renting – Page 2

Decisions Owners Renting Their Homes Need to Make

June 30, 2015 By Chris

Renting a house seems fairly straight forward, right? Create an ad, find a tenant, collect the rent. It’s not quite that simple though. There are a myriad of things you should consider before renting your home and once you do decide on renting you need to make decisions before you place that “for rent” sign on the front lawn.

Representation

With websites like CraigsList, it’s easy to put together your own ad for the house you’d like to rent but what is going to set your listing apart from the thousands of others that are added every day? A Realtor can not only create an appealing listing but also market it as they would a property that was for sale. The listing created by a Realtor will also be available through the Multiple Listing Service (MLS) and be seen by other Realtors assisting potential tenants in the search for a home.

Price Point

Deciding how much to list your property for rent is probably the most obvious decision you’ll need to make. If you’re seeking the assistance of a Realtor, make him or her aware of how much your monthly mortgage payment is and any other expenses, such as an HOA payment, you expect the tenant to cover. A Realtor will be able to evaluate the area market and set a price that will maximize your income but also make the property appealing to a tenant. You should also decide if you will be willing and able to negotiate on a rental price.

Security Deposit

Local custom or law will most likely determine how much money you’ll require from the tenant to be held as a security deposit. In Florida, there is no law limiting the amount of money a landlord can request from a tenant to be held as a security deposit. Typically landlords ask for a deposit equal to one to two months’ rent. The higher the the security deposit is though, the smaller your tenant pool will be.

Rules & Regulations

As a landlord, you’ll want to make sure both you and your tenants are observant of local laws and community regulations. Make your tenants aware of the community quiet hours, trash & recycling practices, and parking requirements. You’ll also need to know what the tenancy capacity laws are and make sure your tenants adhere to the laws.

Pets

As the landlord, it’s completely your prerogative whether your tenant can house a pet in your property. If you prohibit animals, you may be, again, limiting your tenant pool. If you do allow animals, you can require a non-refundable pet deposit, usually $150-300, to cover the cost of hair removal, stain clean up, and damage not caused by normal wear and tear.

Making these decision prior to placing your home for rent, will allow you to make the most of your marketing efforts and find the tenant most suited to your property.

Flip it or Rent It?

June 16, 2015 By Chris

If you’re attempting to build your investment portfolio with a foundation in real estate the most common question many investors have is: should I flip it or rent it? Before investors attempt to answer that question they should heed the advice of “buy cheap”. Purchasing a property at a significant discount will prove to be easier to profit from regardless of which avenue investors follow.

Flip It

Flipping a house allows an investor to get in and get out without much time invested. Flipping may be a more appealing option to investors if the market prices tend to be higher than average. The profit margin will depend on how much work needs to be done to the house after purchase and how quickly it can be sold after the repairs and updates are made. Investors also need to consider the costs associated with selling a property including realtor commissions, closing fees & taxes, and any buyer assistance than may be negotiated. Flipping properties reduces the investor’s liability considerably since the home will be vacant.

Rent It

Renting a house is more appealing when the property purchase price isn’t as deeply discounted than the average market prices or the average market prices don’t allow for a reasonable profit of at least 10% of the initial purchase price after closing costs. Renting allows for the investor have a steady stream of income and a source of equity to draw on should the need arise. Holding on to a house for several years also for the property appreciate in value and possibly earn a larger profit.

Both options have the potential for making solid profits for an investor. If considering renting a house, investors should evaluate their readiness and ability to be a landlord. Investors should also research the nuances of a specific market and have a well outlined plan for rehab if considering a buy and flip.

Ready to Own a Rental Property?

May 19, 2015 By Chris

You’ll hear the same advice from multiple professionals, if you want an asset that will continually appreciate over time real estate is the way to go. It’s true that real estate is a solid investment. Real estate investing isn’t fool proof though so, how do you know when you’re ready to own a rental property?

