Proof Of Income – Learn More About Why It’s Critical That You Require It

If you own rental properties, one of the most important things you can do is require proof of income from your tenants because, it’s what’s going to let you know if a tenant is really qualified to live in your rental property and will be able to pay their rent on time on a monthly basis or not.

Why You Need Proof of Income

Checking proof of income protects you from losing money and your tenant from eviction, if they suddenly can’t afford rent.

Let’s step back for a minute and acknowledge that most tenants don’t purposely fail to pay rent. Nor do they go into a rental agreement with the intent of living there for free.

But having proof of a steady income that is appropriate for the rent you charge can reduce risk to both you and your tenant. After all, evicting a tenant is not ideal and can cost you thousands.

Determine if the 3x Income Rule Is Met

When asking for proof of income for apartment rentals, you’re not just verifying a stable source of money. You’re also figuring out if your potential tenant can meet the 3x Income rule. Generally, you want to take tenants only if their gross yearly income is three times the rent you’re charging.

Of course, you can make exceptions to this rule, for example, if your potential renter has good credit, a steady work history, or if they have a cosigner.

For many potential renters you just need to look at a few pay stubs, but with retirees (who are renting more and more), students, and those without your typical salaried job, for instance, you may have to find other ways to verify their income.

The rise of the gig economy may also affect how you determine appropriate income. The Bureau of Labor Statistics estimated that about 10 percent of the U.S. population had “alternative work arrangements” in 2017. Still others supplement their traditional income with side gig companies like Uber or Upwork.

Verify Income for Potential Renters Without a Traditional Salary

You should verify income for all renters, but it’s especially important for potential renters who don’t have your typical 9-to-5. Let’s take a look at a few of those categories.

Self-Employed: Tenants who own their own business won’t have a pay stub or an employer to call. You’ll have to find other ways to verify their income and ensure that it’s steady.

Cash-Only Employees: Like the self-employed, there won’t be a paper trail for these renters. And a lot of them don’t know how to show proof of income, which makes it difficult for them to rent. This group includes waitstaff, landscaping employees, yoga instructors, artists and master crafts people as well as childcare workers. You will, however, most likely have an employer you can call or email.

Commission-Based Employees: Sales reps and retail employees may be working on commission or through incentive plans. While you probably ask to see two pay stubs for salaried renters, you may want to see a yearly statement of income to determine if a renter that works on commission is making enough.

Retirees: Retirees will have other types of income you can check: social security, retirement accounts, and pensions.

Students: Student renters will almost always need a cosigner. In that case, you’ll want to check proof of income for the cosigner, as well.

Ways to Determine Proof of Income

Whether they’re students, retirees, gig workers or have a salaried job, you still need to ask for documentation. Here are the best ways to do that.

  1. Pay Stub: Salaried and freelance workers who have filed W9s can provide pay stubs. For freelancers, however, a few pay stubs aren’t likely to give you the whole picture. You’ll need more verification.
  2. Employer Verification: A letter, email, or phone call from an employer can help you get a clear picture of finances. This is particularly helpful for potential renters who work on a cash-only basis.
  3. W2 or 1099: A W2 indicates exactly how much a salaried employee made over the past year. If they plan to keep that job, you’ll know whether or not they meet your requirements. A 1099 for a freelancer will give you the same information, but income for the coming years may vary.
  4. Offer Letter: If your potential tenant just changed jobs, ask for a copy of their offer letter. It should state their salary.
  5. Tax Return: Like W2s and 1099s, a tax return will tell you what someone made the previous year. It will be up to you to determine whether their job or other circumstances have changed since then.
  6. Retirement, Social Security or Pension Distribution Statement: For retirees, a distribution statement from social security, a retirement fund or a pension fund will verify income. You may need a combination or all three of these to get a clear picture of their finances.

Insufficient Funds Isn’t the End

If your potential tenant doesn’t meet your income criteria at first blush, don’t decline them right away. If everything else checks out and they seem like a good fit, there may be other ways to bring them on as tenants.

First of all, did you consider all of their means of income? For retirees, did you collect statements from all retirement accounts? For salaried employees, did you consider their side gigs?

Go back and ask them if they have any other sources that they didn’t consider including. If these are steady sources that they plan on keeping, you’re absolutely right to include them as part of their gross income.

And if their income still doesn’t add up, ask them if they would consider finding a cosigner. A lot of landlords require this for students, and it’s usually a parent or guardian. But other renters might be open to the idea, as well.

Proof of income is critical in protecting yourself and your renters. Still, you don’t have to keep to a hard-and-fast rule in determining who’s in and who’s out. Look at all the information in front of you, and use it to make a well-informed decision in the best interests of you and your tenants.

