Agents, Brokers, Property Management, Real Estate Investment

Groundwork

To be chosen to manage rental units, you first need to make sure you’ve laid the groundwork as a successful company. It is imperative that you are properly licensed, create an LLC  or S Corp, and follow a business plan if created. Having a framework will allow your clients to feel confident in your skills and capabilities.

Setting up a company and displaying a healthy rental portfolio will show potential landlords that you know what you’re doing. To be successful and appointed, you need to have the foundation in place.

Building Relationships

In any client facing role, building relationships is the key to growth. Valuing employee relationships can build a solid business, but so can relationships with property owners in your community. Set expectations and keep the lines of communication open for new prospects and current owners.

Feel confident providing your own proactive feedback to owners and identify opportunities for additional revenue streams. Property owners are looking for firms to explain exactly what can be provided for them.

A Healthy Portfolio

Property owners are looking for management companies with healthy pipelines and positive reviews. It is important to model high levels of customer service and management skills. If there is high tenant turnover or flags with occupancy or vacancy rates, this can impact your reputation as a company and deter new prospects. Keep up with shifts and remain accommodating.

Your Next Move

When it comes time to being chosen, be prepared for questions. Most owners want to know how the property will be managed, the fees involved, and how to cancel if needed. Whether the management company has failed to deliver on promises, or you simply want to manage the home yourself, you should let the company know your reason for leaving.

You want a company that is not only knowledgeable about their own processes and systems, but also about the changing real estate market and local laws that affect your property.

Condo vs. Single Family

A condo is an attractive housing complex for most new buyers. With each unit owned by an individual with privileges to use common areas within the building, it provides a next step to turn renters to buyers. However, condo owners are responsible for maintenance and repairs within their own unit. Owners are also required to pay regular fees to a condo association that provide maintenance of the shared common areas, building amenities and the exterior of the building.

There are a few perks to investing in a condominium. Compared to a single-family home, condos are attractive because they are typically less expensive. Condos also appreciate in value over time. Since external maintenance and upkeep is mostly taken care of for you, this releases an amount of stress off the unit owner. Most buildings also offer amenities such as pools, fitness centers, common areas which provide a social aspect for individuals interested in communal style living.

Looking for an ROI

If you’re in a position where you want to investigate investment properties, a condo may be something to add to your list of considerations. While renting can be an affordable option for those who aren’t ready to invest in real estate, buying a condo can be a rewarding move that sets you up for future financial success. How? Condominiums allow you to build equity in the property that you wouldn’t with renting.

While this might sound like the right move, you should also consider the drawbacks.

The Association

The Homeowners Association is a subdivision that makes and enforces rules for the property and residents. The contrast with having an association is some can be very restrictive about what members can do with their properties.

Depending on the location you are considering, condo association fees can be hefty. These fees can increase your monthly payment, which would cut into your overall return on investment. In addition to rental restrictions, there might be other restrictions in a condo community related to parking, common areas, pets, etc.

The association might also limit the types of modifications you can make to the unit. Not every condo community allows you to rent out the condo or limit this capability so short-term rentals like Airbnb are not allowed.

Takeaway

If you want to start investing in condos, make sure the location you select is likely to provide a good return. Consider how you will obtain financing and how much time and money you want to spend on maintenance and repairs. If you can keep up with the fees and the restrictions don’t prevent you from renting the unit, investing in a condo can be a senseful move for the first time buyer or property investor.

Start Small

When getting started on your portfolio journey, don’t be too ambitious. Be sure to learn how to increase the property’s value and how to manage tenants. Start by getting clear on your investment goals and strategy plan. Think of it as a business plan, which will help you get clear on specific, shorter-term goals. This increases your chances of becoming closer to achieving your objectives and defining the strategies you intend to use to achieve those goals.

Pull the Tigger

Once you’ve created your business plan for building your real estate portfolio, now it’s time to buy your first investment property. Be sure to work with an experienced real estate broker and lender. Once you have a property in mind that you believe provides a great investment opportunity, perform an investment property analysis to make sure it makes sense financially.

