Think Curb Appeal When Remodeling to Sell

With home prices up in some areas, the return on remodeling investments at resale can be good. Making little changes can have big impacts when it comes to remodeling your home to sell.

Some updates will return as much as they cost in hotter markets, but unless your home is in a rapidly inflating city, you may not get enough bang for your buck.

But the lesson isn’t to avoid remodeling your home. It’s to rethink your expectations. Do you want to enjoy your updates for a few years? Or do you want to make your home more immediately appealing to homebuyers?

If you’re remodeling for your own household, updating a home has a legitimate purpose that is unquantifiable. When you add square footage, update systems and fixtures, or rearrange traffic flow, you improve the functionality of your home. Refreshing wall colors, window coverings, and flooring adds to the beauty and enjoyment of your home. Many would consider that money better spent, and if you decide to sell in a few years, you’ll be ahead of the game in terms of updates that will appeal to homebuyers.

But if you’re remodeling strictly for the next buyer, there’s some risk. Will you choose the right elements to appeal to the next buyer? What if they don’t share your taste or appreciate the areas where you allocated your remodeling budget?

Start with what absolutely has to be done, whether you plan to stay in your home or not. You may be tempted to put off replacing the roof for an average of nearly $20,000, because Remodeling Magazine says it will only return approximately 72 percent of costs. But a new roof could make the difference in whether or not an FHA or VA buyer can buy your home and pass government inspection.

Otherwise, stick to smaller updates that can yield big impacts in terms of curb appeal, safety and building integrity. The top five cost-to-value projects that netted the most return are:

Replacing the front door with a 20-guage steel door – 102 percent.
Manufactured stone veneer — 92. 2 percent
Fiber-cement siding — 84.3 percent.
Garage door replacement — 82.5 percent
Wood window replacement — 78 percent.

As you can see, the most lucrative projects for resale were all about curb appeal. Seal the deal with a new welcome mat, new sconces to complement the new steel door, and potted plants for color. Wow your buyers on the outside and they’ll be more likely to choose your home over the competition.

Position Realty
Office: 480-213-5251

Self-Employed? What to Know About Buying a Home

Jammie pants and slippers. Dog curled up at your feet. Your favorite TV show playing in the background. Sound like a quality weekend day? Not so fast. For a growing number of Americans, it’s what a regular ‘ole workday looks like.

We’re not necessarily talking about a work-from-home scenario (although this is another growing workforce trend). And it goes beyond having flexibility to work from wherever you want (and wear whatever you want!). It’s self-employment, and it’s on the rise. FreshBooks’ second annual Self-Employment Report found that, “Some 27 million Americans will leave full-time jobs from now through 2020, bringing the total number of self-employed to 42 million,” said the New York Post. “The report defines self-employed professionals as those whose primary income is from independent client-based work.

But self-employment can also make it difficult to buy a home. “Lenders are primarily concerned that all applicants, including self-employed workers, have the ability to consistently repay the mortgage,” said U.S. News & World Report. “They’ll need to see that your income is high enough to pay for the mortgage and likely to continue, and that you have a good track record of repaying your debts.”

These tips can help you get yourself in a better position.

What do you need to show?

Showing two years of steady income is a basic requirement for just about any mortgage, but those who have an employer other than themselves may have more flexibility. Other factors, such as income, savings, down payment, and debt-to-income ratio can make that two-year rule less critical.

Those who are self-employed, however, will want to show as much income history as possible. “Mortgage lenders typically require self-employed individuals to show two years’ worth of self-employment income to prove that they have a steady revenue stream,” said The Motley Fool. In addition, “You’ll have to provide tax returns from the last two years, and you may also have to provide a list of your existing debts and assets. Business owners may have to provide profit and loss statements from the last couple of years.”

How to treat business expenses

Adding to the challenge is the fact that lenders are going to be looking at your income after deductions. “Self-employed workers also might write off a significant portion of their income as a business expense, minimizing the size of the mortgage they’re able to obtain,” said U.S. News. “Because mortgage underwriters typically look at income after expenses, your taxable income may be too small to qualify for the mortgage you want.”