Get Property Management Here

Do you need full service property management for your Houston area rental properties? If so, contact Vestpro Residential services by calling us at (832) 971-1841 or click here to connect with us online.

Are Owners Required to Disclose Lead Paint in Rentals in Texas? Yes!

Older rental properties in Texas still exist and as of 2019 there still are a fair amount of properties on the rental market today that contain lead-based paint although it’s been banned in the United States since the late 1970s.

Lead-based paint exposure can cause weakness, kidney damage, weakness, and so many other bad symptoms that it’s easy to see why it was banned but in old homes, the culprit is still there even if it’s been painted over a few times with other layers of paint.

Although most landlords don’t let the paint chip or flake off in their rental properties, if lead based paint is allowed to flake off it can be hazardous for small children and dangerous for the environment if the paint chips or flakes are left on the ground.

Lead-Based Paint Disclosure Requirements for Landlords

All sellers and landlords must disclose the presence of any known lead in a home or rental. Here are the steps, according to the EPA, landlords need to take to make sure they are following the letter of the law.

Landlords must:

  • Disclose any known information on the presence of lead-based paint in the building. That includes any common areas like laundry rooms or lounges.
  • Include a lead disclosure attachment to the lease or language in the lease that includes a Lead Warning Statement, and lets tenants know you’ve complied with all notification requirements.
  • Keep lead-based paint disclosure forms for at least three years after the lease of an apartment or other property.
  • Provide an EPA-approved pamphlet on identifying and controlling lead-based paint hazards to tenants.

The Department of Housing and Urban Development (HUD) provides the lead paint hazard pamphlet in several languages. They also provide the Lead Warning Statement in both Spanish and English.

To disclose the presence of lead, give prospective tenants any records about the inspection for or discovery of lead paint.

Keep in mind that you don’t have to provide this information every time a tenant renews, just when a new tenant is ready to sign a lease.

Lead Paint Disclosure Exemptions

Aside from renewals, there are other situations where you don’t have to provide a lead paint disclosure:

  • If your unit or property was built after Jan. 1, 1978
  • If your unit is a studio or loft with no bedrooms
  • If you’re renting for less than 100 days, like those on Airbnb
  • If your unit or building has passed a lead-free inspection by a state-certified inspector

Lead paint disclosure is an important part of the rental process, particularly if you rent to families with little children. Take steps to give your new tenants all the information they need and ensure they have peace of mind that makes a happy, healthy home.

Get Property Management in Houston Texas

Do you need property management for your Houston Texas rental property? Contact VestPro Residential Services by calling us at (832) 971-1841 or click here to connect with us online.

New Report Shows More People Think Renting Is More Affordable Than Buying A Home

Thanks to a recent study we know that more than 70% of Americans now consider renting a home to be more affordable than buying a home.

The recent data from Freddie Mac found that close to 80% of Americans would prefer to rent instead of buy, this is up sharply from close to 67% of Americans who felt that renting was more affordable than buying a home just a short six months ago.

What’s even more shocking is that close to 58% of Renters have said that they have no plans to buy a home within the near future. This is up from 54 percent of renters who are surveyed over the same period.

What’s Happening with The Real Estate Market?

Among the usual suspects: Mortgage rates are up to nearly 5 percent, the highest they’ve been in seven years. The new rate is one percentage point higher than the beginning of the year. Rates are being pushed up by recent hikes in the Federal Reserve’s benchmark interest rate.

But it doesn’t mean renting is necessarily affordable.

Freddie Mac’s survey found that two-thirds of renters say they have had trouble paying their monthly bill in the last two years. Almost 9 out of 10 renters with occupations in what Freddie Mac considers “essential” fields — including healthcare and education — say they have had trouble cutting their landlords checks.

 

More Opportunity for You

On an encouraging note, the obvious benefit that can be gleaned from this article is the fact that with more people viewing renting as being more affordable and favorable than buying, this means more opportunities for people who own rental property.

The key to success though with owning rental property in Houston or else was across the United States is not having to do all the work yourself. Once you own a property you should hire a property management company to manage that rental property for you.

This will save you the time and hassle of having to do things like rent collection, maintenance and communicating with tenants so that you could focus on growing your portfolio of rental properties while living your normal life.

To learn more about the Property Management contact us today (832) 971-1841 or click here to connect with us online.

What Are The Most Cost Effective Options To Choose When Renovating A Rental Property?

Are you planning on renovating your Houston area rental property? If so, there are a variety of cost-effective options that you should consider.

In this article, we will list some of the most cost-effective which will also help to improve the value of your rental property as well.

