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

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.

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

Posted by on June 21, 2017 in Rental Property

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What should you be looking for in a rental property?

What should you be looking for in a rental property?

Are you planning on investing in rental properties for the first time but you don’t what to look for in a rental property? If so, you’ve come to the right place!

In this article we will break down what you should look at before investing in a rental property.

 

  • Neighborhood: The quality of the neighborhood in which you buy will influence both the types of tenants you attract and how often you face vacancies. For example, if you buy in a neighborhood near a university, the chances are that your pool of potential tenants will be mainly made up of students and that you will face vacancies on a fairly regular basis (during summer, when students tend to return back home).

  • Property Taxes: Property taxes are not standard across the board and, as an investor planning to make money from rent, you want to be aware of how much you will be losing to taxes. High property taxes may not always be a bad thing if the neighborhood is an excellent place for long-term tenants, but the two do not necessarily go hand in hand. The town’s assessment office will have all the tax information on file or you can talk to homeowners within the community.

  • Schools: Your tenants may have or be planning to have children, so they will need a place near a decent school. When you have found a good property near a school, you will want to check the quality of the school as this can affect the value of your investment. If the school has a poor reputation, prices will reflect your property’s value poorly. Although you will be mostly concerned about the monthly cash flow, the overall value of your rental property comes in to play when you eventually sell it.

  • Crime: No one wants to live next door to a hot spot for criminal activity. Go to the police or the public library for accurate crime statistics for various neighborhoods, rather than asking the homeowner who is hoping to sell the house to you. Items to look for are vandalism rates, serious crimes, petty crimes and recent activity (growth or slow down). You might also want to ask about the frequency of police presence in your neighborhood.

  • Job Market: Locations with growing employment opportunities tend to attract more people – meaning more tenants. To find out how a particular area rates, go directly to the U.S. Bureau of Labor Statistics or to your local library. If you notice an announcement for a new major company moving to the area, you can rest assured that workers will flock to the area. However, this may cause house prices to react (either negatively or positively) depending on the corporation moving in. The fallback point here is that if you would like the new corporation in your backyard, your renters probably will too.

  • Amenities: Check the potential neighborhood for current or projected parks, malls, gyms, movie theaters, public transport hubs and all the other perks that attract renters. Cities, and sometimes even particular areas of a city, have loads of promotional literature that will give you an idea of where the best blend of public amenities and private property can be found.

  • Building Permits and Future Development: The municipal planning department will have information on all the new development that is coming or has been zoned into the area. If there are many new condos, business parks or malls going up in your area, it is probably a good growth area. However, watch out for new developments that could hurt the price of surrounding properties by, for example, causing the loss of an activity-friendly green space. The additional condos and/or new housing could also provide competition for your renters, so be aware of that possibility.

  • Number of Listings and Vacancies: If there is an unusually high number of listings for one particular neighborhood, this can either signal a seasonal cycle or a neighborhood that has “gone bad.” Make sure you figure out which it is before you buy in. You should also determine whether you can cover for any seasonal fluctuations in vacancies. Similar to listings, the vacancy rates will give you an idea of how successful you will be at attracting tenants. High vacancy rates force landlords to lower rents in order to snap up tenants. Low vacancy rates allow landlords to raise rental rates.

  • Rents: Rental income will be the bread and butter of your rental property, so you need to know what the average rent in the area is. If charging the average rent is not going to be enough to cover your mortgage payment, taxes and other expenses, then you have to keep looking. Be sure to research the area well enough to gauge where the area will be headed in the next five years. If you can afford the area now, but major improvements are in store and property taxes are expected to increase, then what could be affordable now may mean bankruptcy later.

  • Natural Disasters: Insurance is another expense that you will have to subtract from your returns, so it is good to know just how much you will need to carry. If an area is prone to earthquakes or flooding, paying for the extra insurance can eat away at your rental income.

Get Property Management Here

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

 

 

 

 

Posted by on June 14, 2017 in Property Management

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Tips for making your rental energy efficient

Tips for making your rental energy efficient

One of the keys to success with owning rental properties in 2017 is offering a rental property that’s also energy efficient because, these types of rentals will be more attractive to millennials and other renters who want rental properties that won’t come with expensive energy costs each month.

In this article we’re going to provide you with easy tips you can use to create an energy efficient rental property.