Managing your debt-to-income ratio

“Most mortgage lenders will not give you a loan if that ratio is greater than 43%—that is, if more than 43% of your income is going toward paying off debt each month,” said The Motley Fool. That debt-to-income level is key in any mortgage approval scenario, but takes on added importance when everything is under a self-employment microscope.

“It’s important to make sure you keep your debts down to a manageable level. They should never exceed 43% of your income, and it’s best if you can keep your obligations under 36%,” they said.

How’s your credit score?

Credit scores are even more important if you’re trying to prove you’re worthy of being approved for a mortgage. “Even if you’ve been wildly successful after striking out on your own, having a lousy credit score will hinder your chances of getting a good rate on a mortgage,” said Bankrate. They recommend checking your credit before you start applying, which will give you an opportunity to pay down debts or spot errors on your report that could be dragging your score down.

Position Realty
Office: 480-213-5251

IRS gives rental owners clarity on 20% deduction

The IRS on gave owners of rental properties a better idea of how they can qualify for the 20 percent deduction on qualified business income from pass-through entities such as sole proprietorships, partnerships and S corporations.

This deduction is a big, complicated part of the sweeping Tax Cuts and Jobs Act that Congress passed in December 2017. It’s called the qualified business income deduction, or the 199A deduction after its section in the tax code.

The IRS published proposed regulations for this deduction in August, but the section on rental real estate left room for debate. It said that to qualify, a real estate activity must rise to the level of a “trade or business,” an ambiguous term that has no clear or consistent definition in the tax code. The IRS said it would look to its use under section 162(a) of the tax code, but that still left a lot of tax pros arguing about whether people who owned one or a few properties would qualify.

The IRS published final regulations on the overall deduction Friday, but clarified its position on rental real estate in a separate notice.

“The Treasury Department and the IRS are aware that whether a rental real estate enterprise is a trade or business is the subject of uncertainty for some taxpayers,” it said in the notice. “To help mitigate this uncertainty,” the notice contains a proposed revenue procedure that provides a “safe harbor” under which a rental real estate enterprise will be treated as a trade or business under Section 199A and thereby qualify for the 20 percent deduction starting with the 2018 tax year.

The notice outlines numerous requirements, but here’s the big one: Between 2018 and 2022, at least 250 hours of rental services must be performed each year for the business. Starting in 2023, at least 250 hours must be performed in three of the five past years.

Rental services under this definition include advertising the space for rent, negotiating and executing leases, screening tenants, collecting rent, maintenance and repairs, purchasing materials and supervising employees and independent contractors. “Rental services may be performed by owners or by employees, agents, and/or independent contractors,” the notice said.

It added that rental services do not include financial or investment management activities, such as arranging financing, procuring property, studying financial statements and hours spent traveling to and from the real estate.

Also, real estate used by the owner “as a residence for any part of the year” is not eligible for this safe harbor.

More information

To see the notice: https://www.irs.gov/pub/irs-drop/n-19-07.pdf

To see the final regulations on the deduction: https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf

It also added that real estate rented under a triple net lease is not eligible. A triple net lease is one that requires the tenant to pay taxes, fees, and insurance, and to be responsible for maintenance in addition to rent and utilities.

Four Different Ways To Flip A Property

Flipping real estate is a buzz term that has come screaming into mainstream media in the last few years. Its growing popularity is evident by the magazine articles, TV shows, and Average Joe teams trying to break into the business. Is it easy? What is it? How does it work?

Flipping real estate simply means purchasing or acquiring a property then reselling it quickly while attempting to turn a profit on the sale. Flipping can be handled several different ways and when done properly, each of them can be very profitable for a real estate investor.

Buy it, Fix it, Flip it
Likely the most common form is the tried and true “fix and flip”. This involves a real estate investor picking up a property at a discounted rate, doing the necessary work to get the property up to acceptable standards, and then selling the home on the market – generally to someone who will live in the property. This type of fix and flip can get you anywhere from $15k to $50k on a closure depending on the market and of course how good the bargain was on the home when you bought it. You can set yourself up for failure if you underestimate the cost for remodeling and repairs or do not consider the cost of a real estate agent when listing the property for sale.

