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Position Yourself For Success

How To Begin Investing In Rental Properties ~ Buy and Hold

In my judgment, investing in real estate to hold is the best method yet discovered for a person of modest means to become wealthy. Unfortunately, that doesn’t make it easy. Buying and holding real estate successfully requires accomplishing a lot of very different tasks simultaneously or it won’t work. To boil it down, there are five major components:

1 – Acquisition

2- Financing

3- Rehab

4 – Management

5 – Maintenance

In my experience, these five components of buy and hold real estate investing are the basis for building wealth in real estate investing. I will explain each in detail below.

Acquisition

You make your money when you buy. And that is just as true for buy and hold as it is for flipping. Some buy and hold investors can get a little lazy. Whereas flipping creates discipline by quickly showing whether the deal was a good one or not given how much money was made or lost on the sale, buy and hold has no sale. So it’s easier to justify (consciously or subconsciously) lower quality deals. Don’t make this mistake!

Poor deals on the acquisition side will hurt buy and hold investors in the long run just like flippers. More money will be thrown away, cash flow will be lower and refinances won’t pull money out or will force investors to keep high interest private loans. Buy and hold investors should use the same aggressive marketing and negotiating tactics as flippers and not settle for anything less.

Financing

Financing is generally the hardest part for buy and hold investing. Fortunately, there is an assortment of ways to finance properties to hold, but all of them require thriftiness. The first is to save money from a job and use that money to buy investment properties. For this model, FHA loans can be great here because you can buy any property up to a fourplex, live in one side and rent out the rest.

In addition, flipping and holding are by no means mutually exclusive. Why not hold every third or fourth property while flipping the rest? Or better yet, use creative financing (like subject to’s or seller financing) to buy a property for no money down. Or get a ma’ or pa’ private lender to lend you the full down payment. Or partner with someone who has money. Then they can bring the money and you can do the work. It’s not easy, but there are plenty of financing solutions available.

Rehab

The Sydney Opera House was budgeted to cost $7 million and take six years to complete. It ended up costing $102 million and taking 16 years! In other words, it always costs more and takes longer than you think. Contractors and employees are notorious for overcharging, procrastinating or providing poor quality work. So be careful when hiring and be quick to fire if needed.

The best contractors and employees generally come from referrals. Ask for them from people you trust whenever you can. Often local REIA groups will have a list of referred vendors and contractors. And when you are vetting such vendors, ask for references and check them thoroughly. And do not pay them up front!

It’s also important to work hard at accurate budgeting. Make sure to add in a contingency of 15-20% for the things that will inevitably pop up. And always double check your budget against your results. This is important to make sure 1) your buying criteria is right and 2) that you are not under-financing these properties.

Management

The big question is whether to hire a management company or do it yourself. The advantage to hiring a management company is that it frees up more time to look for properties. The disadvantage is that they cost money and that some are incompetent or even criminal. If you do hire a management company, just as with contractors, vet them thoroughly. You should ask for referrals from people you trust and then from the management companies’ themselves. And do not be afraid to fire them. A management company can make or break you and the bad ones will break you quicker than you think.

If you decide to do it yourself, it has to be a primary focus. Property management is the nuts and bolts of real estate, and without it, everything falls apart. Learn the law and consult with an attorney to make sure you are in compliance. In addition, you must have a thick skin and be able to tell a tenant “no” or some of them will walk all over you. Furthermore, know that you will eventually need to hire someone for leasing, maintenance and/or bookkeeping. In the meantime, you will need to be able to do basic bookkeeping yourself in order to properly do your taxes, assess your situation and obtain bank financing.

Maintenance

If you decide to manage yourself you should at least find a roving handyman you can call for maintenance issues (unless, that is, you are very handy). When you have enough units, you can hire someone full time. You will also need to have plumbers, electricians, HVAC technicians and the like on call for such issues.

If you use a property management company, the maintenance and turnover is the most important thing to watch as overcharges will usually go there. If maintenance expenses are out of hand, demand an explanation. If the explanation is unacceptable or the situation doesn’t change, switch companies. The same goes for prolonged vacancies.

