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Don’t Be A Penny Pinching Landlord
Most of us who are small real estate investors buying and renting single family homes are accustomed to making every dollar count. It’s that habit that causes us to make a silly decisions when we advertise a house for rent.
Just take a look at the Home For Rent classified section of your newspaper. You will see rows of two or three line ads that all seem to blend together in an uninspired glob. Yes, I know newspaper ads are expensive, but have you ever stopped to think how much a bland three line ad is really costing you? Let’s do some logical thinking about this penny pinching.
In our example will use a rental house where you have a monthly mortgage payment of $850. That includes principal, interest, taxes and insurance. You are offering the home for rent at $900 per month. If you divide your monthly mortgage payment by 30 you will realize that it is costing you $28.33 cents to own the home. That’s $198.33 per week. So every week that the house is vacant you are losing $198.33. Cutting two weeks from that vacancy will save your $396.66. If you are penny pinching with a little three line ad that fails to find a renter for weeks you are watching $198.33 fly out of your grasp every week. That’s when you should realize that it just makes good business sense to buy a nice big classified ad, which will give you the best chance of catching the eye of a renter the first time it runs.
Filling vacancies fast is the mark of a good investor. As soon as your current tenant gives you the required 30 day notice that he or she will vacate the property you must swing into action. Your goal should be to have a new tenant ready to move in the day the old one moves out. Do this…
1. Ask your current tenant if they know of any one who is looking for a rental. Ask them to spread the word among their friends and co-workers. If you have a good relationship with the tenant they should be willing to help you find a renter. Offer them a one or two hundred dollar reward if they find a new tenant for you before they move out.
2. Immediately put a For Rent sign on the property with flyers describing the property and the cost to rent. We have a page on our Web site for each property we own with inside and outside photos. Included on the page on room dimensions, and the location of nearby features like schools, hospitals, shopping, public transportation, etc. We include the Web site address on the For Rent sign and on the flyers.
3. We send a postcard announcing there will a rental available to the neighbors. They may have friends whom they would like to have live nearby. We offer a cash reward of one or two hundred dollars if we rent to someone they referrer to us before the current tenant leaves.
4. We pass out flyers to nearby businesses like barber shops, nail salons, dry cleaners, etc. We make the same cash reward offer to them as we do to the neighbors.
Penny pinchers don’t do things like that and they pay dearly for their mistake.
Tagged with: classified ad , find tenants , landlord , Mark Walters , Marketing , real estate investing , vacancy
Does Your Real Estate Deal Have Wiggle Room
Experienced real estate investors know that you make your deal when you buy. If you pay too much or have not done your due diligence research, that’s tough, because you’re stuck with the deal after the close.
A buyer still has some wiggle room during the time the deal is under contract. There are a few time worn “weasel” clauses used by some investors. They will read something like, “Purchase is contingent upon approval of buyer’s attorney.”
Or a more legitimate clause would be, “Purchase is contingent upon a home inspection report submitted by a licensed home inspector and approved by the buyer before the close. Inspection to be paid for by the buyer.”
To be safe you want to be the one who pays the home inspector, so the inspector has no doubt about whom he/she is working for.
If the inspection indicates a need for substantial repairs the buyer can reopen negotiations with the seller. If they can’t come to an agreement the buyer can simply disapprove of the inspection report and there is no deal.
Of course, there are many other things that could legitimately void a deal. How do you officially cancel a deal? Something like the following statement could be submitted to the escrow officer:
1. The undersigned party hereby instructs Escrow Agent that Escrow Number ___________ hereby is canceled as a result of a Material Breach by the __________(buyer or seller).
2. The Material Breach is defined in lines ___________________ of the purchase agreement as follows: ____________________________________________________________________.
3. The Earnest Money is to be disbursed as follows: ________________________________.
4. The undersigned hereby affirms that I am not in breach under the terms of the purchase agreement.
____________________________ (Buyer’s Signature)
The contracting of any deal is important and it must be carefully considered and executed. Experienced real estate agents may be capable of doing it, but it is always wise to at least have contracts reviewed by an attorney who specializes in real estate. They are “wiggle room” experts.
For over 90 KILLER real estate forms CLICK HERE.
Tagged with: back out , cancel a deal , clause , Mark Walters , real estate investing , wiggle room
Real Estate Finders Fees are Being Paid in Your Area
Right now is the best time in history to make big money with Real Estate FINDER’S FEES
As you know, there’s a nationwide “fire sale” of deeply discounted houses… a growing number of property owners eager or even desperate to sell their houses.
And… I’ve identified a very large group of “Investor-Buyers” who want you to find these houses for them.
These “Buyers” will pay you $5,000 to $25,000+ for each house you find for them!
I discovered an amazing way you can easily earn very large sums of money for just “finding” certain types of houses that these “Investor-Buyers” want to buy right now in your home town.
NO experience is required. And you do NOT need any money or credit to do this.
With Real Estate Finder’s Fees, you get paid immediately — and very well — for providing a simple service of finding the houses these Investor-Buyers want to buy.
If you have access to a computer, a phone, can follow simple instructions, and have 5 to 10 hours a week available… I can put you in this unique Service Business instantly in your town… and I’ll even set you up for FREE.
