Protect Your Investment!

When you own a property, your hope is that it will increase in value over the years.  This is true whether you live in it or use it as a rental.  It’s easier to maintain your own residence because you’re there every day and tend to notice the items that need attention, like a leaky sink or roof, a cracked window, peeling paint, etc.

But when that home is a rental, you have to make a concerted effort to get inside and take a look … for maintenance issues, and tenant cleanliness issues as well.

For my Indianapolis rental properties, I try to do apartment checks after we’ve had a good soaking rain.  Here are some things I always check:

  • Smoke alarms
  • Furnace filters (they should be changed every three months)
  • Ceilings (for leaks)
  • Under every sink (again, for leaks)
  • Floors around toilets and tubs (are they soft? If so, there’s a water leak somewhere)
  • All rooms for cleanliness

I do the same for all of the rentals I manage for other people.  It’s important that your tenants see your face from time to time.  When they know you care, they’re more likely to care!  And of course, there’s a clause in my lease allowing me to evict if they don’t maintain the property.

At some point down the road, whether it’s your own home or a rental, you’ll want to sell.  If you protect that investment now, your efforts will be rewarded in the end, when you plan your exit strategy.

Happy investing!   🙂

Beautify …

I encourage the tenants in my Indianpolis rental properties to plant flowers and shrubs on the property if they’re so inclined.  Most are not, especially if they’re struggling financially.  Understandable.  If you don’t have much disposable income, you’re not going to consider using it to buy flowers and mulch.

The home in the picture below used to be barren in the front.  I hadn’t gotten around to planting anything along the front porch, although it would’ve enhanced the curb appeal.  But then Shelby moved in and little by little, the outside of this rental property got a facelift!

photo (3)First, the front of the house got a fresh coat of white paint, with my permission of course.  Dirt and dust from the street had grayed it down.  Then the dark gray trim got repainted, followed by the porch floor.

And this spring, the finishing touches … more plants added, a border, a couple of beautiful hibiscus trees and some mulch to finish it off.

I wish I had a “before” picture to show … if you look at the video clip on the home page of this blog under “A Bit About Barb” it’s the first home I drive by … but anyway, it used to be plain and a little tired looking but now?  Warm, inviting, cared for … I love the look!

I’ll continue to encourage my tenants to beautify their exteriors, but for now, I wish I had more Shelbys!

Illegal Entry?

I own and manage 27 rental property units in Indianapolis, and also manage homes for other owners.  I love my work and have gotten fairly adept at it over the years.  When I consult with people who are considering getting into the business, their greatest concern it that tenants will totally trash the rental unit.

Well, yes, that can happen, but there’s an easy fix for that.  Do occasional walk-throughs, and make that privilege part of your lease agreement.  My lease states, “Tenant will allow landlord to show, make repairs or inspect apartment when necessary.”  I explain that the home is in excellent condition and I hope they’ll maintain it.  I’ll be coming in — with proper notice, of course — every once in a while, to do a walk-through.

The key word here is “proper notice.”  Tenants have rights to the property.  Don’t ever think that, just because you own the rental, you can go over there unannounced and gain entry, even to the back yard or garage.  Your tenant (if so inclined) could order you off the property and be correct in doing so!  If you refused, he/she could call the police and have you arrested and hauled off.

By all means, do put a clause in your lease that allows you access to your property.  It’s your asset and you must protect it.  But make sure you give your tenant notice, usually 24 hours, before you come.  It’s common courtesy, but it’s also the law!

Tips For Buying a Rental Property

Buying rental property is a great investment right now.  Thousands of foreclosures have flooded the market and are dragging prices down, and the end is not in sight.  But where do you start?  It doesn’t have to be overwhelming if you break it down:

  • Get your financing in line first.  How’s your credit?  Trim down on that extra (unnecessary) spending and start planning for your first purchase!  Figure out what you can spend and how you’ll pay for the property.
  • Find your target neighborhood.  Before I bought my first rental property I drove several neighborhoods, none of which were further than 30 minutes from my house.  Drive through at all hours of the day, talk to homeowners . . . they will give you precious details about the area/residents.
  • Talk to other, seasoned investors who’ve been there, done that.  Join a landlord association.  Read books.  (Mine is a good one. Lol . . . but seriously, it offers tools, tips, techniques, forms, products and advice to simplify the process.)  In other words, don’t go into this blind.
  • Decide on multi- or single-family rental properties.  Multi-family will bring in more money but is more labor intensive.
  • Look at your personality, work life and home life — do you have the time, etc. to manage your own properties?  Not everyone is equipped to do this work.  Some people have time constraints that prevent them from doing it, others have personality constraints that make it difficult.
  • If you’re not going to do much of the work yourself, find honest, reliable subs before you buy.  You’ll want to hit the ground running as soon as you close on a property, so you’ll need to have your workers all lined up and ready to go.

There’s so much involved in buying rental properties, especially as a first time buyer.  But it’s fantastic for income and long term investment, and now is an excellent time to consider jumping in . . .

So prepare well, trust yourself, and go for it!

Better to Buy Right Now?

Mortgage rates are near a 50-year low and foreclosures continue to flood the housing market.  It was also recently disclosed that the banks are withholding thousands of these foreclosed homes, and will release them into the market throughout 2012.  This is only going to delay the housing recovery even more.  But I guess the good news in this: for investors (or other buyers who can qualify) there’s plenty of inventory out there, prices are going to bump along the bottom for a long time, and it’s a great time to buy, as mentioned in the following article that appeared in Kiplinger on line:            http://www.kiplinger.com/magazine/archives/should-you-buy-or-rent.html.

Indianapolis is actually cited as one of 10 cities where the prices are low/stable and unlikely to drop much further.  They also talk about a price/rent ratio, often called the rent-to-buy ratio.  To find out whether it’s smarter to buy or rent in your area, you take the value of the home you’re looking to buy, and divide it by the annual cost of renting the same type of dwelling. If the number is below 15, it’s a good buy.  Above 15, smarter to rent.

For example, on the foreclosure I bought last fall, I paid 35K and have a total of 40K in it.  At 825/month rent, my ratio is 4! Definitely a buy.  And even at the true market value of the home, compared to those around it (80K), the ratio is only 8.

The rent-to-buy ratio here is excellent, and we have a very strong rental market.  I was able to find a fantastic renter for that home as soon as it was finished and ready to go.  So we’re fortunate here.  It’s a great market for buyers — if you can qualify.  And there’s the catch.  The banks have tightened their purse strings and are making it difficult.

They’ve gone from way too lenient to way too strict.  Hopefully, the pendulum will swing back to middle ground soon . . . in the mean time, people everywhere are being forced into rentals.  For us landlords, life is good . . .      🙂