These are, of course, just the broad strokes. For more information, read ,The Millionaire Real Estate Investor by Gary Keller and How I Turned $1000 into a Five Million in My Spare Time, by William Nickerson or view the many articles and books on this site.

Position Realty
Office: 480-213-5251

Common Legal Mistakes Real Estate Investors Make

You can’t expect to reduce your risk of getting sued to zero, but you can take steps to reduce your risk as much as possible. In any situation where your money is at risk, ask yourself, “Is there a better way?”

Know the legal and financial risks of the situations in which you place yourself, your business, your family, and your assets.

Without covering every issue involved, here are a few common mistakes that investors make, novice and experienced alike.

Poor Legal Forms

It’s amazing how short-sighted novice investors can be when it comes to shelling out money for good legal contracts. They often buy contracts at discount office supply stores, from Internet web sites, or borrow them from friends.

However, a real estate deal is only worth the paper it’s written on. Like the old expression, “every tax strategy works until you get audited,” it can also be said that “every contract works until you have a dispute.”

So invest in a good set of legal forms that apply to your practice and ask a local real estate attorney to review them. Also, make certain you fill in the forms correctly—a good real estate attorney will review contracts for just a few hundred dollars.

Too many people rely on real estate brokers to fill out contracts, which is fine for a “standard” deal. However, most brokers aren’t trained in legal matters and often create long contract addendums that are insufficient to protect your interests.

Illegal Discrimination

The Fair Housing Act of 1968, as amended, prohibits discrimination on the basis of race, color, religion, nationality, familial status, age, and gender. Many state and local laws also forbid discrimination on the basis of sexuality or source of income and the Americans with Disabilities Act makes it illegal to discriminate against disabled people.

If you harbor any such prejudices and would allow them to come into play when renting a housing unit, then you’re probably not cut out to be a landlord. However, many sincere real estate investors make honest mistakes that result in discrimination lawsuits. The best way to avoid these lawsuits is to be informed.

The Fair Housing Act may appear to be common sense and most people would never think of discriminating against people of different races or religions or on the basis of gender. However, it’s important to note that the Act extends beyond the screening process and into advertising as well, so watch the wording on your ads.

This is where many landlords and property managers make critical mistakes. Some people scour the classifieds looking for inappropriately worded ads so they can pounce on them and threaten a lawsuit. While someone must have standing to bring suit, these scoundrels often work in coalitions to ensure that all of their bases are covered.

For example, if you own a rental property in a predominantly Jewish community, its proximity to the local synagogue could be a major feature. But if your ad says “within walking distance of the synagogue,” you could be sending the message “gentiles need not apply”—even though this wasn’t your intent.

And keep in mind that you may not discriminate on the basis of whether a couple is married and whether children are to live in the unit. You may also not discriminate on the basis of age. Often, novice landlords aren’t aware of these areas of concern. And while it’s good that citizens are more aware of their rights today, it can create a bad situation for well-meaning landlords who are out of step with the law.

Be aware of your local laws and use good business sense. State law and local ordinances can extend similar protections granted under the Fair Housing Act to other groups. For example, California, Minnesota, and North Dakota prohibit discrimination based on source of income. In other words, landlords can’t discriminate against would-be tenants who rely on public assistance. Putting the political perspective of the landlord aside, such discrimination makes little business sense because people on welfare or social security are virtually assured of a fixed income.

The Americans with Disabilities Act (ADA) prohibits discrimination against the disabled and also requires landlords to make “reasonable accommodations” to disabled tenants. Who decides what’s reasonable? Typically, judges, if it comes to that. But while most landlords are aware of the ADA and would never stoop to discriminate against a person in a wheelchair, many are unaware that the ADA also protects mentally disabled tenants. A mental disability could also include recovering alcoholics and drug addicts. On the downside, these people can relapse; if they do, this can cause serious problems for you and other tenants. Everyone deserves a second chance and many recovering addicts become productive members of society. Those unable to recover typically have other problems and, thus, if you decide to reject their rental applications, it’s vitally important that you document additional reasons for rejecting their applications.

Improper Disclosures

Improper disclosures are a common mistake for investors. It’s critical to be aware of the federal and state requirements for disclosures. For example, federal law requires a lead-based paint disclosure on the sale or rental of properties that were built before 1978. State laws may have additional regulations.

