Investor Blog Articles

Investing in Long Distance Rental Property Part 2

8 Tips Every Out-of-State Investor Should Know:

Since it’s not always possible to invest in positive cash flowing investment property in many parts of the county, real estate investors often seek out investment property in markets that do provide positive cash flow. For some investors this means they must invest in a property that is not local to their primary residence. Investing in long-distance rental property can be very rewarding if done correctly and can also be a disaster is done incorrectly. In part 1 of this series, we discusses tips 1-4. In this article we’ll discuss tips 5-8 on investing in long-distance rental property.

5). Do Not Buy Un-Rehabbed Property:
It doesn’t matter how experienced you may be at rehabbing, doing it long distance is a nightmare. It’s hard enough dealing with contractors face-to-face, doing it long-distance is even more challenging. Every market has turnkey property providers. These are investors who buy foreclosures, renovate them, and sell them wholesale to investors. There are many so called, “turnkey” investors so make sure they are the real deal. Ask to see testimonials, and check out their sold properties. Make sure they’ve got a good history and experience.

When buying an already renovated property, make sure it is indeed fully renovated. Ask for pictures and videos but always get a 3rd party inspection to verify everything is in top working order. Some investors will offer a wholesale property at a rock bottom price and claim it only needs $10,000 in work. Avoid these properties no matter how attractive the price. Many investors bite on what I call the “cheap factor” and will buy because they can’t pass up on the cheap price. Some investors will offer to do the rehab for you once you buy. I recommend avoiding these types of deals as well. Why buy a property then have 4-6 weeks or longer to get it rent ready? Why not buy an already renovated and preferably already rented property.

6). Work with the Best:
Build a team of the best property providers, insurance agents, lenders, appraisers, property managers, title companies, maintenance workers, etc. Your team will help you be as successful as possible. Always ask who is the best at what you need in that market. Ask to join their newsletters and social media sites. They will most likely provide valuable information about market trends and information that will be helpful to learn. Fortunately, if you are working with a turnkey property provider, they will gladly share with you their contacts. We refer our investors to our team because we know their commitment to excellence.

7). Choose the Right Property Manager (PM):
The best relationship is one where both investor and PM have a clear understanding of each other’s expectations. Each property manager has a different style and a different way of doing things. Find out what their policies are as far as collecting, maintenance, vacancies, evictions, etc. and make sure you agree with those policies. Be clear on what decisions he/she can make on hiss/her own and which ones you would like to be involved in making. Once you have an understanding on how the property will be managed, step back and let the PM do their job. I’ve seen investors reluctant to give the PM enough control to do their job effectively. Choose a property manager that has experience with non-local investors. Explain the type of communication you want to have. Remember, the PM is your eyes and ears since you are not physically there. Again, the right turnkey property provider will already be working with excellent property managers.

8). Don’t Sweat It!:
Don’t lose sleep over your property. Some properties perform better than others. That’s just the nature of rental property no matter what. I’ve got properties that have had the same tenant for years and who always pay on time. I have other properties that don’t do as well. Relax, that’s part of owning rental property! If a property is not performing, take action, correct the situation and move on. Successfully investing in long distance rental property requires a certain degree of patience and trust.

In conclusion, by following these 8 tips, you can confidently invest in long distance rental property. Remember, rental property should be passive income. Set it up correctly and your property will provide income will very little to no effort on your part.

Happy Investing!

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about how to invest in long distance rental property, visit our site and download our FREE tools “Rental Income and Expense Tracking worksheet” and “Cash Flow Analyzer.”

Click Here For More Details

Investing in Long Distance Rental Property Part 1

8 Tips Every Out-of-State Investor Should Know:

Since it’s not always possible to invest in positive cash flowing investment property in many parts of the county, real estate investors often seek out investment property in markets that do provide positive cash flow. For some investors this means they must invest in a property that is not local to their primary residence. Investing in long-distance rental property can be very rewarding if done correctly and can also be a disaster is done incorrectly. I’ll share 8 tips on investing in long-distance rental property.

1). Choose the Right Market:
Whether local or long-distance, investing in rental property is a long-term strategy, especially in today’s market. The idea is to buy low, hold long-term, realize appreciation, and sell high or hold indefinitely, all the while collecting positive cash flow. Nothing is more crucial than investing in a market that has long-term potential despite the current market condition. For example, my properties are in Pontiac, MI. While MI is currently a depressed market, Pontiac is centrally located in Oakland County, one of the wealthiest counties in The U.S. The state is investing in the film industry, bio technology and other things that I believe will have a positive economic impact on the state in the years to come.

