understand the numbers.  Omitting or miscalculating a few expenses can quickly cause a profitable looking property to turn negative.  A rental property with negative cash flow will weigh on your portfolio and make you second guess buying rental property in the future.  In most cases all of the expenses are black and white however there are a few that are often overlooked.  It is these overlooked expenses that make all the difference with your cash flow.  Here are five overlooked rental property expenses you need to be aware of.

Maintenance. Every rental property will need maintenance at some point. In fact if you are not getting maintenance calls your tenants may be hiding an issue with the property. Maintenance doesn’t necessary mean replacing the furnace or hot water heater. It can something as basic as getting the locks changed on ever lease or repairing a clogged toilet from time to time. Individually these items will not break the bank. However added up they can be much more than you may realize. You also need to factor in seasonal items such as cutting the grass and snow removal. There are also costs for seasonal maintenance on the furnace, HVAC and house cleaning after every lease. It is not a stretch to say that these costs can quickly exceed a thousand dollars or more annually without having to deal with a major problem.

Vacancy. No landlord ever expects a vacancy. However the longer you own rental property the more realistic it becomes. With every property you own you need to ask yourself what you would do if your tenant suddenly stops paying. Most landlords think they are protected by eviction laws but they don’t work overnight. Even with the courts help you are still looking at multiple months without income coming in. Without capital to help bridge the gap until you can find a new tenant you will be looking at trouble. At least some portion of the rent received should be placed in a reserve vacancy fund. You should plan on not touching this money for as long as it takes to have a vacancy. Ideally you won’t need this money for several months, if not years. However when the inevitable vacancy pops up you will be glad you have these funds available. Unexpected vacancies can happen with any tenant and to any landlord.

Fees. There are several fees that are unrelated to the property. Everyone is aware of property tax and insurance fees that come with owning a property. However many towns have begun charging their own set of fees. If your property is located near a number of colleges and universities the town may impose a student housing permit fee. This is required as long as you are currently renting or may want to rent to student tenants in the future. Like most other town fees this won’t break the bank but must be accounted for. You are looking at a few hundred dollars annually on top of inspection fees every few years or so. You also need to make sure you have good tenants in your property. If your student housing tenants are rowdy and cause excessive damage you may be stuck with a bill or a fine from the town. It is a good idea to reach out to the town planning and zoning every few weeks or ask to be put on an email list to be notified of any changes.

Eviction. An eviction is truly one of the worst things that can happen as a landlord. Not only do you lose your only source of income but you also need to pay to have the problem rectified. Dealing with an eviction means first reaching out to an attorney. Even if you have some idea how the process works having an attorney helps speed things up with the court and make things as smooth as possible. Your best case scenario is having the court set an eviction date a few months down the road. When that day finally comes you can bet that your property will not be in the condition you desire. You will also need to have money to fix any repairs to get the property ready for your next tenants. If at all possible you should try to reach some kind of an agreement with your tenant before you get that far. If not you will be looking at a stack of expenses that will fall on your lap.

Equipment. There are many rental property owners who decide to self-manage their property. The thought process is that they can save money on management fees by taking care of the property themselves. While this is true to some extent you need to factor in the cost of management. If you are going to cut the grass you need to have a good lawnmower at the property. It is also a good idea to have a reliable snow blower as well as anything else you need to take care of the exterior of the property. You should also invest in a good set of tools and other basic items needed to manage a property. When all is said and done you could be looking at an investment of at least a few thousand dollars.

A well run rental property can be the gift that keeps on giving. Understanding all of the numbers associated is big part in rental property success.

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Is Student Housing Right For You?

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Is Student Housing Right For You?

There are always two sides to every coin. If you are in the real estate business long enough you will find there are many different ways to build a portfolio.  Some investors strictly stick to quick flips and rehabs while others look for long term buy and hold properties.  Within the buy and hold segment you have student housing rentals.  These are properties located in close proximity to a college or university that rent primarily to college students.  For every investor who sees the upside in these properties there are those that run away from them as quickly as possible.  As they say, beauty is in the eye of the beholder.  Student housing can be a great addition to your portfolio or a time consuming nuisance that is more trouble than it is worth.  Here are a few pros and cons of student housing rentals and some insight as to whether or not they would work for you.

PROS: 

The biggest advantage of a student housing rental is the dramatic increase in rents received. Properties within a few miles of a major college or university are always in high demand.  There are many schools that require upperclassman to live off campus.  If the demand for rentals is strong a landlord can up their price 20-30% or more.   Over the years this can equate to thousands of extra dollars in rent received.  You also have the ability to catch the students as juniors almost guaranteeing they will live in the property for at least two years.

A student housing rental does not need to be decked out to the nines. This doesn’t mean you can neglect the property but it does not need a complete overhaul ever year.  You can supply the property with a basic amount of furniture and avoid any major renovations annually.  This allows you to reduce your maintenance costs and get better quality appliances and other items that can hold up to the wear and tear.