Finances

You shouldn’t go into a rental property without a solid financial footing. The same closing costs you encountered during your primary residence closing will be due when you close on an investment property. You’ll also need to be able to make any necessary improvements to make your property attractive to potential tenants as well as meet the monthly mortgage obligations until a tenant moves in.

Many investors use the equity in a property they already own to purchase another property. If you’re able and willing to use the equity in your primary residence you’ll possibly be able to pay cash or pay a sizable down payment to reduce the amount of money you’ll need to finance.

Business

Real estate investing is a multi-faceted business and you should approach it as such. Define your goals for real estate investing. Are you looking to make a quick profit or are you in it for the long term? If you’re in it for the long term you need to develop a budget for upkeep, marketing, general overhead, and unexpected issues. You’ll also need to determine how you’ll meet these costs, how you intend to handle emergencies and disputes with tenants.

Research

Purchasing a property that will costs a lot of money to repair isn’t necessarily worth the discount you many get on the price. The same goes for an immaculate home that will only rent for enough to simply cover the mortgage. You will need to research potential areas for not only home prices but also rental prices. Potential investors should also research the local laws related to rental laws to be fully aware of what is expected not only of the landlord but of the tenant as well.

Logistics

Finally, as an investor, you’ll need to determine how you’ll handle the logistics of being a landlord. You’ll need to collect rent, manage accounts, and maintain the property. If you don’t want or are unable to handle these issues you can hire a management company but be prepared to account for this expenditure in determining your profits.

Successful investing can be measured in many different ways. Defining your goals and assessing if you can reach these goals with the resources available to you will determine your ability to become a successful real estate investor.

Are You Prepared to Become a Landlord?

October 21, 2014 By Chris

Do you own a home and want to move but you don’t want to or can’t sell your home? Perhaps you’re looking to diversify your investment portfolio and want to venture into real estate. Becoming a landlord may be an option for you in either of these situations. It seems like a straight forward proposition: obtain a property to rent, find a tenant, and collect your rent. There is definitely more to it than that and you should examine yourself, your abilities, and your financial situation honestly before you dive head first into landlordship.

Financial Security

As the owner and most likely mortgagor of the property, you are ultimately responsible to meet all the financial obligations related to a property. The income from your rental property should cover the monthly expenses of the property. You should be in a position to be able to make monthly mortgage, insurance, and tax payments should your tenant fail to make rental payments on time or if your tenant moves out and you’re unable to find a replacement before the next payment is due. Be prepared to cover the cost of any unexpected repairs or legal fees, as well.

Maintenance and Availability

You’ll need to make yourself reasonably available to your tenant and the property. Depending on their needs, you may need to respond and visit the property almost immediately (think burst water pipe or the heater kicks out in the middle of the night). You may also need to visit the property to pick up the rent payment and maintain the landscaping. If you’re not handy, are short on free time, or don’t live within commuting distance of your property, consider hiring a management company to take care of routine maintenance, emergencies repairs, and collecting the rent.

Organization

Whether you realize it or not, as a landlord you’re a small business owner. You’ll need to keep an updated lease, records of each monthly rental payment, maintain an escrow account for the security deposit, and notate any repairs and damages made to the property during the term of a lease.

People and Business Skills

You’ll be dealing with people a lot during your tenure as a landlord and it won’t always be pleasant. You’ll need to interview potential tenants and determine who will be the best tenant for you. Should a dispute arise between you and the tenant, you’ll need to remain calm, cool, and collected even if your tenant does not. You also need to be able to make sound business decisions. You’ll have to enforce rules such as late fees, pet fees, and retain security deposits in the event of damage. You may even have to proceed with an eviction despite any story that may tug at your heart strings.

If you feel you can reasonably meet these qualifications, being a landlord may be right for you. Before you sign a lease though, talk with a licensed real estate agent for a valuation of your home and comparable rental prices. You should also consult an attorney for help drawing up the proper lease documents and tenant notices.

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