Tag: real estate investors

How To Become A Successful Landlord: Mastering The Basics

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Being a landlord can be hard work, but it’s also rewarding when done correctly. And, as long as you have the skill and time to complete all of the tasks associated with managing your rental property, you can be successful as a landlord and save a little money in the process.

At TALK Management, we have mastered the many responsibilities of property management, and we handle all of the duties of our landlord clients so they can focus on what they do best (not having to be a landlord). If you get started as a landlord and realize it’s too much, we’re here for you, and we would love to earn your business. 

Now, let’s dive into some of the key factors of becoming a successful landlord. 

Set Up Your Business

Prior to purchasing your first property or signing your first lease, make sure your business is fully prepared on the backend. You want to set up things like asset protection, insurance, and your bank account to ensure your investment is protected and everything is set up as much as possible. 

Consider keeping a folder of your important documents for each property to keep everything organized and ensure you have everything you need to prepare for tenants.

Make The Commitment

Landlording is no small feat. It takes a lot of time, energy, and responsibility to be done correctly. Before you decide to become a landlord, make sure you have thought about what this will mean for you. When purchasing properties and selecting tenants, take the time to make sure your decisions are the right ones. Nothing should be done on a whim; you need to take the appropriate amount of time to make decisions that will make you money and help your business in the long run. 

Understand Your Tenants

Not only is it important to properly screen your tenants to make sure they’re the right fit, but you should also take time to connect with them and understand their wants and needs. Establish trust with them by always being transparent and having an open line of communication so they feel they can come to you with questions and concerns. It’s also important to understand what they expect from you and what you expect from them, including following the lease agreement terms and paying their rent on time. 

Handle Issues Appropriately

Regardless of how excellent your tenants are, there will be times when issues will arise. As much as we don’t want to deal with problems, it’s part of the business. When issues arise, it’s important to have the appropriate systems in place to ensure they’re handled efficiently and correctly. Taking issues personally doesn’t help anyone, so try to keep your emotions out of it and navigate problems appropriately. 

Reach Out To The Professionals

If you get overwhelmed by everything you need to do to be a successful landlord, contact the professionals at TALK Property Management. Here are a few of the value-added services we provide that can save you work, stress, and, often, money:

  • Rigorous tenant screening process to select quality tenants
  • Attend court proceedings on your behalf
  • Handle HOA correspondence and violations
  • 24/7 maintenance for tenants for emergencies
  • Utilize licensed professional vendors and handymen for maintenance issues

Being a landlord can be a gratifying job when done correctly. If you have any questions about becoming a landlord or need someone to handle property management services on your behalf, reach out to us! We would love to offer our expertise and services!

The Benefits of Staging Your Investment Property

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While most investors might think staging their investment property isn’t worth the money, the benefits of staging can outweigh the cost. Deciding whether or not to stage your investment property is entirely up to you and your situation, but there are many pros to staging that could work in your favor in the competitive Austin real estate market.

Let’s dive into a few of the top pros to staging your investment property. 

Pro #1: Helps The Property Stand Out

Many investors aren’t utilizing staging for their investment properties, so staging yours will help you stand out among the competition. Potential tenants are more likely to look at your listing with staged photos over listings that aren’t staged because they’re more attractive and inviting, which helps them picture themselves living there. 

Pro #2: Increases The Value

Staged properties offer a more move-in-ready vibe that many potential tenants are more willing to pay for. In addition, they tend to have higher rental rates, meaning you can potentially charge tenants more money to live there. This means you could be marketing to tenants with higher incomes and higher quality tenants. 

Pro #3: Less Turnover & Vacancy Rates

Investment properties that are staged tend to attract more involved tenants who are looking for long-term rentals. Attracting this type of tenant can reduce your turnover and vacancy rates, meaning less stress on you and more money in your pocket over time. 

Pro #4: Shows You Care

Starting on a good note with tenants is huge. Taking the time to stage your investment property shows you’re willing to put in the effort to show the home in its best light. This sets you up to be viewed positively by potential tenants and shows you care about your tenants, their comfort, and the property.

If you have any questions or need ideas on how to stage your investment property, reach out to us! We would love to offer our expertise! 

