If you’ve ever rented a house out, you have inevitably run into a very annoying occurrence. The prospective renter/applicant didn’t show up and you have wasted between 30-60 minutes of your time. There’s no way to get that time back, but you certainly want to prepare to utilize every second of future showings.
When people call about your ad showing the property for rent, they’ll probably ask you some questions. Give them a little info, but more importantly, find out what is important to them. Find out if they have pets, how many bedrooms they’re looking for, why they want a 4th bedroom etc.
Let’s take this example. A caller tells you they want a finished basement. You need to ask them why they want a finished basement. They might tell you they want a finished basement so their kid has a place to play. If that happens and your house has a family room and a living room, maybe the kid can play in the family room. This will keep more people interested in what your property has to offer.
While you’re still on the phone, make sure to get their contact information. Find out their cell phone number. Tell them you need to confirm befo
re the actual appointment. I no longer go to a showing appointment if I haven’t heard from an applicant. I tell them on the initial call that they need to call me when they’re on their way to the house.
Another good practice is set up multiple showings at one time. This accomplishes a couple of things. First, you won’t spend a lot of time and money driving back and forth. Secondly, it creates an atmosphere of competition. It makes the prospective renters believe they better apply now if they want to have a chance at living here.
Once a house is ready for showings, make sure there are applications on-site at the house. I’m a bit of a freak when it comes to applications. I make sure there are plenty at the house, I carry some in my car, and I’ll throw some in my bag before I head out to show the place. You never want to be standing there with someone who wants to apply and have to tell them that you don’t have an application. You might lose a truly qualified and interested applicant.
Finally, have some handouts of the property. Someone might look at your house first, then go to a bunch of houses later that Saturday morning. There’s still a chance for them to pick your rental property as the one they want to apply for. You can at least keep top of mind status with a handout as most landlords won’t bother to do this.
Summary
• Drastically reduce “no-shows” at showing appointments with these tips
• Get caller’s contact info and find out “what” and ”why” of things they’re looking for in a rental property
• Demand confirmation before you drive to the property
• Set up multiple showings at the same time if possible.
• Always have applications on-site and bring extras.
• Provide prospects with handout flyers of the house so they have something to remember it by.
Related Posts:
Posted in Property Management by .
The other day I heard from a friend who told me his family member had a problem with a rental property. This example is a common problem with rental properties that can easily be avoided. With this particular property, the tenant moved out and expected the entire security deposit refunded. The only problem was that significant damage had been done on the interior of the house. The landlord told the tenant that part of the deposit would be used to buy supplies and pay for the labor of fixing the damage. That notification drove the tenant to become extremely angry and threaten litigation.
Like I said before, this scenario can play out with rentals frequently if allowed, and is easily avoidable with a little work up front on the landlord or property manager’s part. Let’s review.
- Problem: Landlord claims tenant damaged the property. Tenant claims the damage is normal wear and tear. Landlord wants to keep part or all of security deposit. Tenant wants all of the security deposit returned.
The solution is very easy when you do the leg work up front. Properly documenting property condition (say that five times fast) when the tenant is moving into the rental and moving out will create the records necessary to set the record straight. 
An inspection list does not need to be too lengthy. All you’ll need is a list of the rooms of the house and slots to remark on the condition of the walls, flooring, light fixtures, and window coverings. Also note the condition of appliances. Include a section for Additional Notes as a catch-all for any part of the house that may not be included on the sheet. Sign and date the form and have the tenant do the same. Keep for your records.
You’ll repeat the process when the tenant moves out. The only difference here is now you will compare the move-out with the move-in inspection form. Note where condition severely decreased and charge the appropriate amount for those repairs.
Recording the condition of the components of the house before and after the tenant occupying the place will greatly reduce threats of lawsuits or disagreement with the tenant. Even if the tenant does sue, you’ll now have a paper trail showing what happened in this rental.
Related Posts:
Posted in Property Management by .
Dec 11
11
Why Do You Need Title Insurance?
Before purchasing a home, it is vital that you have a better understanding of title insurance policies that are available for both lender and homeowner protection. If obtaining a mortgage, title insurance will be a requirement to shelter the lender for the full amount of the loan until it is completely paid off.
However, owner title insurance will be something you need to consider if you want to protect your own interests as well, since the aforementioned would not cover your own equitable interests in the property. Typically the purchase of an owner policy can either be covered by the seller, or is something that you can include along with the lender policy for a small investment.
When purchasing a home, buyers are actually obtaining a right to occupy the land and property space which comes in the form of a title. Therefore, insurance is necessary to identify any issues that may be attached to the title of the home before closing on the property.
