5 Tips for a Low Stress First Rental Property Investment

Tip #1: Advice is OK, but Do Your Own Research

Take courses, read investment books, go to a seminar, or any other learning process that helps you to gain confidence to make decisions. I suggest that any books, courses or seminars be about how to select locations, value properties and evaluate the rental market. Your success will be based on your due diligence and most of all buying right in the right area.

Your first rental property investment is best done in your area of residence, where you know what’s going on economically. You want to know that the economy will support today’s decision into the future, as this isn’t a short term strategy. Understand who the major employers are, what drives people to move in or move away, and if things look good into the near future.

Tip #2: Don’t Just Rely on Real Estate Agents

Sure, now and then you can work with a real estate agent who handles foreclosures and get a good deal. Remember though that these will be “listed” foreclosures on the MLS, Multiple Listing Service. You and all of your competitor investors have access to the same information, so competition will likely drive up your cost of acquisition.

If you do your own marketing and locate motivated sellers, you have a greater chance of negotiation a good deal. Another approach is to work with an experienced real estate wholesaler. They are investors too, but they are experts and finding great deals that they can flip to rental property buyers at a below-market value price. Just check their references out and be sure they do know what they’re doing.

Tip #3: Know What Will Rent and for How Much

Check with property managers who handle single family homes. Go to the classifieds and check out what homes similar to the one you’re considering are renting for. Are the owners offering incentives like free months? This is usually a sign of a soft rental market or heavy competition, so you may want to try another neighborhood or property type.

Call on ads, drive around, talk to landlords as if you’re a tenant. The most important thing for you to know before the next tip is what you can reasonably and conservatively expect for rental income and low vacancy.

Tip #4: Get the Right Financing & Cash Flow

You need to know all of your costs, including estimating repairs and other maintenance costs. But, the mortgage is going to be your largest cash outlay, so it is your most important cost consideration. You’ll need to put 20% down or more in most cases. For a rental unit you may also pay a slightly higher mortgage interest rate. A great credit history helps in this regard.

Get a firm handle on all of your costs, then see what your mortgage payment with taxes and insurance escrowed will be. Let’s use an example of a $150,000 home with a $32,500 down payment and closing costs. If you can manage to clear even $250/month over cash out of pocket, your return on the actual cash invested is going to be around 9%.

Tip #5: Lock in Equity at the Closing Table

NEVER buy at retail market value. If you can’t get the home at a 10-20% discount to its current market value, don’t do the deal. You want to leave the closing table with that equity as either future profit or a cushion should you have to sell before your initially planned liquidation date.

If you’re going to work with a wholesaler who you may meet at a local investment club, be clear that you’ll want to see their valuation calcs and you’ll check them with your own. You give them your requirement. If it’s 15% below market value, then they will know what they have to deliver.

You’re in control here, and you don’t have to make a deal until you know it’s going to be a great investment.

Get Property Management Here

For professional property management in the Houston Texas area contact Vestpro Residential Services at (832) 498-0016 or click here to connect with us online. 

Property Management Tips – Is It A Bad Thing To Own Too Many Rentals?

Are you thinking about buying rentals to add to your portfolio and are wondering if it can be a bad thing to own too many? The answer to this question is both yes and no.

Yes, it can be a bad thing to own too many rental properties unless you hire a professional property management company to manage those rentals for you.

If you’ve been “on the fence” debating if you should hire a property management company or not to professionally manage your rental properties, this article will provide you with reasons to hire a property manager.

Rent Collection

One of the biggest problems most property owners who own homes or multi-family properties have is collecting rent from their tenants each month especially when their tenants fall behind on paying.

Thankfully when you hire Vestpro Residential Services to manage your Houston Texas Rental Properties you can have confidence that your rentals will be professionally managed and rent will be collected from your tenants on time each month eliminating the need for you to contact tenants or start collections against them if they don’t pay.

Maintenance

Another big problem for some owners has been the issue of maintenance because, it’s not always easy to handle maintenance issues if you own multiple properties.

With Vestpro on your side you will have peace of mind in knowing that your tenants will call us when they have maintenance issues and this will also help you keep tenants as well because, your tenants will know that the can depend on the property management company to solve problems when they occur instead of hearing making empty promises.

Customer Service

Last of all, but most important is customer service.

Many property owners offer customer service and poor support so that whenever there is an issue at one or more of their properties it will go unresolved for weeks or months.

At Vestpro we take pride in offering great customer service so that if your tenants call in with an issue they will be served by true customer service professionals every time.

Get Professional Houston Texas Property Management

To learn more about how Houston Texas Property Management will make your life easier contact Vestpro Residential Services today by calling us at (832) 971-1841 or click here to contact us online.

 

Need property management? Call us at 832-971-1841 or connect with us through our website.

 

 

Thinking Of Buying Rental Property? Here Are Five Things You Should Know

Planning on investing in rental properties? If so, before investing in your first rental there are a variety of things you should consider which include the following:

First, on the tax front, not only are all your cash expenses – including broker fees and management fees – deductible for your federal taxes, so is the depreciation of your property. Calculated over 27.5 years on a straight-line basis, depreciation protects the first 3.6% of your annual return from taxes. With returns around 5 or 6 percent right now (2017), that’s a big deal. Calculation below.

Second, leverage. If you can borrow money at a lower interest rate than the return you otherwise get from the property, the return on the portion you provide is higher. Calculation below.

Third, what about rents? Do they swing like home prices? How much can you raise them? And what’s the right rent to be charging in the first place? Each property is different and so is each location, so it depends. You should go online and see what other landlords are asking for a similar property in the area. You can ask local brokers, but take their answer with a grain of salt – they’d rather get the commission at any rent rather than have you hold out for a higher one.

 You can and should raise your rent every year. Inflation eats into your real revenue if you don’t keep pace. Rents don’t swing like home prices can; they rarely go down and usually rise a bit faster than inflation. If the neighborhood around your property changes, you can see rents rise even faster – and sometimes fall. This is one of the opportunities you have and one of the risks you take.

Get Professional Property Management Here

For professional property management contact Vestpro Residential Services by calling us at (832) 498-0016 or click here to connect with us online.