How to Make Your Home More Energy-Efficient: Tip #1

Reduce Drafts

One of the easiest ways to make your property more energy-efficient is to reduce the amount of air that comes in or out of the home unintentionally. Drafts force tenants to turn up the heat; and at the end of the month, they’re the ones who pay for it.

Reduce drafts and energy bills with the following fixes:

  • Exterior doors: There are a number of ways to stop drafts from sneaking under the bottom of the door. We recommend sealing doorways with inexpensive solutions like draft stoppers, foam tape, or door sweeps.
  • Windows: Old windows are especially prone to letting drafts in. If you’re not ready to replace them just yet, check out this weather stripping tutorial for an affordable solution.
  • Fireplace door: If your unit has fireplaces, whether or not they’re actively used, fireplace doors block drafts from entering your home. Sam Wilhoit of Brick-Anew explains, “[Fireplace doors] were originally designed so that a person could let the fire die down and then close the doors before they went to bed. That way the room would not be freezing cold the next morning from the cold air that came into the room.”Choose clear or tinted glass to accent your space.

For both doors and windows, your best bet could be to replace them, as we suggested in last week’s post on energy-efficient updates. This reduces drafts while also boosting the property’s security and aesthetics. You can also mention that your unit has brand new doors and windows in your rental listings.

How to Make Your Home More Energy-Efficient: Tip #2

Install Energy-Efficient Bulbs

Lighting is an important area to focus your attention because “an average household dedicates about 5 percent of its energy budget to lighting,” according to Energy.gov. As a result, they explain, “Switching to energy-efficient lighting is one of the fastest ways to cut your energy bills.”

Start by replacing bulbs in the 5 most frequently used light fixtures in your home. In doing so, Energy.gov says, you could save $75 each year. Consider which rooms are used most–likely the bathroom, kitchen, and living room are at the top of the list–so you can make the most of this investment. In addition to indoor lamps, consider replacing bulbs in outdoor lighting that might be left on for a long time.

Compact fluorescent lamps (CFLs) and light-emitting diodes (LEDs) are two of the most popular options, with LEDs using just 20-25% of the energy used by traditional incandescent lightbulbs. “For high-quality products with the greatest energy savings, choose bulbs that have earned the ENERGY STAR,” suggests Energy.gov. New bulbs will last longer and improve energy efficiency–a win-win.

How to Make Your Home More Energy-Efficient: Tip #3

Choose One Big Upgrade

Upgrading to energy-efficient appliances is expensive. It’s a hard investment to justify as a landlord who’s worried about how potential renters will treat these valuable items. Instead of investing in all new appliances at once, start with one big upgrade. Which one should you start with? According to Direct Energy, these 4 appliances pack the biggest savings punch:

  • Washer: $40/year and $415/lifespan
  • Air purifier: $27/year and $215/lifespan
  • Clothes dryer: $16/year and $160/lifespan
  • Air conditioners: $11/year and $99/lifespan

If you don’t have the extra cash to replace old appliances just yet, focus on downgrading wherever possible. “Make an effort to buy appliances that suit your needs–no bigger and no smaller. Oversized air conditioners, water heaters and refrigerators waste both energy and money,” explains Mary Boone on Zillow.

When all is said and done, don’t forget to update rental listings to feature any upgrades you’ve made. Use buzzwords like “eco-friendly,” “environmentally friendly,” “green,” “sustainable,” and “energy savings” to pique the interest of tenants that care most about these features–and highlight the money it’ll save.

Get Property Management Here

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

 

 

Posted by on May 29, 2017 in Property Management Tips

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Property Management Tips – How to cleanly remove popcorn ceilings

Property Management Tips – How to cleanly remove popcorn ceilings

Are you planning on buying another rental property but you noticed that it has popcorn ceilings?

Even though a popcorn ceiling can be tedious to remove the reality is that it can be done cleanly / efficiently by following the tips in this video.

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No time to continue managing your rental properties yourself? No problem! Contact Vestpro Residential Services today by calling us at (832) 498-0016 or click here to connect with us online.

 

 

Posted by on May 26, 2017 in Property Management Tips

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Reasons to Hire a Kingwood Texas Property Management Company

Reasons to Hire a Kingwood Texas Property Management Company

By Vestpro Residential Services

Have you been thinking about hiring a Kingwood Texas Property Management Company to manage your portfolio of rental properties? If so, you’ve come to the right place! In this article, we will share with you reasons to hire a property management company to professionally manage your portfolio of rental properties.