#1: Replace Windows

Realtors consistently emphasize the importance of curb appeal when you’re trying to market a property. Upgraded windows are a smart way to make a good impression on prospective renters while packing a powerful punch for long-term energy savings thanks to increased insulation efficiency.

Remodeling Magazine reports 74 percent cost recuperation for vinyl replacement windows and approximately 70 percent for wood. Can’t find money in your budget for either one? Consider adding storm inserts and re-caulking existing windows.

#2: Freshen Paint

One of the most cost-effective remodeling projects for an investment property is to touch up walls and trim with a fresh coat of paint. Choose neutral colors, which resonate with a wider range of prospective residents. Consider using in-house staff to do the job–you’ll still have control over the quality of the work without the need for a professional contractor. This is one project that you can DIY to keep operations simple and costs low.

#3: Switch Out Flooring

Hardwood flooring continues to grow in popularity. Durable and easy to clean with a classic look, renters tend to prefer wood or engineered wood planking to linoleum, tile, and carpet.

Engineered wood is naturally resistant to changes in humidity and temperature. Unlike genuine hardwood, planks don’t buckle, shrink, or expand. Thanks to its waterproof qualities, engineered wood flooring is even appropriate for moisture-prone areas such as a front entrance, mud area, or bathroom.

Planks can be glued, stapled, or floated over a pre-existing floor. Some even come in interlocking segments that snap together to form a tight seal. Seek different suppliers and see if you qualify for bulk pricing to replace current flooring. If your property already boasts natural hardwood floors, consider refinishing them to enhance their appearance and longevity.

#4: Update Bathrooms

A noteworthy distinction exists between mid-range and upscale bathroom remodels. According to Remodeling Magazine, you get more bang for your buck when you limit bathroom renovations to a “mid-range” budget–but what does this mean in actuality?

New faucets, shower heads, and fixtures. Look for low-flow versions that cut water consumption by as much as 30 percent.

Ceramic floor tiling. Consider a geometric or playful pattern (but not so bold as to drive renters away!). Doing so draws the eye downward and makes the room more inviting.

A new tub and toilet. Go with standard porcelain for the tub. Keep in mind that federal standards mandate that all new toilets use 1.6 gallons of water per flush.

#5: Remodel Kitchen

As with the bathroom, a minor kitchen overhaul boasts a significantly more substantial return on investment than a major remodeling project. For example, instead of replacing cabinets in their entirety, simply switch out the doors and update them with new hardware.

Replace appliances with energy-efficient models and shop around for a new mid-priced sink and faucet set. Remember to check into possible tax credits or rebates for your area.

Installing appliances requires a specialist’s help. Consider taking out a service contract to ensure that your appliances receive the care they need to stay running over time.

#6: Add Outdoor Space

Does your property contain open-air terraces or decks? Outdoor living space is a big draw for current and future renters. If adding exterior square footage is a feasible option at your properties, check into reliable sources of wood composite, which is more environmentally friendly and cost-effective than natural wood.

Is there any room left in your budget for extra material? Fashion an arbor or pergola with seating, or build large containers for seasonal plantings. Anything you can do to enhance the flow of indoor-to-outdoor living benefits your investment, both in the short and the long term.

Get Property Management In Houston Texas

For property management in the Houston Texas area contact Vestpro Residential Services by calling us at (832) 971-1841 or click here to connect with us online.

What Is the Best Way for You to Grow Your Portfolio of Houston Texas Rental Properties?

Are you interested in growing your portfolio of Houston Texas Rental properties but you’re concerned that adding another rental property may be more work or added responsibility than you can handle?

If you’re still managing all of your rental properties yourself, one of the very best ways to add more rentals to your portfolio without increasing your workload is to hire a property management company.

Reasons to Hire A Property Manager

Rent Collection – Hiring a Houston Texas property manager will save you the time, money and hassle of collecting rent yourself including dealing with the excuses from your tenants for why they are late paying their rent and when they promise to pay.

When you hire a property manager you can count on rent to be collected on time each month and deposited into your account all without you having to reach out to your tenants for payment again.

Tenant Selection – Another time-consuming task that comes with owning rental properties is tenant selection. With a property manager, you can remove yourself from this process and have confidence that your manager will always find and place the most qualified tenants in your rental property for you.

Maintenance – From mowing the lawns at one of your rentals, changing toilets or full-blown maintenance, you can have confidence that your property manager will professionally maintain your rental property, saving you the time and hassle of having to do those things yourself so you can focus all of your time on growing your portfolio of rental properties.

Customer Service – Last of all, but most important, with a property manager serving your tenants you can also rest assured that should your tenants have a question or need assistance with their rental property, they will always have someone to call to handle those issues and you won’t have to worry about your phone “ringing off the hook” again. Continue reading “What Is the Best Way for You to Grow Your Portfolio of Houston Texas Rental Properties?”

