Real Estate Investing Articles

Real estate investors may, like many others, believe in the adage, “if you want something done right, then you’ve got to do it yourself.” Generally, that’s true, but at some point, a real estate investor may have too many properties that make the efficient and profitable overseeing of those properties, without the use of a property manager, next to impossible.

The twelve sure-fire signs that you need to hire a property manager to care for your investment properties are:

1. You’ve brought an exterminator to the property on Peterson Street to fix an electric ceiling fan, and you’ve brought an electrician to the property on Peterson Avenue to eliminate a pest problem. Your little mental mix-up resulted in two relatively happy contractors, each of whom charged you for two house calls, and two bewildered tenants, wondering what happened?

2. You’ve been so busy that you forgot to collect the rent in one of the properties you own, and now the tenant informs you that they’ve spent the money and will be late getting it to you.

3. You don’t schedule the new delivery of home heating oil in preparation for the upcoming winter and your tenants are calling to ask you how to light a fire in their fireplace… their faux fireplace.

4. You forgot to run a background check on a potential tenant, and they turn out to be serial evictees with a page full of judgments against them on their credit reports.

5. You don’t panic when the phone rings at 2:00 in the morning, worrying that it’s a family emergency; instead, you mutter an expletive before you answer the call, knowing it’s a tenant with a property-related issue (and not necessarily an emergency).

6. You feel bad about raising the rent, and guiltier still if you have to perform an eviction, because you allowed yourself to get caught up in the drama that is your tenants’ lives.

7. You don’t have the time to inspect your properties on a quarterly basis, much less a monthly one, and the majority of the properties are less than an hour’s drive from your office.

8. Your spouse and/or your kids are complaining that your tenants see you more than they do, and you’re neglecting the maintenance of your own property, because you’re exhausted from your handy-man duties.

9. Several of your properties are vacant, and the word-of-mouth marketing scheme and the FSBO signs you planted on the front lawns are just not working.

10. You have no idea what your local, state or federal landlord/tenancy laws require and whether or not you’re in compliance (“Tenancy law? What tenancy law?” and “Fair Housing Act? What’s that?”). Ignorance of the law is not an excuse.

11. You’ve kept your repair receipts, invoices, insurance policies, tenant application forms and all property related documentation in a big box underneath your desk; at the end of the year, when you need your financial statements prepared, you hand the box to your CPA and he starts to cry.

12. You’ve got no back-bone when it comes to confronting your tenants about NSF checks, noise related complaints from the neighbors and/or police, late rental payments and poor property upkeep. You put off the confrontation until you’ve mustered up enough courage, and then begin your conversations with, “Umm. I really hate to bother you…”

It’s true that no one will love your properties as you do, certainly not your tenant and probably not your property manager, but it is in your property manager’s best interests (after all, he does get paid to do this) to keep your interests at heart. Trust them to know the best way to maximize the income that your property can generate, while minimizing the risks of vacancies, non-paying tenants, property damage and loss of property values.

Let your property manager handle the (sometimes unreasonable) demands of the tenants, the middle of the night phone calls, the confrontations and the evictions. Your property manager will also have the responsibility of preserving and even enhancing your properties, through regularly schedule maintenance and landscaping , alerting you to potential problems before they become serious and costly, and handling the day-to-day minutiae that is so time consuming, such as collecting the rents, and paying the bills, utilities and taxes. When and if your property becomes vacant, the property manager’s role is to market your vacancies, help you to set your rental prices reasonably and fairly for the market environment, and run the background check on all potential tenants.

What’s your responsibility, as the property owner? Ultimately, everything is your responsibility; it is, after all, your property. Provided that you’ve chosen a competent, qualified and responsible property manager, though, you’ll spend less time involved in your properties, leaving you more leisure time to spend pursuing the things that you love. Really, wasn’t that the reason that you got involved in real estate investing in the first place, to have time to enjoy life?

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under Real estate investor resources & real estate marketing & rentals | No Comments »

It’s a statistical fact that almost 90% of potential home buyers start their search for their “dream home” on the Internet, and 72% of those Internet users drive past a home that they first saw online. According to Realtor.com, virtual tour listings get “hit” 40% more than ordinary listings. All of that leads to one conclusion, and the savvy real estate investor understands that they need to move beyond the traditional still (ho hum) photographs of the house and property, and create dynamic video that really conveys a property’s potential. These “virtual tours” are an ideal medium to draw that buyer to you, from anywhere in the world. Though still a rarity, it is not unheard of for a home to be bought entirely over the Internet, (physically) sight unseen, usually by individuals or families relocating from another area of the country, or even from another country.

Selling property the old fashioned way, via print media and weekend scheduled “Open Houses,” were fine in their day. But newspaper classified advertisements, and listings in the “Take One Free” brochures invariably found at bus and train stations, as well as 24- hour convenience store magazine racks, had a very limited (i.e. local) reach. Even in seller-favorable market environments, the period from listing to closing could take several weeks and even months.