Several Issues That This Search Could Uncover Include:
- Easements that may allow for roads, sidewalks, cables, etc. to be built on your land
- Judgments or liens that are a result of unpaid taxes or money that is owed
- Errors or forged signatures contained within deeds, trusts or wills
- Undisclosed heirs or rightful owners to the property
- Additional legal issues or pending suits such as divorce that could affect the purchase
Owner title insurance will protect both homeowners and their heirs from any claims that arise as a result of problems that were initiated prior to obtaining the coverage. In the event that you were to inherit your own liens or judgments against the home, a new policy would then protect the next buyer if these bills were overlooked and remained unpaid upon closing.
Did you know that approximately 1/3 of all title searches will uncover some type of issue on a property? Although these tend to be extremely thorough and accurate, there are still those rare instances where certain matters will remain undetected. Title insurance is therefore the solution for any such cases that may arise.
In the event that you purchase a policy and claims do arise, the policy will reimburse you for any losses that are incurred under the coverage. Therefore, the stress, fees and wasted time that you can avoid when faced with such unfortunate circumstances are well worth the small investment.
To obtain information on reputable title companies that we highly recommend before your next purchase, contact us using the information included on our “Contact Us” tab above.
Related Posts:
Posted in Investment Planning Uncategorized by .
Oct 11
24
Investing in Real Estate Vs. Stocks
When it comes to investing in real estate or stocks, there is no one size fits all. Although both vehicles have proven over the long run to provide excellent returns when handled properly, each person will have their own unique goals, risk tolerance, and capital that they are willing to spend.
Additionally, this is where a financial planning specialist may offer useful insights as well. You may have heard the advice to not put your eggs all in one basket. Therefore, it may even be beneficial to consider pursuing both forms of investments to better leverage your profits.
So our goal is to offer an overview of both sides of the coin in order for you to start forming your own opinion. All in all, it is most important that you proactively take your financial future into your own hands and only pursue the path that you feel will be the best for you and your family.
Benefits of Investing in Land or Real Estate
Many very successful people started out their investing careers in real estate. Plus regardless of what happens in the economy, it is factual that people will always need a place to live. Homes very rarely decrease in value when they are well maintained and purchased correctly.
With real estate you are offered something that is tangible and can be easier to calculate your due diligence. In other words, after reviewing the property specs with appraisers and inspectors, you have a fairly good idea of what you are getting into.
Downside of Real Estate Investments
First of all, there is typically a lot more time and energy invested in managing your investments. Whether you are renting your property out to tenants or keeping your lots clean and free of debris and coding violations, this is something you will be much more actively involved in.
Next, real estate always has some sort of cost involved. Regardless of what you decide to do with your properties, you will still be responsible for taxes, insurance, utilities, repairs/maintenance and possible a host of other expenses. Plus you can end up overspending and losing your shirt.
Finally, you have to have the proper investment strategy in place. Although real estate has historically been a strong hedge against inflation, you always need to consider your own local trends so you can properly leverage your investments to realize a strong ROI.
Benefits of Investing in Stocks
Unlike real estate, this is an investment that can be essentially placed on autopilot. Aside from keeping an eye on your portfolio for rises and dips, you can leave the management and operation of each entity up to the professional staff. You own a piece of each company without having to work for it.
Even with the Great Depression and other scares that we have witnessed over the last century, stocks have historically proven to be the best return on investment for those who hold on through the tough times and invest their returns properly.
Additionally, it typically doesn’t take a huge upfront investment to get involved in the market, and this is very beneficial for those who don’t have a lot of cash on hand. As long as you choose the right companies, earnings will continue to increase. Selling your stocks is also infinitely easier than listing a property or land for sale as well.
Downside of Stocks
On the other hand, the greatest benefits of stocks can sometimes be the most detrimental weaknesses. For example, though you do not need to actively invest sweat into each company, you are also leaving your finances in the hands of a management team that dictates how things operate.
Therefore, if business takes a nosedive so do your stocks. Some will recover while others may crash and burn. Also, this can be a very emotional game. Especially for those who are getting closer to retirement, the couple scares that we have witnessed in the last decade caused many people to pull out at huge losses.
Finally, stocks can be a lot more unpredictable, especially if you are jumping on the bandwagon of rising trends or promising starter companies. Though some may end up being a homerun, you are always listening to the speculations of gurus or your own gut feeling. Alternatively, real estate can typically be more accurately measured.
