Real Estate Quotes
I recommend finding an insurance broker, rather than just an agent at a specific company. A broker can shop around at different companies for the best rate and coverage, and can switch your policy if necessary without your having to take your business elsewhere. [2015] - Brandon Turner
Most commonly, a property manager will do the following: Advertise vacancies; Take phone calls from potential tenants; Show units to prospects; Hand out and accept applications; Screen tenants for rental, career, and criminal history; Choose a tenant and sign a lease; Accept maintenance phone calls and schedule needed appointments; Prepare monthly reports concerning the property; Supply the owner with a year-end summary; Manage problems as they arise; Stay in constant communication with the owner about problems; Pay property bills (sometimes, depending on the manager and the bill) [2015] - Brandon Turner
Property management fees differ depending on the size of the property and its location, usually ranging between 8% and 12% of the monthly rent, with 10% being the most common for single-family and small multifamily properties. Also, management companies have a "placement" fee that is typically equal to one-half of the first month's rent (or even the entire first month's rent) upon a lease signing. Some management companies also charge a "renewal fee" each year when the tenant renews their lease, but this is not as common. [2015] - Brandon Turner
A good property manager can be a great source of leads for your next property. They can also help you better understand the market, such as vacancy rates or current market rent. [2015] - Brandon Turner
The 50% Rule: A rental property's expenses tend to be about 50% of the income, not including the mortgage principal and interest (P&I) payment. The formula looks like this: Cash Flow = (Total Income x .5) - Mortgage P&I [2015] - Brandon Turner
"Meeting the 2% rule (the 2% test)" means that a property's monthly rental income must equal 2% of the purchase price or greater. The value 2% could easily be replaced with another number to test that as well. For example, many people look for "the 1% rule (test)." You might hear people talk about the .5% rule (test), the 1.5% rule (test), the 3% rule (test). In my local real estate market, I know that if I can find a property that gets close to 2%, it's probably going to cash flow well. Yours might be different. Maybe you'll discover that 1% is plenty to get you enough cash flow to create a solid return on investment. [2015] - Brandon Turner
The purchase closing costs are all the costs associated with the purchase transaction. Included might be loan points, loan origination fees, prepaid insurance, prepaid property taxes, title and escrow fees, recording fees, attorney charges, and other fees custom to your area. In my experience, these purchase closing costs usually average around $1,500 for a $100,000 property, plus any fees added by your lender. [2015] - Brandon Turner
Location is still key in any real estate investment. I'm referring to the middle-class neighborhoods on the outskirts and in the suburbs. Generally these areas are found 20 to 40 miles outside the city center, in smaller towns and communities. [2015] - Brandon Turner
Turnkey investing is a loosely defined investment strategy in which the investor buys, rehabs, and has a property managed through a third party, usually from a long distance away. All you need to do is "turn the key". There are hundreds of turnkey providers in America (and across the world), and no two companies are exactly alike. Some will buy, rehab, rent and then sell a property to you. Others will simply help you find the property and let you do most of the heavy lifting on the rehab side, then manage the property for you. Many people who live on the East or West Coast of the United States, as well as many who live outside the country, rely on turnkey companies (usually in the Midwest, where cash flow tends to be higher) to invest in great markets. [2015] - Brandon Turner
Small multifamily properties are any property that contains two, three, or four units. Large multifamily properties, therefore, are those with five or more units. Smaller multifamily properties are considered "residential" to most lenders, and are thus seen as no different from a single-family residence (SFR). Large multifamily, however, is considered commercial real estate, and the rules change drastically. [2015] - Brandon Turner
The terms "REO property" and "foreclosed property" are often used interchangeably, but both refer to the same concept: a bank-owned property. Today, REOs are usually listed on the MLS. The homes are listed through local real estate agents and sold to the higher or best buyer. REOs can be exceptionally good for investors for two reasons. 1. There is usually something distressed about the property. Many people simply avoid these properties, because they don't want to deal with the problems. 2. Banks are not likely to get offended by a low offer and will look at your offer analytically, not emotionally. For this reason, banks are often willing to drop their price fast to get the property sold and off their books. [2015] - Brandon Turner