Investment Tips For Beginner Real Estate Investors

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Investing in real estate is a great way to create a passive income and generate generational wealth. It’s a low-risk investment that can be very exciting for new investors. However, if you’ve never invested in real estate before, it can be challenging to navigate, so it’s important to be as knowledgeable as possible before diving in. 

Let’s dive into a few tips to help you through your real estate investing journey.

Team Up With Professionals

One of the biggest mistakes you can make is trying to do things alone. Don’t spread yourself too thin trying to do it all. Sit down, meet with a few real estate agents, and pick the best for you and your goals. They will be able to help you find properties and negotiate better than you can on your own. Once you find the property, make sure you have trusted contractors lined up to make any repairs or updates. 

Establish A Clear Budget & Criteria

Looking at properties can be exciting, and it can be easy to jump into something too quickly. Once you establish your budget and the features you want in a property, stick to them! Don’t purchase a property over your budget or outside your criteria; it will only hurt you later. 

Diversify Your Portfolio

It can be easy to stick with one form of real estate investing, even though there are lots of options to choose from. Flipping a few properties in a row is nice to get your feet wet, but venture out into other possibilities like rental properties, commercial properties, and more. In addition, invest in different geographical areas to reduce your portfolio risks and make sure you don’t get too comfortable in one area.

Build Your Network

In real estate, you will meet many real estate agents, real estate attorneys, lenders, and more. Take advantage of any interaction you have because you never know what opportunities could come from them. Whether you need real estate advice down the road or they know someone selling a property you might be interested in, it’s beneficial to make connections. 

 If you have any questions about investment tips as a beginner real estate investor, reach out to us! We are always here to help.

When Can You Back Out of a Real Estate Contract?

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Before buying a home or investment property this fall, here is what you need to know about your real estate contract and how to get out of it if necessary. Each real estate contract is unique and may apply to certain circumstances, so always ask your REALTOR® beforehand. 

During Due Diligence

The due diligence phase in the home buying process is the negotiation period when the buyer can review the house and ensure everything is good before deciding to move forward. We’re in a seller’s market now, so buyers are competing against each other. As a way to close quickly and appeal to sellers, some buyers are skipping this phase and the inspections tied with it. But this is the easiest time to back out of a real estate contract. 

Contingency

After the due diligence phase, the only way to get all your money back is if a contingency is not met. A contingency is a condition that must be met before the closing date. They’re called contingencies because the closing is contingent on these specific requirements. 

Contingencies are a form of protection as they will protect you if something is found during the home inspection, title process, or if the appraisal goes too high. Again, since we’re in a seller’s market, there might not be time to include these contingencies. 

Another common contingency is a financing clause. The clause will indicate that the buyer will use all good faith to obtain a loan, but if they are not able to qualify for a mortgage, then they can get out of the deal with no consequence. This is why getting pre-approved is so important in today’s market! Sellers fear this financing contingency, which is why they prefer cash offers, even if it’s lower than their original price. 

Earnest Money

If everything goes right and you’re on track to buy the property, you can still back out of the real estate contract, but it will cost you money when it’s this late in the game. Part of what’s included in a real estate contract is how much each side would be compensated if the other party backed out. This is called earnest money. It’s usually 1% to 3% of the agreed-upon sale price but can be as high as 10%, depending on the real estate market. 

Homebuyers will put this earnest money into an escrow account at the contract signing. This deposit will apply to the down payment or closing costs once the sale goes through. If the deal doesn’t go through, though, the seller keeps the earnest deposit as compensation. 

Today’s Market

There might not be time for these contingencies in today’s hot real estate market, which is why you have to be careful. Many buyers are waiving contingencies as a strategy to close on a house faster. With this route, it’s common for buyers to make up the difference if there’s a difference between the offer price and home appraisal. 

As your real estate agent, I’ll help you navigate through this hot market. Contact me! Reach out to TALK Property Management– We are here to help: (512) 721-1094 or dbrown@talkpropertymanagement.com. 

Profits Rising for Home Flippers

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While fewer property investors are flipping homes, those still active in the real estate market are earning higher profits. According to ATTOM Data Solutions 2020 U.S. Home Flipping Report, investment returns for house flippers climbed to the highest level since late 2018.