It’s become common practice for real estate brokers to use a property disclosure form as a general-purpose sell disclosure for all aspects of the house. Even if you’re selling your house on your own, be sure to use one of these forms. Whenever in doubt, disclose what you know, especially something the buyer or tenant may not know about, such as dangerous conditions, water damage, electrical issues, or plumbing problems.

Illegal Solicitation of Money

Many novice investors try to solicit money for investing via public advertising or mailings. This is commonly referred to as syndication. You may inadvertently cross over a variety of federal and state securities regulations when trying to raise capital. Chatting with friends over the dinner table about a real estate deal is one thing, but advertising to the public in mass may be considered a public offering. Before soliciting money from strangers, review your marketing, paperwork, and solicitation strategies with a local attorney well versed in this area of law. You may be able to get away with a good set of written disclosures if you solicit money on a limited basis, but it’s better to be safe than sorry.

Independent Contractor Liability

The IRS and your state department of labor are on the lookout for employers who don’t collect and pay withholding taxes, unemployment, and workers’ compensation insurance. If you have employees that are “off the books,” you’re looking for trouble. If you get caught, you’ll have to pay withholding taxes and as much as a 25 percent penalty. Intentionally failing to file W-2 forms will subject you to a $100 fine per form. The fine for failing to complete the Immigration and Naturalization Service (INS) Form I-9 varies from $100 to $1,000 per form. Your corporation or LLC won’t shield you from liability in these cases, either. All officers, directors, and responsible parties are personally liable for the taxes.

If you hire people to do contract work for you on a per-diem basis, they may be considered employees by the IRS. If any workers fail to pay their estimated taxes, you may still be liable for withholding. If these workers are under your control and supervision and work only for you, the IRS may consider them employees, even if you don’t. If this happens, you may be liable for back taxes and penalties.

To protect yourself, you should:

  • Hire only contract workers who own their own corporation or get the business card and letterhead of any unincorporated contractors you may use so you can prove these workers aren’t your employees.
  • Require proof of insurance (liability, unemployment, and workers’ compensation) in writing.
  • Get written contracts or estimates on workers’ letterhead that states they’ll work their own hours and you don’t have direct supervision over the details of the work.
  • Have letters of reference from other people for whom the contractors worked to show that the contractors didn’t work solely for you. Keep these in your files.
  • File IRS Form 1099 for every worker to whom you pay more than $600 per year.

In addition to possible tax implications, an independent contractor can create liability for you if a court determines the contractor is your employee. For example, if your independent contractor is negligent and injures another person, the injured party can sue you directly. If facts show that you exercised enough control over your contractor, a court may rule that this contractor is your employee for liability purposes. As you may know, an employer is “vicariously liable” for the acts of his or her employees—the employer is liable as a matter of law without proof of fault on the part of the employer. Make certain you follow these guidelines when hiring contractors and pay particular attention to the issue of control.

Finally, under your state’s law be aware which duties are considered inherently dangerous, such as providing adequate security for tenants in a multiunit building. These duties can’t be delegated to an independent contractor without liability on your part, regardless of whether the person you hire is considered an independent contractor or an employee.

Position Realty

Office: 480-213-5251

How to Get Your Renters to Think Like Home Buyers

Most rental residents treat their dwellings like renters, not home buyers. That’s because rental residents “think” like they are renters, in almost all cases. However, I’ve found it is to the landlord’s advantage if tenants think like “future home buyers.”

Residents who think like home buyers act in the following manner:
Take better care of property than average tenants.

  • Pay rent on time and fulfill other obligations.
  • Handle minor repairs and needed maintenance.
  • Add upgrades/improvements to the property.

Therefore, from the very first month a rental resident moves in, one of you major management objectives is to change their mindset from renter to future home buyer. In fact, your opening letter of introduction, or cover letter, to announce your rental policies starts off: “Welcome Future Home Buyer”.

The process to change a resident’s mindset from renter to future home buyer is not instantaneous, but can be gradual yet continual and very effective. Here’s how I suggest you start the transformation.

WELCOME “FUTURE HOME BUYER”

In the first month, welcome the resident as a “future home buyer” and use that term in both oral and written communication.