Offer on deals on Friday, when most agents and investors have already begun wrapping up for the week and are planning their weekend fishing trip or barbecue! The same principle applies to holidays and especially to the end of the year. Savvy investors know that this is the best time all year to find deals, for two reasons. One, during this season, banks are in a hurry to unload their properties before the new year; and two, there is less competition for properties! [2015] - Brandon Turner
Perhaps the easiest and most passive way to use Craigslist is to simply search the site for real estate postings in your area. You can even automate the process so new posts that contain certain words that you choose are sent directly to your email inbox (you can do this through IFTTT.com). You can use Craigslist to search for rental listing that appear to have been placed by "mom and pop" landlords (not professional property management competencies). Call them and explain that you are looking to invest in real estate in their area and may be interested in buying a property. [2015] - Brandon Turner
Wholesaling is one of the most difficult real estate "jobs", because you have to be great at almost every aspect of the transaction (marketing, analyzing, communication, sales, negotiation, etc.). However, if you are able to connect with a great wholesaler, you truly can get hot deals delivered straight to your inbox. To find wholesalers: Call the numbers you see on those ugly "bandit signs" on the side of the road; Go to every real estate club in your area; Create a Marketplace posting on BiggerPockets; Train your own wholesaler on how to find you deals! [2015] - Brandon Turner
It's hard to get long-term tenants in a one- or two-bedroom house. In my experience, three- or four-bedroom houses tend to make the best rentals because they attract long-term tenants. Furthermore, three-bedroom houses are generally the best kind of property to sell. If you are looking for a multifamily property, two-bedroom apartments are acceptable, and incredibly common. Single-bedroom and studio apartments are also common, but they tend to attract a more transient tenant, so expect more turnover in that style. [2015] - Brandon Turner
When looking for single-family homes, look for ones for which all utilities (including water, sewer, garbage, electricity, and heat) can be paid directly by the tenant. When shopping for multifamily, at least look for ones where heat and electricity can be paid by the tenant, and if you can find properties that can be converted to a "master metered" system to allow tenants to pay for their own water, you've potentially struck gold! [2015] - Brandon Turner
Problems to Look for When Shopping for Rental Properties: 1. The Bigfoot smell; 2. The hidden third bedroom; 3. Ugly countertops and cabinets; 4. The bad roof; 5. Mold; 6. Compartmentalized configuration; 7. Jungle landscaping; 8. Junk. Problems to Avoid When Shopping for a Rental Property: 1. Neighborhood; 2. Foundation (including water leaking) issues; 3. Location-specific problems, such as being directly below a flight path or next door to loud/angry dogs. [2015] - Brandon Turner
There are several places where you can go to get a purchase and sale (P&S) agreement: local title company, online, office supply store or other investors. No matter how you obtain your P&S form, I recommend that you have a local attorney take a glance at it. You want to be sure you are covering all the necessary bases, and a lawyer can help you do that. You can also simply get a P&S agreement from an attorney, though this might be the most expensive option. [2015] - Brandon Turner
If the home has been sitting on the market for a long time, and you have a good indication that the seller is eager to sell, there is no real danger in submitting a lowball offer to see what happens. However, if you are in a competitive market and a new listing hits the MLS at a great price and you know that is't going to sell quickly, you may want to cut out the chase and simply offer your highest amount. Sometimes, you may even need to offer more than the asking price. I would never pay more than asking price just to win a bid if the numbers didn't pencil out, and you shouldn't either, unless you have some dramatic future reason for doing so. [2015] - Brandon Turner
Sometimes, the secret to getting a "yes" is as simple as being the first to offer on a property. Be sure to have automatic alerts set up with your real estate agent. Rather than playing a game with the seller, offer your maximum offer right up front. If they counter and try to make you go higher, just say no! If you want to get your deal accepted, get that person to like you! I think the best way to do this is to include a letter with your offer. Include your family in the photo for added benefit! [2015] - Brandon Turner