The Wholesale Flip
The fix and flip is a very popular method of doing business, and that means there are a large number of real estate investors looking for remodel properties. If you can get a property at a relatively good bargain, you can turn around and immediately sell the home to a real estate investor who is willing to put all the work in and take the project the rest of the way. You can make several thousand in this manner on each sale. While the number is small, you can quickly see how it would add up after quickly reselling multiple houses in this manner.

Buy it & Flip it “As Is”
Fix up work is not for everyone, and some real estate investors want to quickly move a house without sinking money into a professional contractor. If a house is in sellable condition and requires little immediate maintenance work then you can consider just selling it as is. Even if a home is in poor condition, you can make a quick sale if the real estate market is in good shape and the property is in a transitioning neighborhood.

Buy It, Refinance & Lease
Instead of tossing the property for all cash right away, you can try and sell for terms. Once the remodel and refinishing is completed, refinance the property. Provided you were able to punch the math up right, you should not have any money tied up in the deal (or very little at least). You can turn around and sell the real estate investment on a lease, with option to buy. Any rent payment that you make from your renter (buyer, hopefully) can be used to handle the mortgage payments. This way, when the tenant goes for the option to purchase you’ll end up reaping a larger profit – mainly because you don’t have to pay a broker fee.

There Is More Than One Way to Flip a House
I’ve identified the ways to flip a property for virtually every real estate investing scenario. These methods all work extremely well, so it is only a matter of determining what works best for your real estate investment strategy and your overall goal.

***Gain access to our deeply discounted list of flip properties: CLICK HERE

Position Realty
Office: 480-213-5251

Four Reasons Why Your Home Isn’t Selling

Ever wonder why some homes sell and others don’t? There is no magical fairy dust that can turn a loser of a house into a palace. And, in fact, if there were such a thing as magical fairy dust, sprinkling it in your home would make a big mess, and that’s a big no-no if you want to sell.

Getting your home sold is not all that hard if you stick to the basics. But if you’ve got some of the problems below, you may just be sitting on that unsellable home for a while.

Problem No. 1: Because your home is ugly
Yes, your home is ugly. If your Realtor didn’t tell you that, let us go ahead and say what he should have. And just so we’re clear, “ugly” can also stand in for:

• Cluttered
• Outdated
• Dirty
• Messy
• Tacky

Very few people – investors looking for a deal aside – can walk into an untidy mess of a house and see the potential. If you’re not willing to clean it up, clean it out, and maybe make a few overdue updates, you may not get it sold. That goes double for over-personalization that is so in your face buyers can’t see past it.

“Everybody’s taste is different, so less is more when it comes to decor at sale time. Loud patterns and bold colors can be big distractions,” said MSN.

Solution:

You need to de-ugly-fy that house but quick. Pretty places around you are selling. If you have similar plans, similar features, similar lots and they’re selling while you’re sitting, it’s not hard to figure out why.

Take a good long look. If you don’t see anything wrong, bring in a few friends for their opinions. But only the ones who might actually tell you the truth.

Problem No. 2. Because your price is unrealistic
This is the No. 1 most common problem with homes that are not selling, says MSN. “If you’re guilty of having “a ‘what the heck are they thinking?’ price tag,” they say, you can expect to sit on the market for a while.

“Price is usually the overriding factor in any home that doesn’t sell. Whatever its problem, it can usually be rectified by adjusting the price.”

Adds U.S. News: “Without question, the No. 1 reason a home doesn’t sell is price. Sellers have an emotional attachment to their homes and tend not to be objective about the true value.”

Solution:

If it is an emotional attachment that’s getting in the way, take the emotion out of the equation and think of it simply as a business transaction. Many times the issue is a seller owes more than the home is worth or simply wants a higher price. But it’s the market that sets the price. And if it’s telling you your price is too high, it’s probably best to listen.