Grow Over Time

In time, it’s important to grow your portfolio, which means buying properties and adding them to the set. Keep in mind that when you’re juggling multiple rental properties or multiple properties in the process of being renovated, it can be hard to keep everything organized. You may want to consider a property manager to assist you in this process.

Measure Your Success

The easiest way to measure the success of a real estate portfolio is to hire a portfolio manager . Most professionals will conduct an initial investment audit and make recommendations on how to strengthen your portfolio based on the results.

Check your Finances

The most important step before you begin looking at properties is to check your finances. It is important to know where you stand when it comes to your debt-to-income ratio. You can also use one of the easiest ways to calculate a homebuying budget using is the 28% rule, which dictates that your mortgage shouldn’t be more than 28% of your gross income each month. Remember, homeownership involves a variety of continuing costs, including insurance, property taxes, and repair/upkeep expenses.

Learn the Mortgage Process

The best way to learn the mortgage process is to find a step-by-step guide that explains it in greater detail. Most mortgage brokers will look into your income & job history, credit score, debt-to-income ratio, assets, and the property type you are interested in.

Get Pre-Approved Before You Start Your Search

The first step in this process to get pre-approved is to start by filling out a mortgage application and supplying your Social Security number so that the lender can do a credit check. Going through the pre-approval process with multiple lenders allows a homebuyer to shop mortgage rates and find the best deal. You can also count on a seller wanting to see a mortgage pre-approval letter and, in some cases, proof of funds to show that you, the buyer, are serious.

Research the Neighborhood You Want to Live In

Once you receive your pre-approval letter, it’s time to find the neighborhood you want to purchase in. You can work with a broker directly to see what area you are interested in. It is important to find a broker who you can trust and who will achieve your wants and needs in a property.

Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Finally, it is important to consider what you need in a property and what you would like in a property. Before you start your search, list all the features of a home you would like and then qualify them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items. This will help keep you focused on what’s most important.

The benefits of purchasing a home early are related to taxes and investment perks. Most homeowners receive tax deductions, mortgage interest deductions, point deductions, and state & local tax deductions. However, there are also a few cons to owning a home, such as changes in interest rates, maintenance and upkeep costs, and market fluctuations when looking to sell. However, when the time comes to make the decision to purchase, consider a few factors before buying.

Credit score

Your credit score informs lenders about your personal finances. You won’t need spotless credit to qualify for a mortgage, but here are a few highlights to consider when lenders investigate credit –

• 580 for FHA loans with 3.5% down
• 580 to 620 for VA loans
• 620 for conventional loans
• 640 for USDA loans

Remember, when you check your credit score the scores you see in free credit monitoring apps tend to be higher than the FICO scores used by lenders.

Debt–to–income ratio (DTI)

Your existing debt affects your mortgage eligibility, and this ratio compares your monthly debt to your gross monthly income. To measure your DTI, add up your loan payments along with your minimum credit card payments, then divide by your gross monthly income. Multiply that number by 100 to see your DTI.

Down payment

To receive a home loan you will most likely need to have a down payment. For example, a 3% down payment on a $300,000 loan equals $9,000; to put 10% down you’d need $30,000.

If you have enough cash to exceed the minimum down payment requirement for your loan, you’re more likely to qualify for a lower mortgage rate which saves on long–term interest. It is important to consider all these factors before moving forward with a home purchase. Be sure to consider all the financial and other lifestyle implications.

If you are not in this position yet, not to worry! Now you know how to prepare when the time does comes to buy your first home.

They Know Their Stuff

A great real estate broker is well-rounded in the industry. They provide all listing facts, are up front about any problems that arise, as well as share their knowledge of the market – competitive market analysis . It is important to recognize if an agent is not displaying these qualities early on, so you do not pay for it later in the transaction.

Communication is Key

Finding a broker who can be transparent and communicate is crucial to a successful partnership. Courtesy goes a long way as well. If you are running late to an appointment or encounter issues in the transaction, it is your duty to communicate this directly. Communication builds trust which is needed to continue forward in the transaction.