A well run student housing property should also have little trouble finding new tenants. Even with annual turnover keeping your property filled is not nearly as difficult as the traditional single family rental.  Through word of mouth alone you should keep the rental cycle going for as long as you want.  Something as simple as a sign in the front yard is often enough to get your phone ringing and find your next tenant.

Student tenants can be a blessing and a curse. Depending on the group of students you rent to your phone may either ring off the hook or you may never hear from them during the lease.  Neither option is very appealing.  However in most cases the lease is backed by the students’ parents meaning you don’t have to chase your rent from 19-20 year old kids.  An off campus rental is usually much cheaper than anything they can find living on campus. This works out to be a win-win for everyone involved.

CONS: 

Renting to college students is exactly how you think renting to 19 & 20 year old students is like. Even the best college tenants will cause some damage to your property.  Through no fault of their own there will be wear and tear to the couches, holes in the closets and the occasional clogged toilet.  It is a good idea to hire a dedicated property manager when dealing with a student rental.  This will eat into your monthly cash flow but will make your life much easier.  You don’t want to have to deal with phone calls at all hours of the day.  Student renters are almost always first time tenants which means they do not have any experience running a home.  If there is even a minor issue with the property their landlord will be the first one they call.

A big concern renting to college students is the hidden damage they cause to the property. In spite of your repeated requests to inform you of any minor issues inevitably they cannot be bothered.  A running toilet can end up adding hundreds of dollars to your water bill.  A damp basement can eventually lead to mold.  A small problem with the washing machine can eventually cause it to stop running.  These smaller problems lead to you spending more money taking care of the property over the years.

A final problem with students is the noise. When they sign the lease your tenants will tell you that they are focused on their academics and can’t be bothered with partying.  This may be the case a majority of the time but all it takes is one party to cause a problem.  Not only can tenants cause major damage to your property but they can be a problem for your neighbors.  Your neighbors will call the police who will eventually call the town.  If there are too many problems you may have a difficult time getting your student housing license renewed.  Most towns require annual approval to rent to students.  Too many noise or property appearance complaints can cause your renewal to be rejected.

Student housing rentals are not for every landlord. You need to have the right temperament and be willing to embrace whatever comes your way.  However the right property in the right location can be a real goldmine.

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Borrowing Money From Family & Friends: A Viable Option?

New Post has been published on http://www.cthomesllc.com/2017/01/borrowing-money-family-friends-viable-option/

Borrowing Money From Family & Friends: A Viable Option?

It seems like everyone wants to be involved in real estate. You probably have a Great Uncle, co-worker or someone you went to school with talk to you about investing in real estate.  You may have even discussed all the success you could have and maybe even a little about how you would go about things.  They throw out a number they are comfortable contributing and proclaim the rest is up to you.  Before taking the next step and making any commitments you need to step back and think about your business.  Whether you are investing with someone you have known for years or someone you just met at a meeting last month you need to follow a process.  Without taking the proper steps to protect yourself and your business you may end up in a situation you could have easily avoided. If you are considering investing with friends or family here are five important tips you need to follow.

Determine A Strict Repayment Plan. The more you treat borrowing money like a bank the easier things will be. Having the mentality that you will figure things out as you go doesn’t work. Money has a way of changing the way people think and sometimes even act. Even if you are close friends you need to have a firm payment arrangement in place. Without knowing the interest rate, payment frequency and everything about the numbers of the loan there will be some disagreements down the road. Eventually there will problems that alter the finances of the deal. Your friend or family member may want to keep things relaxed and simple but real estate investing doesn’t always work that way. When problems happen expectations may change. You may not feel you have to make a repayment or the repayment will be reduced. By treating your lender like a bank there will be no misunderstanding.

Be On The Same Page. You need to have multiple conversations with your financial backer prior to any financing agreement. As unbelievable as it may seem some financial partnerships are thrown together with nothing more than an idea in mind. Your family member may have been sitting on some money just burning a hole in their pocket they are eager to invest. Their only source of real estate investing knowledge and strategy is based on what they see on TV but are ready to act. Investing without a plan is a recipe for disaster. You need to know exactly where, when and what types of deals you will pursue. There should be an understanding of the timeframe and projected return. You never want to have your partner question why you entertained a certain deal or what you plan on doing with it. Even if they want to be a silent financial partner you should seek their input before you make a single offer. There should be no second guessing your plan of attack once you get going.

Get Everything In Writing. It is easy for feelings to get hurt in the real estate business. Regardless if your partner feels comfortable with it or not you need to get everything in writing. Even on a small scale you are probably looking at borrowing tens of thousands of dollars. You want both sides of the transaction to feel protected and comfortable moving forward. It should not be viewed as an insult for your partner to read your partnership agreement. In fact you should insist that they have their own attorney take a look at everything. If there are any problems it is much better dealing with them at this point rather than at the end of the transaction.