Rental Property Move Out Checklist

Move-outs are typically one thing that many landlords handle poorly because most landlords are usually in a hurry to get their property listed online and rented to a new tenant as quickly as possible.

Sadly, during the process of moving from one tenant to another, it’s possible that some landlords may miss damage caused to their rental property from their previous tenant and the opportunity to repair that damage before the next tenant moves in.

Step 1 – Do A Walkthrough

After your last tenant has moved out you should do a complete walkthrough of your rental property documenting the condition of the rental and any damage.

Questions to ask

  • Are the walls damaged or is its normal wear and tear?
  • Is anything broken in the rental?
  • Has the carpet been cleaned or is it still dirty?
  • Are the appliances functioning or will they need to be repaired/replaced?

Step 2 – Change the locks

Don’t forget to change the locks! This step is easy for some landlords to forget but it’s vital because with other copies of the key to your rental property potentially floating around out there it’s important for you to protect the safety of your new tenant by ensuring that your old tenant is unable to re-enter the rental property after they’ve moved out.

Step 3 – Research comparable rentals in the area

After taking the time to clean your rental and ensure that it’s in the absolute best condition, you should next start researching other rentals in the area to find out what you should rent your property for.

Don’t be hasty with this step! Take the time to really analyze and research comparable rental properties to determine what is the best monthly rent you should ask for your rental property.

Get Property Management Here

For professional property management in the Houston Texas area contact Vestpro Residential Services by calling us at (832) 971-1841 or click here to connect with us online.

Has Your Rental Property become A 2nd Job? Hire A Property Manager Today

By VestPro Residential Services

Did you recently purchase a rental property but found that it’s turning into a 2nd or 3rd job? If so, instead of continuing to overwork yourself and staying frustrated with your rental property why not hire a property management company instead?

A Property Manager Will Save You Time and Money

Hiring a property management company will save you the time, money and hassle of managing your rental property yourself.

Our team of experts has skills in every major field including maintenance, rent collection, tenant placement and customer service to ensure that you and your tenants always receive the very best service on a monthly basis, for a great price!

When you hire us to be your Property Manager you can count on us to provide you with a full suite of property management services including:

Tenant Screening

Tenant Placement

Rent Collection

Customer Service

Maintenance

And More!

Imagine no longer having to take calls from tenants at night, or on weekends! When you hire us to be your Kingwood Property Manager you can count on us to provide you with reliable service at excellent prices every time!

Get Back to Enjoying the ROI from Your Rental

As a top property manager in the Houston Texas area, our primary goal is to get you back to enjoying the Return on Investment (ROI) from your rental property once again so you can relax and have the time to grow your portfolio of rental properties.

To learn more about the services we can offer you contact us at (831) 498-0016 or click here to connect with us online.

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.

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. 

 

 

 

Planning for retirement? Why not buy an investment property?

Is your retirement around the corner and you’re searching for income producing investments to add to your portfolio? If so, why not add rental properties to your portfolio?

There’s never been a better time than right now to invest in Real Estate especially since more people continue to move to Texas every day and as an investor you will be able to capitalize on the demand for rental properties by investing in Real Estate. If you want to buy and sell notes, there are many places where you can get your start in Real Estate.

Tips For Investing In Rental Properties

Gather as much information as you can. Talk to other investors, mortgage brokers andreal estate agents who have worked with income property about what owning a rental property is really like, in addition to reading books and articles on the topic. “It’s all about obtaining knowledge,” Rodriguez says.

Decide if you’re ready to be a landlord. Buying and managing property yourself provides the greatest return but also the greatest headaches. “Do you have the stomach for being a landlord?” Fleming says. “Stuff’s going to happen that just really ticks you off.” Other, less active options include becoming a partner in a limited liability company that owns properties or buying into a real estate investment trust.

Crunch the numbers carefully. A rental property is only a worthwhile investment if it makes money. Yes, the property may rise in value and yield a profit when you sell, but it also may lose value depending on which way the market goes. “If you’re banking on just appreciation, it’s really hit or miss,” Alexy says.

Make sure you have enough cash. Getting rich on real estate with no money down is a great dream, but it’s almost impossible to accomplish. Expect to need a sizeable down payment, reserves to pay for repairs and maintenance and a good income before you start investing.

Property Management Makes Owning Rental Properties SIMPLE

Before managing your rental properties yourself, learn more about how affordable property management is by calling Vestpro Residential Services at (832) 498-0016 or click here to connect with us online.

 

DIY Property Management Is HARD! Make it easy by calling Vestpro at (832) 498-0016 or click here to connect with us online.