We Specialize in Tenant Screening, Placement, and Retention

From screening the right tenants to live in your Kingwood Texas rental properties, to tenant placement, and tenant retention, you can count on us to find the most qualified tenants to live in your rental properties who will care for your rental property as their own and enjoy living there.

You can also count on us to offer the best customer service and support possible to your tenants so that when it comes time for them to renew their leases they will be motivated to renew for another year rather than look elsewhere for a Kingwood Texas Rental.

Our Property Managers Will Save You Time and Money

As your portfolio of rental properties grows you can count on us to save you time each month because you won’t have to travel out to your rentals for things like maintenance, you can count on us to professionally manage all aspects of your rental properties so you can focus on continuing to grow your portfolio of rental properties.

Besides saving you time and money, another reason to choose Kingwood Texas Property Management is you can also count on us to make all aspects of your rental property function better, maintaining the value of your investment, and ensuring that it will continue to produce revenue for you for years to come.

Get Kingwood Texas Property Management

For professional Kingwood, Texas Property Management contact Vestpro Residential Services today by calling us at (832) 498-0026 or click here to connect with us online.

 

 

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How often should your Houston TX rental property be inspected?

How often should your Houston TX rental property be inspected?

If you’re like most owners you’ve probably wondered how often should you have your Houston TX rental property inspected.

Should you have it inspected every three months, six months or one year? In this blog post we will answer this question and provide you with more property management tips.

How Often Do I Need a Rental Home Inspection?

So how often should you schedule a rental home inspection? It depends upon several factors:

If you have crawlspaces or a basement, you might want to invest in a rental home inspection every 2-3 years, or each time your property comes up for re-rental. You may also want to inspect this more frequently if you have older plumbing or wiring, or if your home is in an area with a lot of moisture, an extreme climate, or both.

If your home is newer and was professionally inspected when you bought it, and you don’t have major weather extremes, you can probably get away with a longer inspection cycle.

If your home has never been professionally inspected since you’ve owned it, do it now.

Another reason to have a rental home inspection is if you are planning a major renovation project anyway. Why? You don’t want to have already committed thousands of dollars to a bathroom remodel only to discover that you need to replace your furnace. Conduct a reconnaissance before you march.

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

 

 

 

 

 

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Harmaston Texas Property Management

Harmaston Texas Property Management

Are you searching for Harmaston Texas Property Management? If so, contact Vestpro Residential Services by calling us at (832) 971-1841 or click here to connect with us online.

About Harmaston Texas Property Management

At Vestpro Residential Services we specialize in all aspects of Harmaston Texas Property Management including the following: tenant screening, tenant placement, rent collection, customer service, maintenance and so much more!

Property Management will save you the time, money and hassle of managing your portfolio of rental properties yourself so that you can focus on the spending more time with your family and growing  your investments without having to spend the time managing your rental properties yourself.

Learn More About Harmaston Texas

Harmaston is a place in unincorporated northeast Harris County, Texas, United States that used to be a distinct community.[1]

Harmaston, located at the southwest corner of Lake Houston, was developed along the timber shipping railroad line Beaumont, Sour Lake and Western Railway. Lumbermen from several companies, such as the Texas Longleaf Company, lived in a boarding house in Harmaston. By the 1980s the remaining component of the community was an abandoned railway station.Wikipedia 

Now Is the Right Time for Harmaston Texas Property Management

If you plan on hiring a Harmaston Texas Property Management company now is the right time to make your move because, more people in 2017 are renting than buying and with the greater demand for rental properties in Harmaston and the Houston area you can confidently grow your portfolio of rental properties without becoming overburdened with the day-to-day tasks of managing your rental properties yourself.

To learn more about the services that we can offer you contact us today by calling (832) 971-1841, connect with us on Facebook or click here to connect with us through our website.

 

Harmaston Texas Property Management

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Tenant Screening – Changes You Need To Know

Tenant Screening – Changes You Need To Know

There’s no doubt that tenant screening can be one of the most complicated aspects of owning rental properties because you have to follow the requirements of the Fair Housing Act and not offend anyone. 

In 2017 tenant screening has gotten a little more complicated for owners thanks to recent policy updates from the Department of Housing And Urban Development.

