Looking To Buy An Investment Property? Here Are 4 Ways To Finance It!

Whether you’re looking to purchase a property to flip and put back on the market or to rent out to tenants, there are many ways to invest in real estate. One of the biggest questions investors might have is, “How will I finance this investment property?” Luckily, depending on your situation and finances, there are a few different ways to finance investment properties.

Let’s dive into four ways to finance your next investment property and see which method will work best for you!

Conventional Loan

Like traditional buyers, conventional loans are one of the most common ways to finance an investment property. Conventional loans conform to guidelines set by Fannie Mae or Freddie Mac, but the federal government does not back this loan, unlike with FHA or VA loans. 

Your credit score and credit history are considered to get approved for a conventional loan. The minimum credit score for a conventional loan is 620 or 740 if you want to receive a good interest rate. In addition, a 20% down payment of the home’s purchase price is required for conventional loans. 

Hard Money Loan

Professional individuals or companies lend money to investors specifically for real estate investing purposes. Hard money loans are easier to secure than conventional loans and are best if you’re looking to flip a property instead of buying or renting it. Hard money loans don’t look at credit scores or credit history; however, they take into account the property’s profitability. While hard money loans are one of the most common types for investment properties, they only last for 36 months and have higher interest rates, around 10% higher than conventional loans.

Private Money Loan

Private money loans are where you have people in your network or sphere of influence who have extra money and are looking for a good return on their investment. Private money loans have more flexible terms and are typically used by investors when banks have turned down. Loan terms and interest rates may differ, depending on your relationship with the person who loaned the money, but interest rates are usually lower, and the length of the loan is more flexible than with other loans.

Home Equity Loan

Home equity loans allow an investor to borrow against the equity of their primary home to use towards buying another home or investment property. These loans are essentially a second mortgage, but with a higher interest rate than your first mortgage.

Lenders will run a credit check and have an appraisal done on your primary property to determine creditworthiness and the market value of your home. In most cases, investors are able to borrow up to 80% of the home’s equity to use towards the purchase, repairs, and more. 

If you’re currently an investor or need help getting started, reach out to us at TALK Property Management. We would love to provide our expertise and answer any questions you might have. 

How To Become A Successful Landlord: Mastering The Basics

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

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

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.

Property Management During COVID-19

Property management in a normal market is a complex industry. There are several complicated moving parts from understanding the current real estate market to staying informed of changing leasing and fair housing laws. Now, take that complex market and add the impact of COVID-19, and property management has become a moving target. 

What do you need to know regarding leasing and property management in Austin during the COVID-19 concerns? 

Tenants who are having trouble paying rent or other fees due to COVID-19 complications can establish a temporary, flexible payment plan with property owners and landlords. As a Texas REALTOR®, you can access the agreement form by clicking here.

Although tenants have the right to ask for assistance in payments, they cannot refuse access to the property in fear of virus-related consequences. They must follow current agreements for entering the property, and if property owners choose to screen those viewing the home, they must follow fair housing guidelines. However, if the tenant is at a higher risk of developing an illness, they may have different rights. When considering accessing a home with a fearful tenant, property owners and managers should move slowly and carefully with respect for the safety of everyone involved. 

Residents struggling with the effects of current health concerns may find themselves well underwater; however, the Texas Supreme Court has suspended all eviction hearings through May 18th, 2020, as well as put other restrictions in place such as prohibiting posting evictions through May 25th, 2020.

An owner and property manager must pay close attention to evolving guidelines in handling tenant nonpayment issues. As health concerns twist and turn current tenant rights and leasing laws, income property owners need to stay up to date on the latest legislation.

If you have questions or concerns regarding property management and rental homes, please do not hesitate to contact Dona Brown with Talk Property Management. Our years of experience make us a reliable resource in Austin. 512-721-1094.

Six Tips on Investing in Real Estate

Today we’re lifting the veil and revealing some of the key factors you need to know to begin investing in real estate. We’ve laid them out in six simple steps to get you on your way.

Step one: Learn everything you can about real estate investing.

Real estate has many nuances and can be a large beast to jump into head first, so it only makes sense to seek knowledge from those who’ve been in the industry and have hands-on experience you can use to your advantage. No matter how you learn best, there’s a method for you. From books and blogs to podcasts and forums, you’ll find a plethora of knowledge and experience that will benefit you in the long run. Start with the general topics and take a deeper dive into the investment areas that catch your eye.

Step two: Don’t wing it.

If you don’t make a plan and start investing based on an idea of grandeur in your head, you’re bound to make a lot of mistakes. Mapping out where you are today with your assets, expenses, and monthly income, as well as where you want to be and how you’ll get there will keep you focused and moving in the right direction. Once you have a plan set out, ask an investor to look it over and make sure it’s plausible. If there are some flaws in your plan, your investor will point them out and help you create a plan that may work better for your budget and lifestyle.

Step three: Finance before you purchase.

What we mean here is that you need to know how you’re going to finance your property purchases before you try to find the residence you would like to add to your investment portfolio. Banks and mortgage lenders will be able to show you all of your options, so you can narrow your scope and focus on properties that make sense for you.

Step four: Look for the right investment.

This is the step that can hold many people back. It makes everything real and is the step you need to take to actually make your investment plan a reality. Make a list of what you’re looking for and specify location, price, property type, and condition of the property and begin crossing off homes that don’t work for you. Don’t make exceptions to your list and stick with your gut.

Step five: Put in the paperwork.

Partner with a real estate agent who understands real estate investment, and don’t be afraid to tell them all of your wants and needs. Your agent will begin to pull properties that meet your criteria list and negotiate with the sellers when you find the right fit to get you the best deal. Once you’ve struck a deal, look for unforeseen costs and have an inspector take a close look at the property. The last step is to close and officially become an investor!

Step six: Effectively manage your properties.

Just like any other business, real estate investment will fail if it’s managed poorly. Learn what it takes to be a good landlord, or look into professional property management companies and find the right manager for you and your investments.

If you’re thinking about real estate investment and are ready to find the right property that meets everything on your criteria list, we’re here to help! Reach out to us today, and we’ll begin the search to put your plan in motion.