When all else fails, listen to your agent, who should have provided you with comparables that spell out recent sales and market trends. (Also See: It’s The Price That Sells a Home)

Problem No. 3: Because it’s a ‘project’ house
Maybe you’ve made the decision to sell and you just don’t want to put any money into a house that’s no longer going to be yours. But a house that looks like it’s going to take too much work – or too much money – to fix up is a turnoff.

“If a home looks as if it’s going to cost half as much to repair or renovate as it does to purchase, it’s going to take a long time to move,” said MSN. “Today’s buyer is a lot more reluctant to take on a ‘project,’ especially if there are houses around it that don’t need as much work. Ditto for homes that have strong pet or mold smells.”

The Solution:

“Fix it, or prepare to lop a large amount off the price,” said MSN.

Problem No. 4: Because you’re not cooperating
This is also the No. 1 reason houses end up overpriced. Uncooperative sellers also tend to ignore other advice from their agent, about keeping the home tidy (see No. 1), being available when needed, being open to price reductions, being able to make the house available for open houses, and agreeing to terms when there is a contract discussion.

“No offense, but maybe you aren’t showing your house off enough? If you aren’t using a real estate agent and work away from your home, your time might be limited, of course. But you should try to make your house as accessible and available as possible for a Realtor and a potential homebuyer to easily drop by and take a tour (which means having the place clean, too),” said U.S. News. “Having your home be shown only by appointment or only at designated times will severely cut down on the number of showings you get, and if the house isn’t getting shown, it isn’t going to get sold.”

The Solution:

Get in or get out. Or get in to get out. You have to commit yourself to a process that, quite frankly, can be inconvenient and a hassle in order to get your home sold, especially in more competitive markets. Being agreeable and available, however painful, for this finite amount of time, will pay off in the end.

Position Realty
Office: 480-213-5251

5 Reasons to Buy a Fixer-Upper Instead of a Perfect Place

“Location, location, location” is the mantra when it comes to where to buy a home. But when it comes to what to buy, it gets a little more complicated. There is definitely a contingent who would insist that you would buy the best home you can afford. But while there is something to be said for buying a move-in ready home, a place that needs a little love can be downright irresistible.

You don’t have to go all Chip and Joanna here, but buying a fixer-upper makes sense for so many reasons

.It costs less
“Fixer-uppers list for an average of 8% below market value,” said LearnVest. If you’re on a budget or are being priced out in your market, this is a way to get a literal foot in the door. How much depends greatly on the location. “Fixer-uppers in Phoenix have the smallest cash discount, saving buyers just $1,000 off list price. But you can save a lot of money in expensive markets like San Francisco, where fixer-uppers are discounted an average of 10%—giving homebuyers $54,000 in upfront savings for renovations on the median home.”

You may be able to finance your renovation
One of the major drawbacks of buying a home that needs to be fixed up is having to come up with the cash—especially after you’ve just put so much money into your down payment and closing costs. There are a few different types of loans that package the mortgage with funds for renovations, and they often come as a surprise to buyers who have only focused on FHA and 30-year conventional loans.

“Whether you need a new roof or your kitchen is outdated, there is a mortgage that’s right for your fixer-upper,” said Bankrate. Fannie Mae’s HomeStyle loan and FHA’s 203(k) loan both bundle a mortgage and funds for renovations. They each require a minimum credit score of 620. You’ll need at least 5% down payment for HomeStyle and just 3.5% for the 203(k).

It gives you the opportunity to build value
With an already-updated home, “If a seller has redecorated or improved the whole place, that seller is reaping the benefit,” said Forbes. “If the home’s value has been raised, the buyer is paying for it. Also, consider this reality: A seller who re-does a whole house in order to sell is not likely putting in the highest-quality materials. They’re cutting costs to maximize profit. But if you buy a fixer-upper, you might be able to secure an undervalued property, improve it and get the benefit of the extra equity. It’s a core real estate concept. If you can find the right property, this could mean thousands of dollars almost immediately.”