In conclusion, it important that you take the time to assess the investment opportunities that are available to you before making any decisions. It is important to look out for your financial future and well being, and we’re here to support you along the way.
If you need more information about how you can get started investing in real estate, and want to discover the options available in our local area, take the time to contact us today. We look forward to doing business with you!
Related Posts:
Posted in Investment Planning by .
Jun 11
12
New Rules for Real Estate
I came across this article, by Ilyce Glink, laying out the 5 New Rules for Real Estate. Glink covers points for both the home buyer who is buying their own residence and the investor buyer. Reading this article, I really zoned in on her tips for investors.
Glink points out that both types of buyers focus in on foreclosures and bank owned houses because of their potential for low sales prices. Many of these buyers don’t fully understand the costs of buying and improving the house back to a state where it can be sold for a profit. Reality TV shows have seduced many investors into chasing large paychecks at the end of a successful house flip. As a result, they scoff at buying and holding a property.
I understand this line of thinking. Our company follows both strategies of the buy and hold as well as rehabbing and selling properties. We might be able to create a larger check at the end of a flip, but there are many problems associated with this strategy. For one, you have to get the house sold to get paid. It sounds simple, but due to tighter lending regulations your sale could be delayed by a few months. I have seen this happen. And when it does happen, it’s a non-performing asset. You are still paying utility bills, cleaning the house, and racking up mortgage payments while you wait for your sale to close. Glink says this is the fast track to bankruptcy and I agree.
Glink notes in Rule 4 that many investors would be better served by taking an income approach to investing. Concentrate on building a steady stream of income through rent checks. She gives the example of buying a foreclosure for $75,000 and earning $800 to $1,000 in rent each month. She calls this a “terrific return on investment”.
These types of deals are available in the Kansas City Area. In fact, you can find even better deals than Glink talks about. Instead of a foreclosure, you should buy something that’s already fixed up, has tenants in place, and has property management that will take care of maintenance issues and collect rent for you! Click here to see what I’m talking about.
If you are interested in passive real estate investing income, make sure to fill out the form at the top right of this page and receive our free gift to you. Also check out the tab “Investment Properties” at the top of the page here.
Related Posts:
Posted in Investment Planning by .
Today’s real estate market has opened the door for fantastic opportunities for buyers, especially investors. Additionally, the internet and other technology advances have made it possible to invest in markets other than your local community. The internet, smartphones, and tablets make it much easier to research, evaluate, purchase, and manage investment properties. As a result, smart investors are looking to invest in the market that will provide the best investment and greater returns as opposed to settling for investing in their backyard.
Many people from across the US are buying their investment properties in Kansas City. Why Kansas City real estate?
1. Net Positive Cash Flow. Buying equity, stable prices, and affordable property management are all great, but positive cash flow is the key to building long term wealth.
2. Equity with today’s prices. Today’s market offers you an opportunity to buy houses at up to 25% below market value.
3. Great tenant market. Over 40% of all households are rented in Kansas City. At any given time there is a pool of people who are looking to rent.
4. Affordability. Rehabbed and rented properties are available at prices below $100,000 much lower than other parts of the country.
5. Long Term Wealth. Real estate is an excellent investment vehicle that allows you to purchase at a discount, earn positive monthly cash flow, tax advantages, and have a tenant pay your mortgage down.
To sum it all up, Kansas City offers the perfect storm for long term wealth building. You have a great opportunity to buy houses at affordable prices & with equity. There’s a large pool of renters who are willing to pay rent, which covers your mortgage and leaves you with excess cash at the end of the month.
The great thing about Kansas City real estate is that it doesn’t matter whether you live here or not, it provides a great investment opportunity. Make sure you sign up for our buyers list by filling out the form at the top right of this screen. Also, we’re happy to provide you with more information and put together a plan for your investment needs when you call us at 816-399-4994.
Related Posts:
Posted in Uncategorized by .
May 11
3
New Way to Use Zillow
Update: Since we filmed this video, we have compared Zillow’s rent estimates against actual rent rates. Even though, the situation needs more monitoring, I would say Zillow is pretty accurate. Also, check out www.Zilpy.com. This site will give you rent estimates too.
Related Posts:
Posted in Evaluating property by .
Many unethical turn-key rental property companies operate like a used car dealer, waiting to take advantage of uninformed buyers. Some of these companies claim to offer a “turn-key” rental property investment opportunity, or property that “needs no repairs.” When you make your decision to buy investment rental property, make sure you are dealing with a reliable and trustworthy company. Here is a tip on how to interpret the claim that a property needs no repairs.