For more information about how you can start receiving some nice checks with “real estate finder’s fees,” go check this out…
http://budurl.com/r7cd
Warm Regards,
Mark Walters ~
P.S. I WANT TO GIVE YOU FREE INFORMATION… show you how these unique property owners are “matched” to the buyers… how the houses are found… and why and how you can get set-up with a perfect “copycat” of a hugely profitable Finder’s Fee business in your area FOR FREE.
Go here to see what it’s all about…
Tagged with: bird dog , finder fee , getting started , make money , Mark Walters , real estate investing
Alternatives To High Risk Mortgage Refinancing
Most investors find themselves in a cash crunch at one time or another. Vacancies, renovations, changes in mortgage terms and interest rates, municipal fees and taxes, it can all add up.
This leaves investors scrambling to balance their portfolios. Most refinance with an eye on mortgage products with lower monthly payments. The current product of choice is the interest only mortgage.
This mortgage lets property owners pay the interest part of a loan monthly, while making capital payments at a later date.
However, other factors need to be taken into account, such as closing fees, financing rates, and interest rates. What may seem like a short term solution can turn into a long term nightmare.
If the interest only mortgage will be obtained for more than two years, the investor will pay twice the interest rate for two years, which can add hundreds of dollars to at the mortgage. This type of mortgage flipping also makes it difficult to estimate how quickly the mortgages will be paid off.
The cost of switching mortgages between interest only and fixed rate mortgages can be high. The interest only mortgage does not decrease in value. If the investor takes out a $200 000 mortgage and makes payments for 10 years, the investor still owes $200 000. This means that the early closing fees will be higher, as much as $8 000 to arrange the mortgage twice.
This means that the investor is paying a high price for the privilege of having lower monthly fees for a year or two.
One thing that causes investors concern is that the interest only mortgage forces the investor to lose their profits for a year, or more, until the mortgage is refinanced. This alone should make investors hesitate before signing an interest only mortgage agreement for their investment properties.
The secondary concern with the interest only mortgage is that it doesn’t free any equity from the home to create profits for the portfolio, when the property is sold. This makes it difficult to obtain future financing that is needed to continue buying new properties. It also makes it more difficult to sell quickly at a profit. Both of these are vital components of any successful property investment strategy.
There are alternatives. As heart-breaking as it may seem, selling a non-performing property will relieve the cash crunch, and protect future profits. Put some of the profit in a bank account where it can be used to leverage equity, preventing the investor from being forced to consider a dangerous mortgage product.
Another opportunity will be to arrange a rent-to-own option with one of your current renters, or to encourage renters to fill a few properties. The rent-to-own is a bonus for investors. The investor still profits, on an annual basis, even without flipping the property. If the renters leave, the property reverts to the investor’s ownership. The investor is not obligated to return any of the money to the renter – plus the investor still owns the property.
The average person moves once every five years. Combine this with the fact that renters who believe they are purchasing the home will take better care of the property, and the investor has created a win-win situation that increases their income stream while protecting their investments.
Smart investing requires more than understanding market trends. Sometimes an investor can avoid a disaster by taking a good look at alternatives to the traditional methods of investing, arranging financing, and flipping properties.
Tagged with: interest only , lower risk , Mark Walters , mortgage , real estate investing , refinance
1031 Real Estate Exchanges – The Good and Bad!
One of the most powerful tools in a real estate investor’s bag of tricks is the 1031 Exchange. When used properly it can defer the tax on capitals gains almost indefinitely.
A 1031 Exchange is really very simple. You don’t actually have to trade one property for other… you just must use the gain from the sale of a income producing property to buy another income producing property. There are a few simple rules you must follow. One rule is that you have to complete the transaction within a prescribed time period.
The other requirement of a 1031 Exchange is that you must never personally touch the money from the sale of the first property. Certain people and companies are in business to act as an “Intermediary” in exchanges. Their primary job is to collect and hold the funds from the buyer of the first property and deliver them to the seller of the property you are acquiring. And that’s where the trouble starts. In the past few years some Intermediaries have disappeared and the funds they were holding from many deals vanished along with them. Often the investor’s losses amounted to from hundreds of thousands to millions of dollars.
Oh yes, there have been other problems. Some Intermediaries “co-mingle” the monies they are holding for exchangers. That means that all of their exchange client’s money is held in one account under the Intermediary’s name. If the Intermediary is sued for some reason all money in the account may be frozen. If the freeze lasts beyond the prescribed time limit (180 days) for exchanges the investors are out of luck. There are no extensions possible of the 180 day deadline. Now the investors must pay income tax on all those capital gains.
With the huge increase in real estate values in many areas recently, investors should be using 1031 Exchanges. There is just no better way to protect their profits and build net worth. But they must also protect those profits from careless intermediaries.
Make sure that your exchange funds are held in a separate exchange account that holds only your money and no one else’s. That account must be separate not only from other client’s monies, but also separate from the intermediary’s assets.
Each of the accounts should have the client’s name on it something like this: “The Exchange Kings, as intermediary for Barbie and Ken Investor”. That account must have the investor’s tax ID or social security number on the account. Now, no matter what goes wrong with the intermediary, your exchange funds will remain protected and accessible.
It’s great to exchange a property for profit. Just don’t exchange that profit for an unexpected loss.
Tagged with: 1031 Exchange , capitals gains , defer tax , exchange funds , intermediary , Mark Walters , real estate investing
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