Give on-time thank you vouchers.

At the start of the second month, after the resident pays the rent on time, send your resident an On-Time Thank You Voucher – valued at either $25 or $50 good toward the purchase of the home they are living in (or toward any one of your homes if that is an option you would consider).

The first time your residents receive this voucher, they will probably not call you up in immediate urgency to buy your home. But this strategy will start their minds thinking a little about the possibility of buying.

Oh, I almost forgot to mention, one small but significant point about how the on-time thank you vouchers system works. If a resident is ever late, any vouchers received up to that point are considered null and void. This point is spelled out on each voucher as a reminder to residents.

This is significant because when residents first start receiving the vouchers, it effects them. Even though they may not be sure if they will ever buy something; most people don’t want to lose out on something of high perceived value that they can receive. Residents will keep paying you on time so they can keep getting the $25 or $50 vouchers.

The vouchers begin to add up to significant amounts after several months, up to $600 in a year. Residents don’t want to simply throw that much money away or lose it. Some owners offer a one-time only, or once a year only, late payment without complete loss of accrued voucher total. With a late payment, owners deduct a penalty of 25% or 50% off accrued total instead of penalizing the full amount. Whatever method you utilize, the penalty should be significant to be effective.

Your residents will do everything within their power to be able to keep paying the rent on time each month, to keep from losing the possibility of using the vouchers. Don’t be surprised if the residents begin paying a week to ten days early to insure they don’t come close to missing out.

HOLD HOME-BUYING DISCUSSIONS

By the middle of their first rental year, you will want to ask the resident if you can have a home-buying discussion with them.

Hold home-buying discussions twice a year. They are an important part of the transformation process. During home-buying discussions, you share with your resident the buying possibilities, outright purchase, lease option, land contract, etc. As the owner, you should also mention your criteria for choosing whom you would sell the home to under favorable terms. Home buyer criteria should include someone with good payment history and good maintenance and upkeep history.

As the transformation from renter to future home buyer continues because of your home-buying discussions, your resident will take excellent care of your property.

It’s important that you understand that the objective of changing the resident’s mindset is to get residents to “start” to think of themselves as future home buyers, but it is not necessary that they actually buy a home. In fact, please note that you do not allow residents to cash in on their vouchers until an actual closing to buy the house takes place. Even though you are starting to change the resident’s mindset, in most cases you will not see the final transformation from renter to future home buyer to actual home buyer.

However, just getting residents to think differently of themselves, as future home buyers, during their stay in your rental, will cause them to perform differently. Even if they end up not buying one of your homes, and rents or buys elsewhere, the steps I’ve suggested you follow to start the transformation from renter to buyer, will greatly benefit you the rental owner. You will get rents on time, residents will take care of all minor repairs and maintenance headaches for you, because you are not dealing with a renter, you are working with a future home buyer, whose performance is determining whether he or she will be able to buy.

Stay in control and make the most of your assets.

Landlord Tips On How To Raise Rents

Being a landlord and Property Management are just like any business. Real estate costs rise over time, from property tax bills, to insurance premiums, to mortgage rate increases – so landlords sometimes need to raise tenants’ rental payments or leasing fees to maintain profitability. Raising a tenants’ rent can prove a challenging situation for many landlords, so here are a few suggestions to help make this navigate this necessary task successfully.

5 Landlord Tips For How To Raise Rents

Tip 1: Research Market Rents
It’s far easier to raise the rent if you’re raising it to a reasonable level and comparable to other local rents. Find out what other local landlords are charging for similar properties, and if your tenant balks at your raise in rent, show them the data on what they can expect to pay for similar rental properties.

Tip 2: Planning Ahead
Many states require advance notice of at least 30-90 days when raising rents or changing lease terms. This is something you will need to research for your state. Having the conversation sooner rather than later gives you an opportunity to find a new tenant, creating a smooth transition if the rental increase is not accepted.

Tip 3: Face to Face Notification
While it may seem easier to have this conversation by phone or by mail, the fact is human beings are less likely to say “no” in person, making a face-to-face conversation a more effective approach.

Tip 4: Consider The Best Time To Raise Rents
Spring into the Summer season, is the best time to raise rents. Statistically, many more Americans move during the spring and summer months, which makes it far easier to fill vacant rental units during these warmer months.