You can do renovations over time
There may be a few things you can’t live with in a fixer-upper, like the grungy carpet and cruddy plumbing fixtures, but no one (other than design shows) says your place has to be perfect the day you move in. Taking your time to make updates as you’re able gives you the opportunity to save money and recover from all the expenses of buying the home and moving in.

It allows you to put your stamp on it
When you buy a home that was lived in and fixed up by someone else, it reflects their taste and style—or at least the taste and style they think will help the house sell faster. If you buy a house with the intention of fixing it up, you get to update and upgrade it to your standards, and you have the money to do so.

“One of the primary reasons people buy fixer-upper properties is for the opportunity to make the space their own,” said Green Residential. “Instead of purchasing a home in which someone else designed the layout, chose the materials, and dictated where different elements were placed, you can buy a basic structure and then take charge. It’s like building your own home without having to go through the lengthy process of drawing plans and constructing it from the ground up.”

Position Realty
Office: 480-213-5251

4 Ways to Spot a Problem Tenant

When renting a property to someone, unfortunately, you have to be a little judgmental. As a part of your job, you have to be attentive to people’s characteristics and background/history in order to determine if they are the best candidate to rent your property to. Most of the time, a majority of the people you may come across to rent to are decent and good candidates that will end up not being of any trouble at all. While this may be the case, however, this doesn’t mean that you won’t encounter a prospective tenant that could be a problem at some point in your career.

Dealing with someone who shows interest in your property but also displays signs that they could prove to be problematic in the future is not easy by any means. Despite this, if you pay close enough attention, you’ll be able to spot the signs early enough which will ultimately make the process easier. If you are a landlord/property manager nervous about detecting the signs of potential problem tenant, check out my five warning signs below!

Before we delve into how to spot the signs, first, it’s important to recognize what the laws are regarding you, the tenant and your jobs. Lindsey Schober of Zillow makes an important note, stating, “Each state and municipality has unique laws and ordinances. Make sure you have a clear understanding of your landlord rights and responsibilities, tenant rights, and the basic workings of specific notices and eviction procedures. Work with an attorney to set up your policies and procedures.” Once you have a decent understanding of your rights as a landlord as well as the rights of any of your tenants, you will not only feel more confident about the selection process, but you will also feel better about handling a tenant in the case they pose a significant problem.

Now that you have an understanding of your rights and responsibilities, you can easily spot these five problem signs of a potential tenant:

1. Payment History/Credit: One of the determining factors when renting a property to someone is having a decent or good credit score. Though it may be unfair at times, many property managers and landlords use credit scores as a means of determining whether or not a tenant can be reliable in their payments and responsible while living in your property. A warning sign of a bad tenant can be a hesitancy to conduct a credit score or a credit score that shows a history of late payments. According to the staff at Upad, if you think you may have a problem, “Speak to the tenant and ask them if there’s a problem and remind them that the rent should always be paid by the due date. However, if you get a couple of late payments in a row, you should ask them directly if they’re having difficulty with the rent and discuss how you can sort this out.”

2. Friend/Family Member: You may be asking yourself, “what could be so wrong about having a friend or family member as a tenant?” Having a friend or family member as a tenant isn’t an instant horror, however, it can be dangerous. Have you ever heard of the phrase, “don’t mix family and business”? Well, there is a reason why that phrase exists. Unfortunately, in some cases when this happens, it becomes hard to uphold your status as the landlord and makes it harder for you to keep your relationship separate. In the long run, try to avoid this so you ultimately don’t ruin a relationship!

3. Criminal History: Background checks are wonderful things; they tell you anything you could want to know about a possible tenant to help narrow down your selection process. If a prospective tenant has a criminal history that makes you uncomfortable, in a majority of states, you can deny them based on their past criminal offenses. However, in states like California, you cannot discriminate against those who have been convicted of nonviolent crimes, according to Erin Eberlin of the Balance.