HUD rolled out a 10-page policy update last year advising all landlords and property managers that using criminal history for the purpose of tenant screening may actually be discriminatory. HUD notes that nearly one-third of the U.S. population (or 100 million U.S. adults) have a criminal record of some sort, and the misuse of background checks during the tenant screening process can hinder their ability to find safe, secure, and affordable housing—a key aspect of rehabilitation. Sometimes, even those who have been arrested but not convicted have difficulty securing housing based upon their prior arrest.

Black and Latino Americans are disproportionately affected, the memo notes, as they are incarcerated at rates disproportionate to their share of the general population. Black and Latino individuals comprise an estimated 58% of the U.S. prison population, despite accounting for only 25% of the total U.S. population.

Consequently, the memo states:

Criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers. While having a criminal record is not a protected characteristic under the Fair Housing Act, criminal history-based restrictions on housing opportunities violate the Act if, without justification, their burden falls more often on renters or other housing market participants of one race or national origin over another (i.e., discriminatory effects liability). Additionally, intentional discrimination in violation of the Act occurs if a housing provider treats individuals with comparable criminal history differently because of their race, national origin, or other protected characteristic (i.e., disparate treatment liability).

This does not mean that criminal history cannot be considered at all during the tenant screening process. Instead, HUD is basically telling landlords and property managers:

You cannot institute a blanket ban on all applicants with a criminal history.

You cannot reject a tenant based upon an arrest that did not result in conviction.

You must treat comparable criminal histories similarly without consideration of race, national origin, or other protected classes.

Because Black and Latino Americans are incarcerated at higher rates than their peers, any blanket policy for tenant screening that bans applicants with a criminal history would inadvertently discriminate against minorities. HUD cites a Supreme Court decision in reminding us that simply being arrested often has little probative value in showing that someone has actually engaged in misconduct—which is why arrests without convictions should not be used as the basis for denying a tenant.

Convictions are treated differently. Landlords and property managers may reject an applicant whose background check reveals that he/she has been convicted of a crime. There’s one big caveat: The landlord or property manager must show that excluding a person with a conviction achieves a “substantial, legitimate, nondiscriminatory purpose.” To put it simply, you have to distinguish between criminal activity that creates a demonstrable risk to resident safety and/or property, and criminal conduct that does not.

Given the new HUD guidelines, landlords and property managers should consider the following questions when reviewing a person’s criminal history:

Was the applicant convicted of a crime, or were they just arrested?

What was the severity of the crime?

How long ago was the crime committed?

Has the person reoffended since their original conviction?

Was it a drug-related crime? (HUD allows a blanket ban on those who have been convicted of illegal drug manufacturing or distribution.)

New Guidelines for Tenant Screening

HUD’s new policy memo has the downside of making the tenant screening process more complicated than it already is. It muddies the waters in terms of how landlords and property managers evaluate criminal history, as there is no guidance on which crimes should generally considered acceptable and which are not. Landlords and property managers are asked to use their discretion, with the memo acknowledging the need to look at circumstances on a case-by-case basis.

Here are a few tips to help you to comply with the new guidelines:

Screen tenants based on their financial and other qualifications first. Only conduct a background check if a person appears to be otherwise qualified. This will protect you from denying a tenant based upon another qualification, and having the tenant argue that they were denied based upon their criminal background.

If a background check reveals a criminal history, evaluate the nature of the crime (see questions above). If you plan to deny a person based upon this information, put a note in your internal file explaining why you felt a denial was appropriate (e.g. how this protects you, other tenants, and the property). Sign and date the note. This will protect you if the applicant ever alleges discrimination.

Review all existing rental policies and applicant screening procedures. Some landlords or companies may be facing a complete overhaul given the new HUD guidelines. Be sure that all members of your team clearly understand the new policies so they can be implemented uniformly by all.

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For affordable and professional property management contact Vestpro Residential today by calling us at (832) 971-1841 or click here to connect with us online.

 

 

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Posted by on February 23, 2017 in Tenant Screening

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HUD Anti-Discrimination Laws You Didn’t Know You Were Breaking

HUD Anti-Discrimination Laws You Didn’t Know You Were Breaking

In 2015, the enforcement division of the Department of Housing and Urban Development announced 10 separate charges against landlords and property managers for various types of discrimination.

No ethical landlord wants to commit unlawful discrimination. But some honest employees or landlords run into trouble accidentally, despite the best of intentions, by making a mistake during the screening process, asking an innocent but misguided question or making an ill-considered remark that can form the basis of a discrimination complaint.

Let’s look at some of the mistakes made by landlords and property managers that led to discrimination charges.