The real estate investor, as the property seller, can benefit tremendously from virtual tours. The primary advantage is exposure — your property is available for viewing all day, every day, to people in your neighborhood as well as half way across the globe. For the vast majority of home buyers, the time factor, coupled with the ever rising cost of gas, is enough to keep them home sitting behind a desk and exploring the available real estate listings online. The virtual tour eliminates those buyers who aren’t serious – you’ve probably heard of them, they’re “professional” Open House visitors, who do it just for sport (and the cookies), and who relish the opportunity to inspect every nook and cranny (and kitchen junk drawer) of a potential new home.

Another advantage, arguably more important than exposure, is that listed homes with virtual tours sell for more money than comparable properties with only static pictures, sometimes by as much as ten percent.

Having access to a video camera, video editing software and a You Tube account doesn’t necessarily give you license to create your own virtual tour. Nor should you attempt to create your own virtual tour just to save a few bucks. That’s not to suggest you couldn’t do this, but any attempt to do so should be objectively judged, by you – because it will be, and perhaps harshly, by the visitors who view it and immediately click out of it. There are several do-it-yourself kits and packages that will help you create a successful virtual tour.

Some individuals have no picture taking skills whatsoever; they are generally the ones who tend to decapitate their subject, and wouldn’t know an F-stop from an O-spot. For those people, the answer is a professionally created virtual tour. Prices vary, but generally the package is well worth the investment. A professionally created virtual tour should also provide you with the ability to link to external sites, such as search engines, blogs, real estate portals, etc. Furthermore, your virtual tour should offer tracking options and site meters, so that you can see which room or features appears to be most relevant to your site visitors.

At a bare minimum, a virtual tour should have these components:

• Simple navigation – is it easy for your visitors to “walk around” the property, find a specific room or zoom in on something special?

• 360º Images – Some rooms and exteriors warrant a panoramic view, just to capture its innate beauty; you don’t want this for every room, just for the ones that you feel can best “sell” the property, perhaps because of their size or their unique qualities.

• Narration, Audio and Sound Track – You don’t need hokey background music, but you should have compelling voice-over dialogue written, so that you can walk your visitor through the rooms, and point out features and modifications that might otherwise be missed. A word about voice-over, if you’re creating your own virtual tour, listen to yourself on audio tape before you take on the role of narrator; the voice you hear is the voice everyone else does, and it may not be as melodic as you think.

• Load time – Internet users love speed, and if your virtual tour takes forever to load, you’ve lost a potential home buyer.

The virtual tour is a win-win situation for both the real estate investor and the home buyer. Think of it as a “Cyber Open House,” minus the refreshments, of course.

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under real estate agents & real estate marketing | 1 Comment »

Your potential buyer has just pulled up in the realtor’s car. Quick! You only have one chance to make a good first impression, and a potential buyer makes the decision as to whether or not they’re interested in the house within the first 8 seconds of seeing it. So, what do they see when they pull up to the curb in front of your house, even before they alight from the car? Is it a (curb) appealing view? Or do they see window shutters with peeling paint, chipped wrought iron railings, dirt encrusted aluminum siding, patchy brown grass, the remnants of a vegetable garden and the kids’ bicycles and skateboards lying scattered in the driveway? If your answer is yes, then you’ve just lost a sale.

Staging your home for sale is a two part job: inside and outside. Your outside has to be as inviting as your home, because it’s a part of your home. So stand back, and open your eyes. What it will take is probably no more than a pressure washing, a little painting or touch-ups here and there, and a weekend’s worth of landscaping. Your destination should probably be your local home improvement center, where you can get everything you need complete the task.

Let’s look at some of the basics to getting your yard and the outside of your house, properly staged.

Declutter the yard – Remove all trash cans, bikes, building materials, garden fertilizer and the like and stow them neatly in your garage.

Eliminate unnecessary junk – Put away the plastic lawn chairs and tables, the kiddy pool and even the barbecue grill if it’s greasy and nasty looking. If you’ve got a car on your property waiting for rehab, now is not the time to leave it languishing – garage it, donate it or junk it.

Cut back the jungle – Prune or pare down all shrubs, trees and plants, especially those situated directly in front of your house. They should enhance the look of your house, not block a potential buyer from looking at it.

Basic yard maintenance – Depending on the season or need, ensure that your lawn always stays well mowed, weed-wacked or raked, and that your flower or vegetable gardens are well tended and neat. Mulch or fertilize to encourage healthy, vital looking plants.

Clean up the property – Pressure wash dirty aluminum siding or even sooty brick, as well as driveways, decks and patios.

Fix or replace damage – Take a good look at your driveway and walkway. Are there cracks or holes, oil stains, patches of grass coming up between the pavers? If they are beyond the need of a little patch work or a lot of scrubbing, consider having them replaced.

Make it colorful – Consider buying vibrant colorful annuals, and plant them in decorative planters, window boxes or along walkways, or flanking an entryway. A new mailbox, house numbers of hardware are inexpensive touches that translate well.