4. False Contacts: In almost all cases, most landlords/property managers ask for at least one or a few references to help in evaluating a tenant. Most people do not have a problem with this, however, those who can potentially be problem tenants may provide false contacts like friends or family members to pose as references to make themselves look better. To combat this, Chris of LandlordTalking notes, “One of the best ways to avoid this scam is to ask for multiple landlord references, including the current landlord. Come up with some preliminary questions to ask the contact during the interview. What will seem like small talk may actually tip you off to a fraudulent reference.”

While the process of evaluating a tenant may be difficult and exhausting, to notice the signs of a potentially bad tenant will only prove to help you in the long run. As always, good luck!

Position Realty
Office: 480-213-5251

Five Steps To Avoid Illegally Evicting Your Tenants

One of the biggest risks related to owning investment properties is dealing with an eviction. If a tenant doesn’t pay rent, the simple answer is to evict him.

To a seasoned investor, however, it’s never that simple. Actually evicting a tenant is an extremely complicated and expensive process, and one that should always be avoided.

An eviction is an official legal proceeding, complete with a formal process that needs to be followed exactly in order to have your tenant move out and relinquish the property back to you. Failure to follow your state’s laws on a legal eviction can result in delaying the eviction date, losing a court hearing or owing the tenant money.

Rental property owners will benefit from understanding the legal eviction process in order to protect themselves from breaking the law should they ever go through the process. I also hope to instill the idea that addressing an issue with a bad tenant takes a lot more energy than simply evicting him. I want all investors to understand the importance of finding good tenants and sticking to the lease terms, so you can minimize the risk of dealing with an eviction.

Let’s first take a look at the difference between an illegal and a legal eviction.

An illegal eviction involves:

• Changing the locks.

• Putting your renter’s belongings on the curb or in the garbage.

• Threatening the tenant with an eviction or increased fines.

• Turning off utilities or other services.

A legal eviction includes:

• A court order.

• Official notices.

• Appropriate communication.

• Adherence to state laws.

• Patience.

What Is An Eviction?

An eviction is a lawsuit, sometimes known as an unlawful detainer lawsuit, that a property owner files against a tenant in order to regain possession of a property. Once an eviction lawsuit is filed with the court and a judge rules in favor of the eviction, the property owner can work with law enforcement to remove the tenant by an agreed-upon date per the eviction ruling.

In order for a property owner to win an eviction ruling, the property owner must prove that the tenant violated a lease term, that he gave proper notices to the tenant to fix the violation and that the proper eviction process was followed.

Reasons To Evict A Tenant

A tenant can lawfully be evicted for:

• Failure to pay rent.

• A lease violation (like illegal use, subleasing, unauthorized pet, etc.).

• Damaging the property.

• Threatening the safety of other tenants, neighbors, the property or community.

• Breaking other local housing laws, as outlined in the lease agreement.

A property owner cannot evict a tenant because of personality clashes, minor disagreements or annoying behaviors. If you establish a reasonable need to evict a tenant, you should act immediately and follow your state’s guidelines for a legal eviction.

The Eviction Process

Here is a general overview of the standard eviction process:

1. Establish a legal need to evict a tenant:

Tenant violates a lease term, like failing to pay rent.

2. Notify the tenant:

Landlord provides an official notice to Cure or Quit to the tenant. A Cure Or Quit Notice notifies the tenant of the violation and tells the tenant to either fix the violation within a certain amount of time (cure) or move (quit). This notice should be taped to the door and mailed via certified, first-class mail. You will need to prove in court that you did your best to notify the tenant of the potential eviction proceedings.

In some cases, a property owner or manager can file an eviction with the courts without giving the tenant time to remedy the problem. Such is the case if the property or other people are in immediate danger.

3. File with the court:

If the tenant does not fix the violation outlined in the notice and does not voluntarily move out, the landlord can proceed with filing an eviction lawsuit.

After filing an unlawful detainer lawsuit with the local courthouse, you will receive a date for your eviction hearing and the court will notify the tenant of the summons. Depending on which state you live in and how busy your local courthouse is, this hearing can be anywhere from one week to a few months from your filing date. If it takes a few months for your eviction date, you have to let your tenant continue to live at the property until a judge rules otherwise. Often, a tenant will not pay rent during this time. If this is the case, let’s hope you have a good lost rent policy with your landlord insurance provider.