By raising the rent as the warmer months approach, you can ensure an easier time leasing the property if your current tenant decides to move out instead of paying the higher rent or lease term.

Tip 5: Optional Longer Rental Agreement
Doesn’t this sound ideal… higher rental income and an extended term, securing a rented property for the next two years? 100% Possible!

When a tenant expresses their unhappiness regarding a rental increase – tell them you understand that they have their own bills and their own concerns, and that you’re willing to extend their rental agreement from 12 months to 18 or 24 months.

This will offer written assurance that you will not raise their rent again for a year and a half or two.

Maintaining Positive Monthly Cash Flow

Implementing rental increases may not be an easy task, but it’s often necessary if you intend on actually earning a positive cash flow on your investments. Always remember to be fair and honest. Remember that rent cannot be raised in the middle of the lease term, and remember that sometimes securing a longer-term tenant may be more valuable than an extra $25 a month.

Position Realty
Office: 480-213-5251

Lease Option Tips & Strategies

Lease/Options can be fun and profitable, but there are certain pitfalls. The following are some practical, legal and tax tips for lease/options deals.

Protecting Your Option

Lease/options are great, except when the seller decides not to live up to his end of the bargain. Sure, you can always sue the seller to force him to sell you the property, but this can cost you thousands of dollars in legal fees and take years to accomplish. You need to be in a better position if you want your investment to be protected.

Here are three good ways to protect your option:

  • Record the Option. If your option was signed before a notary, you can record your option in the public real estate records. This will give the world public notice of your interest. If the option was not notarized, you can sign an affidavit called a “memorandum of option” and file it in the real estate records where the property sits. Keep in mind that this does not create a lien, it only creates a “cloud” on the title.
  • Escrow the Deed. If your seller has died or disappeared, you will have a big problem getting him to sign a deed. An escrow should be created up front in which a title company or attorney holds an executed deed. When you are ready to exercise, you simply tender the money to the escrow agent and collect the deed.
  • Record a Mortgage. Typically a mortgage is recorded to securepayments on a promissory note. A mortgage can be recorded to secure performance of any agreement, even a purchase option. You as optionee (buyer) will now be a lienholder, in the same position as a secured lender. If the seller refuses to sell the property, you foreclose. Now the seller has to go to court to protect himself, rather than the other way around.

Avoiding The “Equitable Mortgage”

Tenant/buyers who default on a lease/option do not always go away quietly. Sometimes, they fight the eviction and go into court kicking and screaming, “I HAVE AN EQUITABLE INTEREST IN THE PROPERTY.” What they are arguing is that the lease/option is not a landlord/tenant relationship, but rather a seller/buyer relationship. If the Judge agrees, your lease/option is “re-characterized” as an installment land contract. This may require you to foreclose the tenant, not just evict him.

Here are some tips for avoiding the equitable mortgage:

  • Use Separate Agreements. Give your tenant a lease and a separate option agreement. Make certain the lease does not refer to the option. More than 75% of the time, the tenant loses his paperwork.
  • Keep Your Term Short. Do not give tenants more than one year lease/options at a time. If the tenant insists on three years, give him a one year with 2 rights to renew. Draw up a brand new lease and option agreement each time he renews. If you give a cumulative rent credit, raise the purchase price each time.
  • Take a Security Deposit. Sellers don’t take security deposits, landlords do. Make it look like a landlord/tenant relationship, even if the security deposit is small.
  • Pay the Taxes and Insurance. Do not let the tenant pay the taxes and insurance. This makes it look like a sale.
  • Don’t Give Large Rent Credits. The more “equity” the tenant has, the more likely a judge will favor an equitable mortgage.
  • Watch Your Language. Refrain from using the words “credit,” “seller” and “buyer” in your agreements. Instead, use the words “non-refundable option,” “landlord” and “tenant.”

Sell Your Option for Capital Gains Treatment

If you lease/option, then sub-lease/option, we call this a “sandwich.” When your subtenant is ready to buy, you simultaneously “buy and flip.” This profit is taxed as ordinary income. If you held the option more than a year, you may qualify for capital gains treatment. Instead of selling the property, sell your option and let your subtenant exercise it directly from the owner.