Property needing no repairs is common when a seller or their contractor has already made necessary repairs to make the property ready to rent. There are properties available that do not need repairs. But, you need to be aware of two sneaky techniques that some other companies use. These sneaky techniques are the ignored mechanicals, and the outright lie.
Ignored Mechanicals (Only cosmetic repairs have been made):
Sometimes, a supposed turn-key company will make only cosmetic repairs before selling to their landlord customer. They often market this as “rent-ready.” The rent ready property does not need repairs to pass a rental inspection, and technically it can be rented and occupied. However, in many cases, these properties have some deferred maintenance that may cause problems down the road in the form of increased vacancies and increased maintenance costs. Vacancies and maintenance costs will reduce your cashflow and profits.
If mechanical systems (Heating, A/C, hot water heater) are not brand new, make sure this is factored into the purchase price.
The outright lie:
Looking through Craigslist ads, and other websites, I see too many ads for properties that claim “no repairs needed.” Sometimes this can be true. There are properties available that do not need repairs. Often, this type is called “rent ready property.” Unless the company or their contractor has made the repairs themselves, and is willing to give you a list of the repairs they completed, you need to be weary. Many companies will claim no repairs needed, but their definition of “no repairs needed” and your definition, or the tenant’s definition may be completely different.
About a year ago, I met with a home seller who wanted more money than I could offer for the property. A month later, I saw the same property on a competitor’s website listed for less than what I offered, but they claimed “no repairs needed.” Since I had been on the inside of this property, I knew that it needed foundation work, a new roof, new hot water heater, and had multiple other plumbing issues. The electrical system was severely outdated (and dangerous), and needed to be totally replaced. In order for this other investor to make any money on this property, he would have needed to purchase the property for next to nothing, do the repairs, and expect a profit of less than $1000. Something was wrong.
So, I drove by the property again. No exterior repairs had been made. The roof was in the same poor condition. Exterior paint was still peeling. Based on the condition of the exterior, I was pretty sure that no repairs had been made on the interior either. One of my clients had seen this ad, and called the other company directly. They were very hesitant to let him see the property in person, and kept saying he had someone else interested in buying it “sight unseen.” This is another big warning flag. If you run into a case like this, do not buy. The risk is simply too high.
How to avoid these sneaky tricks:
Buy your investment rental property from a company like KC Cash Cow, who buys properties and makes the right repairs (both cosmetic and mechanical/structural) before it is sold to the landlord.
The advantage of working with a company like ours is that with new renovations, the cosmetic appearance of the house is fresh and new. Tenants are looking at many run down rental properties, then they see a property like ours that is freshly painted, new flooring, and clean. The benefit for you is faster occupancy, and usually a higher quality tenant. Also, the updated mechanical systems will save you money by preventing high priced repairs later.
Related Posts:
Feb 11
1
Don’t Tell Your Realtor!
In the real estate investment arena, there are many different types and levels of investors. This makes sense because job and family commitments and financial situations differ from person to person. But one concept is totally universal to all real estate investors whether you are the biggest player and doing thousands of transactions per year or you are looking to buy one rental property. That concept is this: in order to buy investment property, you must be presented with leads or opportunities to buy houses. Without opportunity, you cannot move forward and purchase anything.
Over the last couple of years, in talking with other house buyers, I have noticed that a lot of them tell me they only buy properties that their realtor tells them about. They usually tell me this in response to my question about what kind of properties they look for. I always respond that it’s great they have found a realtor they trust and a person with whom they are comfortable working. However, they are sometimes surprised to find that it’s possible to work with a realtor and use other sources of finding homes to purchase. That’s right. You can work with a realtor and simultaneously find properties from other sources.
I could get pretty technical and break down all the paperwork that supports what I’m saying but you’ll have to take my word for it or give me a call to discuss. See the above “Contact Us” tab. So if you’re already working with a Realtor, you should look at houses they find and you should use other sources to find the property you’re seeking. Here are some other great ways to find rental property.
1. MLS – Your realtor is probably already sending you updated searches from the MLS. They might also have a personal website that allows you to search all of the homes listed for sale with a Realtor.
2. For Sale By Owner – If most buyers work with agents and they are all looking for MLS listed properties, you should definitely look where they aren’t…houses for sale by owner.
3. Wholesalers – Check out your local REIA. In Kansas City, there are two REIA groups, KCIG and MAREI. If you’d like more information on these groups, get in touch with us. Wholesalers will be abundant at these groups. They find discounted properties then sell those properties to other investors. Usually these properties are fixer uppers or handyman specials.