Asking About Mental Health, Medical Status or Diagnoses

In one Minnesota case, a woman diagnosed with bipolar disorder attempted to rent a house with her partner. Shortly before move-in, the landlord’s agent became aware of the applicant’s history of mental health issues, and called the prospective tenant asking if there were any “issues” she wanted to disclose before moving in. The tenant disclosed her diagnosis of bipolar disorder. The agent asked for more information, but the renter told her it was “none of her business.” Subsequently, the landlord refused to rent the dwelling.

HUD Prosecutors deemed the mere inquiry into the mental health diagnosis to be a violation of 42 U.S.C. Section 361(g)(2)(A), and assessed a $16,000 civil penalty against the landlord, in addition to damages.

Discriminatory Advertising Language

In a Philadelphia case, HUD officials were alerted to a Craigslist rental advertisement containing these words: “Not good for young children.” HUD officials investigated and applied to rent the dwelling. Two HUD test coordinators called the lister, one claiming to have a 2-year old daughter, and the other posing as a single man.

The lister told the female caller that the dwelling was directly above a construction business with a lot of heavy truck traffic. The dwelling would be fine for adults, the lister explained, but dangerous to young children. The lister also told the male investigator that he wanted to rent to adults with no children because of the traffic.

HUD officials deemed the actions of the landlord’s representative to constitute illegal discrimination based on familial status. The advertisement was illegal under 42 U.S.C. Section 3604(c) and 24 C.F.R. Sections 100.75(a) and (c)1.

HUD Department officials asked courts to penalize the landlord for each violation, on top of compensatory damages.

Discrimination Based on Limited English Language Skills

An Asian-American man applied to rent a townhome in Champlin, Minn., together with his mother, who was from Thailand. They planned to reside on the property with two children. The property manager took their information and a credit background check. He also collected an application fee of $40 for each of the two adult applicants.

The son’s credit score came back at 725, and his mother’s was 761. Their income qualified the family to rent the apartment. But the manager sent the son an email stating that their rental application was declined. The reason: Both adults would have to sign the lease contract, but the mother had limited English skills. “As I’m told, legal precedent indicates the contract must be translated to her native language,” the manager wrote. “If not, she could easily break the lease.”

The manager also claimed that a certified translation would be required, costing about $500.

The son informed the manager that he had submitted an inquiry to the Department of Housing and Urban Development based on the manager’s statements about his mother’s English language skills.

HUD’s lawyers determined that denying a lease because of limited English skills, as well as the act of requiring a $500 translation fee, amounted to illegal discrimination under 42 U.S.C. Section 3604(a). The Department of Housing and Urban Development is pursuing the property manager for full compensatory damages, as well as a civil penalty of $16,000 per violation.

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Posted by on January 6, 2017 in Anti-Discrimination, HUD

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Should you buy rentals in Houston? Even if you’re out of the area?

Should you buy rentals in Houston? Even if you’re out of the area?

Thanks to the booming real estate market in the last 12 months there are more condos, town homes and apartment buildings available for purchase and rent than ever before but the big question is should you buy rentals in Houston even if you’re out of the area? The answer to this question is yes!

Pros of Buying Long-Distance Real Estate

  • The ability to buy in more affordable markets. Property values in second- and third-tier markets don’t command the premium of real estate in primary markets and there’s lower competition. That said, depending on the market, rents can still be very strong. Buying in one of these markets is a way to get your foot in the door, realize positive cash flow and build equity.

  • Real estate as a long-term strategy. Some investors decide to buy real estate in an area that they don’t currently live in, but think they might want to someday. For instance, I’d consider buying a home closer to my parents if there’s a chance I’ll want to live closer to them someday. Many investors use a similar mindset when considering real estate in vacation and retirement markets, like the Carolinas and Florida. These houses can be rented now and held in case an investor wants to live there someday, too.

  • Tax benefits. Say what you want about Trump, but when the New York Times released a copy of his 1995 tax returns it shed light on a stark reality: real estate investors are able to use the tax code to their advantage. The ability to write off interest paid on a mortgage and depreciation makes buying investment property highly attractive. The provision Trump took advantage of is no different than the loopholes that everyday investors use, too.

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For affordable Houston Texas Property Management contact Vestpro Residential Services today by calling us at (832) 971-1841 or click here to connect with us online.

 

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Posted by on November 23, 2016 in Property Management Tips

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