Take A Loss On Your Personal Residence

As you may know, you cannot write off a loss on the sale of your personal residence. However, if you lease/option the property you may be able to convert it to a rental and take a capital loss when the buyer exercises.

If you have questions regarding these lease option tips and trick, then please feel free to contact me at 480-213-5251.

How To Create Massive Passive Income Without Hassling With A Single Tenant

The true goal of every investor should be to create as much massive passive income as soon as possible.

Passive income means just that, money that comes into your house month in/ month out without you having to do a thing to get it. How can you accumulate massive passive income quickly?

Well, if you went out and bought a couple dozen single family houses and kept them, you would create a decent income. Good but not great.

Its’ going to take you a little time to find all of these deals and then you would have to manage all of those tenants.

What If You Put a Couple Dozen Units in the Same Property?

Then you would only have to find one deal and then a few more to create a great passive income.

I know what you’re thinking. Oh no, not apartments! I don’t want to deal with the tenant hassles! And I agree with you, you shouldn’t be dealing with any tenants, wouldn’t it be better if you could just sit back and collect checks while someone else deals with all of the management headaches?

Those people are called management companies and they make a living shielding investors from the day to day management of their properties so you can go out and continue to do what you do best, find more property and create more cash flow!

But Aren’t They Expensive?

It’s true that management companies are paid a percentage of the gross collected rents, somewhere between 6% and 10%, though if you factor this cost into the deal, as long as the property cash flows with these fees, you’ve got yourself a winner!

Not only have you found a property that will get you one step closer to true freedom, you don’t have to hassle with a single tenant.

Position Realty offers reasonable leasing and property management fees and we GUARANTEE we can beat any property management companies prices. Give us a call TODAY at 480-213-5251.

10 Inexpensive Ways To Spice Up Phoenix Rental or Home

It’s easy to fix up your properties if you have unlimited cash. However, you need to keep your repairs to a minimum especially if the home is a rental property or you are planning to sell the home. There are the basic improvements, such as carpet and paint, but these can still costs thousands of dollars. The following are some inexpensive ways to improve your properties with very little cash.

#1) New Electrical Switch Plates

This is such a minor, yet overlooked improvement. Most rental owners and rehabbers paint a unit and leave the old, ugly switch plates. Even worse, some even paint over them.

New switch plates cost about 50 cents each. You can replace the entire house with new switch plates for about $20. For the foyer, living room and other obvious areas, spring for nice brass plates. They run about $5 each – not much for added class.

#2) New or Improved Doors

Another overlooked, yet cheap replacement item is doors. If you have ugly brown doors, replace them with nice white doors (you can paint them, but unless you have a spray gun it will take you three coats by hand).

The basic hollow-core door is about $20. It comes pre-primed and pre-hung. For about $10 more, you can buy stylish six-panel doors. If you are doing a rehab, the extra $10 per door is well worth-it. For rentals, consider at least changing the downstairs doors.

#3) New Door Handles

In addition to changing doors, consider changing the handles. An old door handle (especially with crusted paint on it) looks drab. For about $10, you can replace them with new brass finished handles. Replace the guest bathroom and bedroom door handles with the fancy “S” handles (about $20 each).

#4) Paint/Replace Trim

If the entire interior of the house does not need a paint job, consider painting the trim. New, modern custom homes typically come with beige or off-white walls and bright-white trim. Use a semi-gloss bright white on all the trim in your houses.

If the floor trim is worn, cracked or just plain ugly, replace it! Home Depot carries a new foam trim that is pre-painted in several finishes and costs less than 50 cents per linear foot. Create a great first impression by adding crown molding in the entry way and living room.

#5) New Front Door

You only get one chance to make a first impression. A cheap front door makes a house look cheap. An old front door makes a house look old. If you have nice heavy door, paint it a bold color using a high-gloss paint. If your front door is old, consider replacing it with a new, stylish door. For about $125, you can buy a very nice door.

#6) Tile Foyer Entry

After the front door, your next first impression is the foyer area. Most rental property foyers are graced with linoleum floors. Consider a nice 12″ Mexican tile. An 8′ x 8′ area should cost about $100 in materials.