Be Reliable 

If you are unreliable, you will not be successful in this industry. It takes only a few moments for first impressions to occur, so if you already show traits that you are not dependable, you will not win the listing.

Trust is essential for working as any type of agent and it goes beyond customer satisfaction. A code of conduct ensures that clients trust you and by following these tips, you too can be a reliable & successful real estate broker in the industry.

Social Media

The best way to grab the attention of the millennial and younger generations is to get on board with social media. This tool is by far the most beneficial to have in your pocket when engaging with current clients and reaching for new ones. Creating short-form videos on platforms such as Tik Tok, Snapchat, Instagram, etc. will help drive interested buyers and renters in your direction.

Enhance Web Presence

If you already know that millennials are constantly browsing the internet and social platforms, then this means you need to also create a web presence. It is crucial to incorporate social media into your website and create a presence that represents you or your brokerage . Most individuals contact multiple agents to see who is the best fit and the first place they’ll check is social. At the end of the day, millennials want to know how you stand out among the rest.

Price Matters

It is no surprise that most millennial home buyers can’t provide all-cash offers for their home purchases. Many are first-time buyers without funds from a previous home or have large sums of debt from student loans.

When you look at how millennials fund their down payment, it’s clear that their financial options are limited compared to other generations.

To help in these situations, share expertise on how to save money during the home-buying journey. Simple things, like contract negotiations or mortgage lender references can go a long way with any buyer.

In summary, if you do decide to target Millennials, you may have to learn some new tricks. Their love of technology means this demographic has different ways for choosing real estate agents.

You may need to accept the fact that calling, or emailing will be the last thing they do in their search for an agent. That contact will only come after they’ve thoroughly checked out your website, social media accounts, and online reviews. If you’ve always relied on having a charming phone presence to seal the deal, you’re already too late to this game.

Housing experts  say the scams picked up speed after the pandemic shutdowns. Vacant properties weren’t being closely watched and left vulnerable to intruders.

In these circumstances, fraudsters break into empty apartments or homes, replace the locks and advertise the property online. Prospective tenants sign a lease, pay a security deposit, and pay monthly rent to the supposed landlord. When that happens, the scammer flees, and the tenant faces eviction from the real owners.

With these new circumstances, it is now more than ever, important to Safely secure your property.  Another great way to keep a property secure is to hire a property management group to keep a watchful eye.

If you’ve never worked with a property management company, you may be surprised at how much they can help with tenancy turnovers, as well as other aspects of being a landlord.

Property managers are able to contract out the necessary work, market the property for new tenants, oversee and manage the property itself and any work occurring at the property, and communicate with departing tenants to get everything is taken care of.

Secure Entry Ways

As a landlord or property owner, the first step is to cover the basics. Make sure all windows and entrances are secured with locks or dead bolts. If installed, use patio and screen doors as well. Be sure to scope the property for any weak spots or problem areas that an intruder could take advantage.

Upgrade Security Features

There are several avenues to explore when it comes to installing security devices. Security cameras come with responsibility as well as privacy laws. It’s important to do your research before purchasing surveillance.

If the jump to purchasing security cameras is too much at first, you can also increase visibility with motion censored or exterior lighting. Displaying safety decals can also increase the security of your property and its surroundings. If in a larger multi-unit complex, attach emergency numbers as well.

Look Into Insurance

Investing in home insurance policies is a common practice for most rental properties or tenants. It’s one of the best ways to ensure that if something happens to the property itself or the tenant’s belongings you’re still protected. Try to find policy options that combine both home and contents.

Hire a Property Manager

Another great way to keep a property secure is to hire security or a property management group to keep a watchful eye. It can be said that perhaps even more important than the property itself is its management.

If you’ve never worked with a property management company, you may be surprised at how much they can help with tenancy turnovers, as well as other aspects of being a landlord.

Property managers are able to contract out the necessary work, market the property for new tenants, oversee and manage the property itself and any work occurring at the property, and communicate with departing tenants to get everything is taken care of.

Rental property investments can be intimidating for the starting investor, but knowing which factors make a great property investment and where to look for them can help you start your journey to passive rental income.