2). Invest in Cash Flow:
When considering which market is ideal, always invest in cash flow today and appreciation tomorrow. Nothing is more detrimental than a negative cash flowing property. It is possible in several markets to acquire fully renovated investment properties for under $50,000, realizing a $200/mo positive cash flow even after financing!

3). Choose the Right Neighborhood:
Once you have a market narrowed down, one of the hardest things is learning the neighborhoods. Since you are not local to the area, you do not know which parts of town may be better than others. Since my niche is lower income rental housing, I make it my business to rate the neighborhoods on a scale of 1 to 10 as follows:

-war zone (1-2), poor (3-4), fair (5-6), good(7-8), excellent (9-10)

I personally find that I do best in the “Fair 5-6″ to “Good 7-8″ areas. Definitely stay out of the war zone and poor areas and I find the “excellent 9-10″ areas don’t provide the cash flow I’m looking for. Sometimes, it’s worth giving up a little cash flow to be in a better-rated neighborhood. For example, consider the following 2 properties:

property 1: sales price $40k, rent $750, cash flow $285 (after financing), neighborhood rate 5

property 2: sales price $50k, rent $825, cash flow $185 (after financing), neighborhood rate 7

Which would you choose? Property 1 requires less capital and has greater cash flow but property 2 will have greater appreciation and probably less turn over because it may (not always) attract a higher quality tenant.

At any rate, when investing in long distance rental property, make it your business to learn the neighborhoods. The best way to do this is to get a map of the area and start asking which areas are better than others. Highlight the map and soon you will know what areas you want to have property in. Build relationships with people you trust that know the local market.

4). Choose the Right Property:
Invest in desirable property. My rule of thumb is to always ask, “would this property be easily rented?” First of all, I prefer single-family homes over all other types of investment property. I believe single-family homes will always be in high demand because people prefer a yard and they are easy to acquire and sell. I stay away from 2 bdrm homes. They rent for less, are harder to rent and have less long-term appreciation. I stay away from anything under 900 square feet, and I avoid odd floor plans like small kitchens, walk-through bedrooms, etc. Also, pay attention to the surroundings. For example, avoid busy streets, or a property next to a noisy commercial property.

To learn about tips 5-8, please read, Investing in Long-Distance Rental Property Part 2

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about how to invest in long distance rental property, visit our site and download our FREE tools “Rental Income and Expense Tracking worksheet” and “Cash Flow Analyzer.”

Click Here For More Details

Real Estate Investing in Turn-Key Investment Properties Part 3

In Real Estate Investing in Turn-Key Investment Properties Part 1 and Part 2 we discussed the steps involved to make a property turn-key and 5 benefits to acquiring rental property from a turn-key property provider.

In this article we will discuss 7 requirements when selecting a turn-key property provider.

1). Buy directly from the seller:
It is common in real estate investing for investors to wholesale other people’s properties. A red flag is when the seller is in California selling a property in Ohio. The problem with this is that the wholesaler doesn’t really know about the property and the property can easily become misrepresented. Always ask if the seller actually owns the property. Inform the seller that you would like to discuss the property with the person or company who originally acquired it and performed the renovations. Even if purchasing from a broker, sign an agency disclosure agreement and still insist on speaking with the owner. When speaking with the owner, interview him/her on the renovations that took place.

2). Pay for a property inspection:
It is always wise to pay for a 3rd party inspection to confirm the property is fully renovated. Don’t be alarmed if the inspection has a few minor items, as all reports do. An inspector must justify his cost. The main thing is that the seller promptly takes care of any/all issues.

3). Make sure the renovation is 100% complete:
Never buy a property at a wholesale price where the rehab isn’t already 100% complete. Some property providers sell the property and then do the repairs. For example, “For sale for $39,900 and only needs $15k in rehab.” The question is does it really needs $15k in rehab. According to who? Performing what repairs? These type of transactions may sound appealing but leave the buyer very exposed to either an under-renovated property or “extras,” exceeding the original estimate. Furthermore, the investor would have to buy the property and then wait for the renovations to be completed, delaying time to begin renting and realizing a return on investment.

4). Know the financials:
The seller should provide a financial analysis showing all the expenses, cash flow, cash on cash return, cap rate and other key financial ratios. One item often misrepresented is the property taxes. Be sure the stated taxes are based on non-homestead rates even if the property currently is assessed with homestead taxes. Sooner or later, the adjustment will come and non-homestead taxes are much higher.