Scrape and repaint – Freshen up anything that looks dingy or has peeling paint, such as wooden shutters, window trim and railings, and most especially, the entrance way door — it needs to be inviting and welcoming.

Brighten up – Buy and install some solar lighting for night time showings; solar lights are more efficient than ever, easy to install, reposition and remove.

Decorate for the season – Don’t hesitate to pull out a couple of seasonal or holiday trimmings, but nothing should be garish or overwhelming. A holiday wreath or trim on the front door, white lights, a jack-o-lantern, they’re to be expected – you don’t want to create a haunted house or Santa’s workshop.

Real estate agents estimate that, with landscape staging, a seller’s return on investment is between 300 and 400%, depending on the area of the country your property is situated in. That $300 or $400 you “invest” at the home improvement center translates into more than $1,200 on your return. That’s a nice net profit.

If you don’t take it upon yourself to make this kind of “investment,” one of two things will happen. Either your potential buyer will reject your house outright or counter offer your asking price. And it won’t be just $300 or $400 less; no, they’re going to shave a few thousand dollars off of your asking price.

In any economy, especially one that favors a home buyer, you need to add the little touches that will make a house a home, even before your buyer signs the contract.

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under Real estate investor resources & real estate marketing | 1 Comment »

Ebay may be the “world’s largest marketplace,” and the ideal venue for buying and selling your grandmother’s salt and pepper collection, but it’s not the forum you first want to turn for buying and selling your real estate investment property. Nor, should it be your last option. Ebay not withstanding, you shouldn’t underestimate the benefit of an auction as a means of acquiring or disposing of your real estate property and maximizing your return.

Given the current real estate market difficulties, resulting in a glut of houses, many of which are in pre-foreclosure and foreclosure situations, auction sales are becoming much more common. Lenders with huge real estate owned (REO) portfolios, homeowners and real estate investors are turning to the auction as a viable means of quickly and effectively disposing and acquiring assets.

An auction is a process of selling or acquiring an asset at a fair market value. Depending on the competitive nature of the auction and the speculative future value of an asset, the bid prices may be higher than the true market value at any given point in time. Under certain circumstances, an auction may be a more beneficial option to all parties involved, rather than a foreclosure or short sales.

There are essentially three different categories of auctions:

• Absolute Auction – the property is sold to the highest bidder, irrespective of price. From a buyer’s perspective, this is the best auction to be a party to.
• Reserve Auction – the property is sold to the highest bidder, only if the (confidential) reserve price, which is set by the Seller, is met. A Buyer may find that they overbid their own price threshold, in an effort to reach the reserve.
• Minimum Bid Auction – the auction prices begin at a minimum price, set by the Seller. Similar to a Reserve Auction, but no “secret” as to how much the Seller is looking for.

From a seller perspective, there are many additional benefits to holding an auction, aside from the price factor:

• Immediate cash is obtained, allowing the seller to move forward with other investment opportunities.
• Swift disposition of a property means the elimination of a seller’s high property carrying costs, such as property taxes, interest fees, maintenance, utility bills, etc.
• The seller maintains control of the property, while simultaneously setting the terms, conditions and (sometimes) price (through the reserve mechanism) of the auction.
• Eliminates the need for numerous property showings and playing the waiting game.
• The seller can require that potential buyers have pre-certification and qualification, ensuring that their participation in the auction is genuine.
• Sale of the property is made on an “as-is where-is” basis.

But of course, those benefits are only from the seller’s perspective. Now, from a buyer’s perspective, can bargains be found at an auction? Absolutely yes. Provided you time it right. So, when should you start looking? Right now. There’s no time like the present. Foreclosures and pre-foreclosures are occurring at an astronomical rate. Statistics show that lender-initiated auction sales that don’t have any takers increased over 2,000% from last year.

From a buyer’s perspective, there are numerous benefits to purchasing investment property at an auction:

• Buyer determines the purchase price
• There is no extended negotiation period
• Sellers who required pre-certification knows that you’re serious about buying
• Opportunity to buy many properties at once
• Quick closing, often with 4-6 weeks
• Buyers may receive a due diligence packet, providing comprehensive information about the property

Naturally, the auction process is not entirely risk-free to a Buyer, and the words “Caveat Emptor” should be burned into your collective being. Here are some of the shortcomings of an auction that the buyer should bear in mind:

• Buyer may not be able to preview the property
• Property is sold “as is” with no Home Warranty; structural faults will be your problem.
• Uncertainty to good and clear title; even if lender-initiated, the property may still have mechanics liens and other attachments.

Obviously, this is merely a synopsis of the more important issues pertaining to real estate auctions; there is extensive information available on the Internet, and you should do your homework.

Whether or not you’re the buyer or the seller at a real estate auction, it’s a great feeling to hear the auction caller yell, “SOLD!” and know that it’s meant for you.

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under real estate marketing | No Comments »