#7) New Shower Curtains

It amazes me that many landlords and sellers show properties with either no shower curtain or any ugly old shower curtain in the bathroom. Don’t be cheap – drop $40 and buy a nice new rod and fancy curtain.

#8) Paint Kitchen Cabinets

Replacing kitchen cabinets is expensive, but painting them is cheap. If you have old 1970’s style wooden cabinets in a lovely dark brown shade, paint them. Use a semi-gloss white and finish them with colorful plastic knobs. No need to paint the inside of them (unless you own a spray gun), since you are only trying to make an impression.

Americans spend 99% of their time in the kitchen (when they are not watching TV). A fancy modern faucet looks great in the kitchen. They can run as much as $150, but not to worry – most retailers (Home Depot, Home Base, etc) often run clearance sales on overstocked and discontinued models. I have found nice Delta and Price Pfister faucets for about $60 on sale.

#9) Add Window Shutters

If you have ugly aluminum framed windows, consider adding wooden shutters outside. They come pre-primed at most hardware retailers and are easy to install. Paint them an offset color from the outside of the house – (e.g., if the house is dark, paint the shutters white. If the house is light, paint them green, blue, etc.).

#10) Add a Nice Mailbox

Everyone on the block has the same black mailbox. Stand out. Be bold. For about $35 you can buy a nice colorful mailbox. For about $60 more, you can buy a nice wooden post for it. People notice these things….and they like them!

Investors Jump in to Turn Foreclosures into Rentals

The government and private equity firms are gearing up to start marketing foreclosed homes as rentals in an effort to help lessen the downward impact foreclosures have on the price of nearby homes.

The Federal Housing Finance Agency plans to offer some of its 180,000 foreclosed homes through Fannie Mae and Freddie Mac to private operators who will turn them into rental properties, Bloomberg News reports.
The Federal Housing Administration also plans to participate in a rental program. In a November memo, it has suggested that its program work with public-private partnerships to share the risk and profits, as well as explore offering rent-to-own opportunities to tenants of the homes.

Private equity firms are stepping up to acquire some single-family homes to manage as rentals. GTIS Partners has already earmarked $1 billion by 2016 to acquire single-family homes to manage as rentals. GI Partners also says it will invest $1 billion on rental housing.

“We’re starting to see this as a billion-dollar opportunity to buy rental housing,” Thomas Shapiro, the founder of the GTIS Partners fund, told Bloomberg News.

A few months ago, the White House solicited ideas from the public on how to work a foreclosure rental program to get a better grip on the government’s foreclosure inventory. The White house says it hopes that by turning some of the foreclosures that have dogged many markets into rentals, it will be able to ward off any further drops to overall home prices.

Demand For Rental Properties – Are There Too Many Rentals

Since January 2011, investors have been purchasing rental properties in the Phoenix market like crazy! The price of single family homes, condos, townhouses and patio homes have reached a level where an investor can purchase these properties, rent them out and receive a 10% or more return on their investment per year. Investors will continue purchasing properties until they are no longer able to receive this kind of high return on investment. There is still a great deal of properties for sale on the market and in certain areas prices have gone up. Below is a chart showing the number of landlord purchases within in the market:

In addition to real estate investors, many homeowner have decided to rent their homes instead of letting them go into foreclosure. Many people have let their homes go into foreclosure and these people still need a place to live. These people will more than likely want to stay in the same area where their children are going to school. There is a great deal of demand for rental properties but supply could exceed demand in 2012.

Could the rental market in Phoenix become over supplied with rentals? It is possible if investor continue to purchase properties at the same level they have in 2011. Currently, the commercial office market is experiencing decreasing rental rates due to the over supply of offices build in the market. The same thing could happen with the residential markets if investors don’t stop buying.

Once rental rates start dropping, then these investors will not receive the same kind of returns they originally hoped for in the Phoenix Market. Also, the people trying to hold on to their homes will be forced to lower their rents and eventually have to let the home go into foreclosure.

Hiring a competent property management to make sure you are receiving the highest amount of rental income for your property and making sure the tenant will take good care of your property before you give them your keys is very important. Give us a call TODAY to discover how we can help you SAVE money!!

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