4. Court hearing:

At the court hearing, you will need to provide proof of the reason for eviction, and that you gave the tenant an official notice to cure or quit. It is also a good idea to bring copies of the lease, rent payment records and records of all communication you have had with the tenant.

If the judge rules in your favor, you will be able to move forward with an eviction by contacting your local law enforcement to escort the tenant out on an agreed-upon date, if needed.

5. Regaining possession of the property:

On the date determined by your eviction hearing, you will officially regain possession of the property. You are allowed to change the locks and proceed with managing any abandoned tenant property per your state’s laws at this time.

As you can see, moving forward with a legal eviction involves a lot of time spent dealing with your local courts. You have to be patient with the court’s timelines and rulings. You also must keep all your communication with your tenant professional during this time, which can be challenging if you are frustrated with your tenant’s behavior.

Evictions are risky because of the unknown timeline from the filing date to the date a tenant will actually be required to leave the property per the court order. The time and money associated with moving forward with an eviction demonstrate the need for approving only the most qualified tenants for your property, minimizing the risk of eviction.

Position Realty
Office: 480-213-5251

Is It Time To Hire A Property Manager For Your Rental

It’s a question that arises sooner or later for most landlords: “Should I manage my own rentals, or outsource the work?”

Keeping on top of rental maintenance is vitally important for any landlord. But for most, it’s not exactly something they enjoy. After all, being on call 24/7 for any repairs and maintenance issues that arise can get tiring after a while, even for the most resilient landlord. Then there’s the issue of time. While in the beginning, doing cleaning, painting and small plumbing jobs might be fine, once you’ve got a few rentals under your belt you’ll quickly find that management can escalate into a full-time job. No wonder 62% of landlords in one recent survey claimed that maintenance was their biggest pain point.

If you find yourself struggling to fit it all in, hiring a property manager is something that may have crossed your mind. But is outsourcing your property management always the best solution? When does it make sense to go it alone, and when should you think about bringing someone else on board?

If you’re on the fence, here are a few questions that can help you determine whether a property manager is the best option for you.

Do I have time to manage my property?

If you’ve reached a stage where you dread answering the phone because you don’t want to deal with yet another tenant maintenance request, it may be time to outsource.

In my line of work, I see it all the time: landlords running themselves ragged, trying to do it all. They have a few properties, but instead of creating passive income streams for themselves, they’ve simply acquired another job — a full-time one at that.

Don’t let your dream of owning rental properties become stifled because you can’t afford to put any more hours in at your properties. Instead, consider outsourcing to a reputable rental management professional who will be able to oversee the properties in your stead.

Do I want to expand my rental property portfolio?

If your goal is to own five, 10 or more rental properties, outsourcing is the fastest way to get there. This is especially true if you’re finding that maintenance and repairs are starting to keep you from high-level tasks like finding and assessing new investment opportunities and properly overseeing your property portfolio.

Will I invest in markets outside of my local area?

While many landlords start out with properties in their own hometown, if you’d like to grow your portfolio, you may wish to take advantage of up-and-coming markets or opportunities that are better than what’s available in your own backyard. However, being a long-distance landlord can bring its own set of unique challenges, even for experienced landlords.

If you’re thinking of investing in an out-of-town property, hiring a professional property manager who will be your eyes and ears on the ground can free you up from the stress that’s often associated with long-distance landlording.

Will a property manager help me be more profitable?

Finally, is hiring a property manager a financially smart decision? If you have one or two local properties, it might make more sense to oversee them yourself. But often, professional landlords find that hiring a property manager to oversee their rentals enables them to invest in more properties than they’d be able to otherwise, helping to maximize returns.

Finding A Reputable Property Manager

Much of your rental property’s success is contingent on how well it’s managed. For landlords who are thinking of outsourcing management or maintenance, finding a reputable and qualified professional is crucial.