4. Direct Mail- This method is for the truly aggressive investor. You buy a list of homeowners and mail them a letter or postcard indicating you’d like to buy their house. There’s a bunch of different lists you can mail to – high equity owners, pre-foreclosures, bankruptcy, divorce, absentee owners, expired listings.
5. Auctions – Attend auctions at the courthouse or at the property itself. Private auction companies will auction houses right at the property that’s being sold. Google “house auctions in (your city)” and you’ll find some you can attend.
6. Referrals- In my mind, this is an absolute MUST. Tell everybody you know that you want to buy investment property. Always ask if they know somebody who needs to sell. If you don’t do this, you will almost surely miss out on a great investment opportunity. You’ll really kick yourself when you miss a referral.
These are all great sources of deals on houses. The title of this post is kind of a joke because I believe this is a topic you should discuss with your Realtor. You should let them know that you will also be searching for houses to buy and that they’re not the sole source of available properties. This both gets everything above the table and strengthens the relationship because you’re open and honest and also motivates the Realtor to give you better service. If they know you will be searching for homes on your own, then they’ll work harder to find one before you can.
Related Posts:
In a word, I would say, “NO.” If you have already bought your first investment property or know a friend or family member who has attempted to perform all the duties of property management, you know that the bottom line about this job is that it is a thankless, never ending job. Other than that, it’s ok.
Let’s just see how many tasks associated with property management I can list. Here we go: clean
ing out the house, advertising vacancies for applicants, meeting prospects and showing the house, collect applications and deposits, signing the lease, collecting rents, chasing late payments, collecting late fees, handling maintenance calls, performing preventative maintenance, filing evictions, renewing leases, and repeat.
That’s a really quick and simple break down of the duties of a property manager. Yet, a lot of investors scoff at the notion of outsourcing this position to a 3rd party because the investor wants to save 7-10% of the monthly rent. The question you must ask yourself as an investor is, “Am I better off saving 10% and managing my houses or should I hire it out and use the time savings on income-producing tasks?”
Also, you must determine if a property manager will help you save on operating expenses such as vacancies and maintenance costs. Here’s a breakdown of the benefits and potential drawbacks of outsourcing this job.
Benefits of Outsourcing Property Management
1. Lower Vacancy Rates and more rent checks collected. A good property manager is skilled in marketing, showing, and screening tenants resulting in a quicker lease-up and the placement of quality tenants who are more likely to pay.
2. Higher Rent Rates. Property managers are skilled and knowledgeable in setting rent prices to a level where you, as the investment property owner, can collect as much monthly rent as possible while still getting the house rented quickly.
3. You don’t spend time on Maintenance Calls. When tenants need or want a repair, they usually call in with a long backstory about the issue. Sometimes a service trip is necessary, while many times the problem can be fixed with just a little troubleshooting. Whether or not a repairman is called out to the rental house, you will save a lot of time by having a property manager because now they are the person spending all the time on this house.
4. Property managers do a better job collecting rent and late fees and filing evictions if necessary. Your professional property management company usually looks at their job as strictly business. Of course, they’re empathetic, but not sympathetic like a lot of landlords are. If someone can’t pay the rent, there’s usually a story along with it. Many landlords fall in the trap of giving leniency and it comes back to burn them when rent is still not collected two months later. Property managers on the other hand, have systems for collecting rent, procedures for when the tenant is late paying rent, and know what to do when an eviction becomes necessary.
Potential Downsides of Hiring Someone to Manage Your Rental Properties
1. You pay more fees per month. You could pay up to 10-11% in management fees per month and one month’s worth of rent to have them fill your vacancy. It should all be specified in the property management agreement you sign with your company. However, these fees are often quite small compared to missed rent you never receive because you were not able to lease the house as quickly as a property manager would have been. Also, a property manager will often cut down on your maintenance costs because they have established relationships with handymen and service companies who offer lower prices in exchange for an increased volume of business a property manager can provide.
2. You have to Manage the Property Manager. You probably thought the whole point about outsourcing this aspect of real estate investing is that you don’t have to do the work. That’s part true, because while you won’t be actively managing the house, you must stay plugged in and keep an eye on your expenses and revenues on the property. It is much easier to handle a property management company than it is to handle a bad tenant.
Your #1 goal of investing in real estate should be attaining the highest level of positive cash flow you can. That goal is what gets other landlords to decide to manage their own properties because they will pocket the management fees. However, factoring in the time savings, management fees are well worth it to you, the rental property owner. These time savings can be huge, especially if you have a full time job or anything resembling a social life.
Related Posts:
Posted in Property Management by .