Profits Rising for Home Flippers TALK Property Management Dona Brown

The typical home flip gross profit (defined as the difference between the median sales price and the median sales price paid by investors) rose to $67,902 in 2020’s second quarter, up from $61,900 at the same time in 2019. This resulted in higher profits for property investors. The typical gross flipping profit ($67,902) equaled a 41.3% return on investment (ROI), marking the first year-over-year gain since the fourth quarter of 2017.

While profits are on the rise, real estate investors engaging in home flipping has dropped since the COVID-19 pandemic began. Fewer house hunters were looking for homes, which likely cut into investors’ likely buyer pool. 

However, investors who were able to bring deals to the closing table did far better than they had since 2018, likely due to historically-low interest rates that proved attractive to buyers who remained employed during the pandemic and who were willing to purchase homes despite social distancing requirements and the overall economic environment. 

Homes flipped in 2020’s second quarter were sold for a median price of $232,402, while approximately 6.7% of all home sales were flips during the same period, down from 7.5% from the first quarter.

Whether you buy and hold properties or if you prefer to flip, if you have questions about the local real estate market and how it impacts investors, reach out to me anytime. I’m always here to help: (512) 721-1094 or dbrown@talkpropertymanagement.com.
Graph courtesy of ATTOM Data Solutions.

Investing in Duplexes in Austin – Is It Right for You?

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If you’re considering investing in Austin area real estate, you may want to consider purchasing a duplex. In today’s blog post, we’ll examine the pros and cons of investing in duplexes in the greater Austin area.

Pros of Investing in Duplexes

  1. Affordability. When you purchase a duplex, you get two units in a single transaction. While they are typically (but not always) more expensive than a single-family home, the fact that you will receive two rental payments may make them a wise long-term investment. Additionally, duplexes are often located in more affordable neighborhoods, which can increase your tenant pool.
  1. Several Financing Options. The most common methods of financing a duplex are cash, conventional loans, FHA loans, VA loans, and 203k loans. A 203k loan may be a particularly good fit for your investment position. This type of loan is considered part of the FHA loan family, but it has some unique advantages, including the cost of repairs into the loan. 203k loans require the owner to live in the property for at least one year and a 3.5% down payment.
  1. Strong Cash Flow Potential. Some real estate investors choose to live on one side of the duplex, making it a more affordable living option. Others opt to find tenants for both units, which improves an investor’s cash flow position. If you’ve used a Deal Calculator to figure your return on investment (ROI), your rents may cover your PITI (payment, interest, taxes, and insurance) and then some. This can make owning a duplex more lucrative than other investment options.
  1. Relatively Easy to Lease. Potential tenants often prefer more space and a more “at home” feeling, and duplexes usually fit the bill. Additionally, tenants only have to share a single wall with one other tenant, which reduces noise and other potential disturbances. Last but not least, if you’re living on one side of the duplex, tenants will often find comfort in knowing that their landlord is near in case of emergency repairs or issues.
  1. Tax Deductions. Because duplexes are considered investment property, they can come with specific tax deductions that aren’t available with single-family homes. For instance, duplex owners can deduct most of their expenses from ongoing maintenance, yard work, and repairs. Check with your CPA to determine your specific tax situation.

Cons of Investing in Duplexes

  1. Rental Income Isn’t Guaranteed. As with any investment, consistent rental income isn’t guaranteed. Before investing in any real estate, be sure to use a Deal Calculator to run the numbers so that you have proper expectations concerning vacancies and your duplex’s vacancy rate. Remember, it’s essential to take the time to find the right tenant. Quality tenants are worth every minute and dollar spent to find them.
  1. Repairs and Maintenance are on Your Dime. When you buy a duplex as an investment property and don’t plan to hire a property management company, you’re essentially signing up to be a landlord. While that comes with reaping the benefits of rental income, it also means that you are responsible for maintenance and repairs. Make sure that you’re ready and willing to invest the extra time and attention a rental property requires.
  1. Sharing a Wall With Your Tenants. While it will often save you money, sharing a wall (or a structure) with a tenant isn’t always the most comfortable situation. The remedy? Commit to finding and screening the right tenant.

The moral of the story? Be sure to do your homework and be diligent about selecting the right duplex investment for your particular situation.

Have a real estate investor or property management question? Reach out to TALK Property Management anytime. We’re always here to help.