Discuss Downside. Every new business or partnership has dreams of wild success. The odds are that you will not reach the heights you anticipate. In your discussion about how to run your business you also need to discuss the downside. Very few people in real estate are comfortable talking about the worst case scenario. They feel if they bring up bad thoughts eventually they will happen. The reality is that the best way to avoid the negative is by talking about it before it happens. You and your financial partner should bring up what you would do if things don’t go the way you plan. What is your exit strategy and what would you do if there are unexpected expenses? The more equipped you are in dealing with negatives the easier it is to react when they come your way.

Length Of Commitment. How long do you plan on working together? Is this a one time commitment based on a deal you found in your local area? Are you looking to build a long term partnership? What would happen if you found a new deal that doesn’t require outside financial backing? Your real estate business doesn’t stop as you work together on your transaction. You need to discuss how long you intend the partnership to last. It is easy for a friend or family member to think things one way while you have a completely different perception. There is nothing wrong with seeing if you are a good fit together on one transaction and taking things from there. You can’t be so worried that you are going to upset your financial partner that you are scared to ask or talk about important questions.

Getting money from friends and family can be uncomfortable at times but doesn’t have to be. By putting as much as possible on the table before you get too far you can avoid dealing with negative items down the road.

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Are You Still On Track To Achieve Your New Year's Resolutions?

New Post has been published on http://www.cthomesllc.com/2017/01/still-track-achieve-new-years-resolutions/

Are You Still On Track To Achieve Your New Year's Resolutions?

As hard as it may be to believe 2017 is already over three weeks old. It feels like just yesterday we were sitting down writing our resolutions thinking about all the wonderful things 2017 has in store.  Before you know it spring will be here quickly followed by summer.  If you are not careful 2017 will get away from you and you will be right back where you started.  The third week of the year is typically about the time when most resolutions are broken.  Not enough progress has been made and you revert back to your old habits.  If this is the case don’t let a failed resolution change your long term vision of the business.  You can start a new path any time you desire. Here are five steps to take if your resolutions haven’t gone the way you had planned.

Set New Goals. Following your resolutions and achieving your goals takes constant recalibration. As difficult as it sounds you need to evaluate where you are, what you have done and what more is needed almost every day. One of the biggest problems most dieters have is dealing with setbacks. They often let one bad meal completely get them off track. Once off track they have a tough time getting back on. The same is the case with resolutions. The minute something goes wrong they scrap their plan and revert back to their old patterns. If you have fallen off you need to get right back at it or start over from scratch. The worst thing you can do is feel sorry for yourself and not do anything. By setting new goals you have something motivating and driving you every day. Without them you won’t work as hard or carry a positive attitude. It is not too late to set goals or change the way you do things.

Visualize Success. Some of the most successful people in every profession visualize their success before they take action. You often hear about golfers seeing the putt go in before they hit it. The same can be the case in your real estate business. You should think about what you want to do, how you want to do it and what steps you need to take to get there. Once you visualize your success that action is actually the easy part. You will already have a mental game plan and blueprint for success. It is important you keep your visualization as realistic as possible. If you think things will be easy you may have a tough time dealing with it when they don’t turn out that way. It may sound corny but you really can do anything you put your mind to. By visualizing your success getting there doesn’t seem as difficult.

Don’t Give Up So Easily. Achieving your goals and staying true to your resolutions is supposed to be difficult. It is easy keeping things at status quo and not committing to change. The real difficulty is when you decide to change things up and break your old bad habits. Most people who try to quit smoking often fail several times. In fact studies indicate that it takes at least a half dozen tries before they finally quit for good. You need to have this same mentality when trying to achieve your goals. Getting what you want done or where you want to go won’t be without a few bumps in the road. A large majority of goal setting is about having the discipline to accept that it will be a constant battle. By having the fight to constantly get up regardless of your setbacks is the real key in getting what you want. Achieving your goals won’t be easy but nothing in life that is worth anything is.

Think Big. It is ok to set your goals as big as you vision can stand. If you don’t think big and set your resolutions high enough you will never realize your full potential. You can take baby steps in getting there but you can’t be afraid to set the bar high. Most people will go as far as their expectations allow them. If your goal is to only close a few deals a year you will probably end up close to that mark. However if you have higher aspirations you will probably come pretty close to reaching it. One of the best things around real estate investing is that there is no ceiling on your success. You can truly close as many deals as you can handle. By thinking big even if you fall just a little short you still end up higher than you would have.

Consider Failure. What happens if you don’t have the success you anticipate? Are you content with having your business fall right back to square one? Many people like to vision success but what about failure? Sometimes the fear of failure can serve as the best motivator. Knowing what will happen if you don’t hit your goals is worse than anything anyone can say or do. Think about what would cause you to fail and how you can avoid it. Putting these thoughts in your head is not a way of being negative but rather showing you the worst case scenario. If you want to avoid this you need to stay focused on the right track.

The New Year is nothing more than a convenient time to commit to change either in your business or personal life. The truth is that any time is a good time for necessary change. If your New Year’s resolutions have gotten off track now is the time to get back on track.