5). Property Manager/Rents:
Be sure to interview the property manager and make sure you are clear on your goals, objectives, and expectations. For example, discuss collection policy and what type of qualifications you would like to see in a tenant.

6). Work with a company that has a proven track record:
When it comes to real estate investing, there are many novice or beginning investors. Be sure to use a company that is established and has a strong track record. Look at previously sold properties and testimonials and ask for referrals. A solid company will work with the best property managers, insurance agents, lenders, appraisers, etc. Find out how long they have been in business. Be sure to do due diligence and learn about the area, rents, property, etc. Select a company that has excellent customer service, superb properties and plans on being around for a long time. Be sure to obtain a full warranty deed and clear title. Above all else, work with only the best in the business!

Be sure to read, “Real Estate Investing in Turn-Key Investment Properties Part 1 and Part 2.”

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about investing in turn-key properties, visit our site and download our FREE worksheets “Rental Income and Expense Tracking worksheet” and “Financial Analysis Worksheet.”

Click Here For More Details

Real Estate Investing in Turn-Key Investment Properties Part 2

In Real Estate Investing in Turn-Key Investment Properties Part 1 we discussed the steps involved to make a property turn-key and how utilizing a turn-key property provider may be the right solution for an investor to acquire rental property.

In this article, we will discuss 5 benefits to acquiring rental property from a turn-key property provider

1). Buying Power:
Turn-key property providers buy distressed properties (usually foreclosures) with cash and they have a strong relationship with the REO realtors/banks in their area giving them a head start on good deals as well as better pricing. The really good deals in any market are often pending the very morning they come available for sale.

2). Time Savings:
As it goes, “time is money.” With real estate investing, this has never been more true. Turnkey property providers have teams and systems and the means to locate, purchase, rehab and rent a property quicker than most. There are many overlooked time consuming tasks such as turning on utilities, recording transfer affidavits, ordering final water bills, attending closings and notarizing paperwork, pulling permits, etc. All of these items are taken care of by the property provider.

3). Market Knowledge:
Turn-key property providers know what cities, streets, and even blocks are good and not good areas to invest in as well as what rental rates are. They also know the types of properties that are most desirable. For example, a 2 bedroom will not rent as well as a 3 bedroom. A small kitchen will detract a tenant. A house across from commercial or on a busy street will not be as attractive.

4). Rehabbing Expertise:
Perhaps one of the greatest benefits to using a property provider is their ability to renovate. Managing contractors is no easy task. Successfully rehabbing a property requires constant, almost daily attention. Miscalculating the cost of a rehab is common. A specialists is very knowledgeable about what it will cost to fully renovate a property. They know the right labor and material costs for each item of the rehab. They have a team of contractors at their disposal. They know how to manage schedules so the rehab is completed quickly. They know how to pay draws accordingly and how to hold back money until the final punch lists are completed, which is essential to keeping contractors motivated to finish the work 100%.

5). Financing:
With real estate investing in investment property, financing is often a major component. Unless you are a cash buyer, financing is required. Most lenders are unwilling to finance the purchase of a distressed property as well as the funds to perform the required repairs. However, lenders will borrow on an already fully renovated property. Today’s programs typically require 20% down payment plus closing costs, allowing an investor to acquire property without having all the cash to purchase and renovate.

Be sure to read, “Real Estate Investing in Turn-Key Investment Properties Part 1 and Part 3

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about how to invest in turn-key properties, visit our site and download our FREE worksheets “Rental Income and Expense Tracking worksheet” and “Financial Analysis Worksheet.”

Click Here For More Details

Real Estate Investing in Turn-Key Investment Properties Part 1

The phrase “turn-key investment properties” is becoming more popular in the real estate investing arena. It implies that all the work is done from A-Z and an investor literally steps into a cash flowing investment property. To qualify as “turnkey” the property should be fully renovated with a property management professional in place and preferably already rented.

For many investors acquiring such a property is the key to success, especially when considering all the steps involved for a property to become turn-key. Here is a brief list of steps:

• learn a neighborhood or market to invest in
• determine rent comps
• view foreclosures for sale within that market
• determine repairs needed
• make offers
• attend closings (at time of purchase)
• obtain final water bills
• turn on utilities
  file property transfer affidavits with the county
• pull permits
• obtain repair quotes
• hire contractors
• schedule contractors
• determine extras/change orders
• inspect work
• ensure work is meeting high standards
• pay contractor draws
• hire a property manager
• register the property as a rental with the local municipality
• obtain a tenant
• fronting the cash to purchase and renovate
• accounting (keeping track of all the draws, expenses, etc)

Not only must the investor be experienced and knowledgeable at rehabbing, he/she must be willing to commit a tremendous amount of time (even when outsourcing responsibilities).