Be sure to do your research upfront. Read online reviews. Ask for referrals. And, much like conducting an interview, ask your prospective property managers qualifying questions to ensure you end up with a great match. Here are a few questions you should ask:

1. How much experience do you have?

First, you’ll want to ensure that you find a professional who’s experienced and knowledgeable — one with a proven track record of success. Consider asking how many rental units they are currently responsible for. A low number could indicate that they’re new to the game, or perhaps struggling.

2. How do you structure your fees?

Concerns about cost is one of the main factors that keeps people from outsourcing. And naturally, this should be one of the first questions that you ask. Generally, monthly fees are either fixed or a percentage of the rental yield, often 8-12% of the monthly revenue. Optional packages and additional services could impact the cost, though, so make sure you’re aware of their fees before you commit.

3. Are there any fees when the property is vacant?

If you find a company that charges you while the property sits vacant, be careful. Property managers should have an incentive to keep your rental occupied, and if they’re being paid regardless, then that incentive goes away.

4. How do you screen tenants?

Any property manager worth their salt will not only screen tenants thoroughly, but also have airtight policies and procedures in place to ensure that they do so in a way that’s in compliance with the Fair Housing Act.

5. What’s your average vacancy rate?

Reducing vacancy times is key to maximizing your returns. A reputable property manager should know their average vacancy rates, and will be more than happy to inform you of them. Anything within the two- to three-week window is outstanding.

At the end of the day, the decision to outsource comes down to your personal preferences and investment goals. While first-time landlords can certainly benefit from the cost savings of doing their own work, for experienced landlords, offloading the day-to-day tasks to a professional is something that often makes sense. Many landlords find that it’s a pivotal turning point in their investment career — the decision that’s responsible for allowing them to reclaim their time and focus on growing their investments.

Position Realty
Office: 480-213-5251

Phoenix Real Estate Market Report ~ October 2018

The number of new listing in the month October 2018 is 9,873 listings (up 650 from last month) which is slightly lower than last year at 9,974 listing in October 2017. The overall number of active listings is 19,230 which is 1,204 less listings than in October 2017. The whole year of 2018 there have been less listing on the market than in 2017. As for the number of sold transactions, we had fewer transactions in October 2018 of 7,358 transactions (down 66 from last year) but for most of the year of 2018 we’ve had more transaction than in 2017. This lower supply of listing and higher amount of transaction is causing real estate prices to continue to appreciate.

The Phoenix Housing Market ended 2017 with an overall annual appreciation rate of approximately +9.0%. As of January 2018 the Phoenix market has only appreciated 3.6% where this lack luster appreciated rate was hindered by a sharp drop in price from $333,392 in June 2018 to $320,710 in July 2018. Since July 2018 there has been a second uptick in the average sold price from $320,710 in July to $326,390 in October which is an increase of only +1.8%. We experienced a similar uptick in price in 2017 but this uptick did not begin until October 2017 to finish off the year at a +9.0% appreciation rate. Since November 2017 (12 months ago), the average days on market has decreased approximately -11.4% (down from last month) and the number of sold transaction has increased approximately +1.9% (up from last month).

Since January 2018 we have seen four sharp trends: The average days on market have decreased -20.0%, the number of sold transactions has increased +18.4%, months of inventory have decreased -33.1% and number of new listing has decreased -6.7%. These are all strong trends but the sold average price has not appreciated as much as last year which could be caused by the rise in interest rates. Historically, 19,230 homes for sale represent the lowest number of homes this market has seen for over a decade. This low number of homes for sale indicates we are in a seller’s market (low supply and increased demand). Property owners are not putting their homes on the market because they are holding off to accumulate additional equity from the market. Hopefully, this roller coaster will come to a slow end instead of everyone wanting to put their homes on the market at the same time like in 2008.

Real estate prices will continue to increase and interest rates are planned to increase in 2018 so if you are thinking about buying a home this year will be the time to buy before you get priced out of the market. Give us a call to discuss your best buying or selling strategy, TODAY!!