Therefore, when it comes to real estate investing in investment property, some investors turn to a specialists or a “turn-key property provider,” who provides already renovated and rented properties at wholesale prices. The right specialist has a system and team in place to find and buy the right properties, in the right areas, at the right prices, and then to successfully renovate and rent the properties offering them for sale at wholesale prices.

To learn more, be sure to read “Real Estate Investing in Turn-Key Investment Properties Part 2 and Part 3”

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about investing in turn-key properties investment properties, visit our site and download our FREE worksheets “Rental Income and Expense Tracking worksheet” and “Financial Analysis Worksheet.”

Click Here For More Details

How to Buy Detroit Investment Properties Part 3

7 Keys to Successfully Investing in Detroit Real Estate

In How to Buy Detroit Investment Properties Part 1 we discussed the first two keys to successfully investing in Detroit real estate (timing, location). In Part 2 we discussed keys 3-5 (desirable, price, cash flow). In this final part 3 we’ll discuss the last 2 keys to successfully investing in Detroit real estate.

6). Condition:
Successfully owning investment property requires the property to be in good condition and as maintenance free as possible. The problem is many of these properties that investors are buying in Detroit are in disrepair and some are in major disrepair. Deciding what repairs to do is often a difficult and puzzling decision for many investors. Click here to see a video of items to repair on an investment property. There is a fine line between not doing enough and doing too much. Most investors do either of the 2 extremes. My strategy is to take care of all capital improvements initially so that over the life of owning the property I won’t have to worry about it. For example here are some major items to repair:

• Roof: replace it has 10 years or less life expectancy
• Windows: replace metal or wood with vinyl
• Siding/facia/soffit/gutters: Make sure any damaged siding, facia, soffit and gutters are repaired, water tight and working properly
• Plumbing: replace all galvanized pipes with new copper or Pex pipes
• Electrical: hard wires smoke detector, replace nob and tube electrical boxes, new plugs/switches, and GFI’s to code.
• Mechanical: replace old, inefficient furnaces with newer forced air
• Flooring: ceramic tile in kitchen and bath, chocolate brown carpet (hides stains)
• Kitchen: repair/replace cabinets, paint.

If the above items are all taken care of initially then the only repairs over time will be carpet/paint-type repairs. When doing initial renovations, I ask myself, “what do I need to do so that I don’t have to repair this item for another 10 years?” I also recommend making each property comply with local and state code as well as section 8. Once you learn what they like to see, make each property meet their requirements. For example, section 8 is really big on screens and sidewalks. Most municipalities are very concerned with handrails.

7). Property Management:
Owning investment property should be as passive as possible. If you want to buy Detroit Investment properties, plan on hiring a good property manager (PM). A good PM will advertise, screen tenants, sign leases, make sure utilities are switched in the tenants name before moving in, conduct property inspections, fill out legal paperwork such as lead-paint disclosures, collect rent, field calls, coordinate routine repairs, file evictions, register rental with local city, hold deposits, and much, much more. Most PMs charge up to 10% of rent and/or a placement fee. this is money well spent and should be factored in when determining the cash flow before investing. I recommend working with with a PM that has experience in your area. He/she will know the rental prices and will keep you aware of what’s going on locally. Also, choose a PM that has experience working with non-local investors. Many of these PMs we direct deposit rent proceeds into the investors bank account.

In conclusion, there are seven keys to successfully investing in Detroit real estate. If you  are considering investing and want to buy Detroit investment properties, be sure to:

1. Buy at the right time
2. Buy in the right location
3. Buy desirable properties
4. Buy at the right price
5. Buy for cash flow now
6. Buy properties in good condition
7. Use a property manager

And remember: it you want to buy Detroit investment properties, it will require some commitment and long-term vision but if you follow these seven keys to success, you will prosper!

Be sure to read, How to Buy Detroit Investment Properties Part 1 and Part 2

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about how to buy Detroit investment properties, visit our site and download our FREE worksheets “Rental Income and Expense Tracking worksheet” and “Financial Analysis Worksheet.”

Click Here For More Details

Next Page »