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Property Investments

How to Buy a Multifamily Property: 5 Pros of Multifamily Investing

Multifamily investing is a great way to diversify your portfolio and increase passive income, here is how to buy a multifamily property, and the benefits of doing so.

People are always looking to invest in rental property, but those who have never taken the leap often don’t know where to start. After all, there are so many options, such as single-family homes, multifamily properties, commercial office space, retail space, hotels, and more.

Where do you start?

Of all the options, multifamily properties tend to be one of the easiest, most straightforward methods of investing in rental property.

 

What is a Multifamily Property?

In short, a multifamily property is one that has more than one unit.

When referring to multifamily properties, it is not uncommon to think of massive high rises or large apartment complexes. After all, these are places where you have many families residing within one building. But multifamily homes can come in all sizes – including a two-family duplex. Tri-plexes and four-plexes are also multifamily properties, housing three and four families.

Smaller multifamily properties are still considered residential property. But, when there are five or more units, it is often referred to as a commercial real estate.

 

5 Pros of Multifamily Investing

Some investors believe that multifamily properties are the way to go. You buy one building and have multiple tenants – it must be a great investment, right? As long as you are making a well-strategized purchase, you will find that there are many benefits to multifamily investing. These include:

1. Create passive income.

As with every rental investment, passive income becomes a great way to bring in money without having to give it much time and attention. This is even more true when you hire a property manager to handle your properties.

2. Increase cash flow.

When you have multiple properties, you have multiple incomes coming in on one property and it can generate an increase in cash flow for you. When you are ready, you can even take this increase in cash flow and invest it in another property.

3. It’s a low-risk investment.

If you have money that you need to invest, but you want to do so safely, then the multifamily investing is a great option. People will always need a place to live.

Even if they are forced to sell their home and move into something smaller, they need a roof over their heads. So no matter how good or bad the economy gets, there is always a good chance of demand.

4. There are many tax advantages.

One thing that sets multifamily rental properties aside from others is that they come with many tax advantages that others don’t. This primarily comes down to depreciation offsets.

5. You only need one loan.

When you buy multiple properties, you will have multiple different loans which can be tedious in tracking and managing over time. However, with multifamily investing, you will only have to worry about one loan on the property of multiple units. When you have a lot on your plate, this can simplify things a bit.

 

How to Buy a Multifamily Property

Once you get your mind set on purchasing a multifamily rental property, you are going to need to know how to do it. You could move in the traditional sense and take out a mortgage. This, of course, means going through various applications and providing the right documentation to get approved. If you are intending to reside in one of the units, you may even qualify for an FHA or VA loan. Be sure to check with your bank or lender to determine your options.

Private money mortgages are another option. If you know a financial backer who isn’t too big into the details of investing but is willing to give you the money to invest, this is another option. Sometimes money may even come from friends or family members who want to act as silent partners in your multifamily investing adventures.

If your investment funds are too high, you can even consider buying cheaper properties using the BRRRR method and rehab them a bit. You may be surprised at how much money you could save — if you have the time and skill to renovate.

Multifamily property investors often have a lot of different strategies they use for determining the best properties or making the best use of funds. Expand your network and learn from those who are already doing it.

 

Utilize a Property Manager for your Multifamily Properties

While there are many reasons to begin multifamily investing, there is one downfall that we have not discussed – and that’s how difficult they are to manage. For investors who aren’t experts at managing more than a rental property or two, having a multifamily unit with multiple tenants – and all the issues that may arise – can be overwhelming and frustrating.

This is where multifamily property management comes in. You can’t let the trials of handling multiple tenants deter you from making a sound investment in a piece of multifamily real estate. Instead, you need to make wise decisions to invest and then delegate the work.

Experienced property managers are able to handle your multifamily property with ease, freeing you up immensely. And hiring one just makes the most financial sense.

A property manager will handle:

  • Marketing your property
  • Tenant screening
  • Showing the property
  • Lease signings
  • Maintenance and repair
  • Walkthroughs and inspections
  • Evictions
  • Rent collection and distribution

And so much more. They understand everything that it takes to successfully manage rental properties – and that’s what they do. At Real Property Management Evolve – the best property management team in Phoenix – we know handling a multifamily property can be overwhelming for the most seasoned investors. That’s why we manage your property so that you don’t have to.

Buying and renting a multifamily property is a great choice to make as an investor – especially because the benefits of doing so are plentiful. But once you do, just know that managing multiple units is much more difficult than you may expect. Reach out to an experienced property manager – such as Real Property Management Evolve – to handle the property for you. It pays to have the experts on your side.

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Property Investments

Becoming Real Estate Investors: 5 Ways to Get Started

Choosing to become real estate investors can be a fantastic way to increase passive income, here are five tips to get started.

Investing in real estate takes a plan and skill. While blindly taking your money and randomly investing it in properties just to invest may land you a nice profit, the likelihood of this happening is pretty slim.

Real estate investors know that investing involves a strategy; and if you want to get started investing, you are going to have to have a strategy of your own.

Most investors will suggest that you start small, with REITs or crowdfunding, and then work your way up. It is less risky and helps you build up your portfolio and your capital, too. Jumping head first into flipping houses could leave you feeling overwhelmed – and in over your head.

Keep it simple and build your strategy. It is ok to start small.

Below are 5 ways to get started as real estate investors. Look at your skills,  your available funds, and your experience – and decide which option would work best for you.

 

1. Short Term or Vacation Rentals

The idea of vacation rentals and websites like Airbnb and the like are very popular these days. Those who are traveling find it more enjoyable to stay with a short-term rental or vacation rental than to stay at a hotel. You usually get a more homey feel, more amenities, and a better overall experience.

As you are getting started in real estate investment, you may want to generate some real estate income without having to do any real investing. Or maybe you need to generate the income for investing. If this sounds like you,  you could get your feet wet by offering up a room for rent or even listing your property for a vacation rental on certain days of the week or times of the year.

Although this investment model can be very easy and profitable, there are always downsides. For example – there are people who rent Airbnb’s simply for the sole purpose of throwing a huge party that will destroy your home. Using a professional management company for your short term rental can help protect your property.

 

2. Buy REITs

REITs or real estate investment trusts involve you investing in trusts – not the physical property. REITs are like the mutual funds of real estate because they consist of large companies that own huge pieces of property (think office buildings, hotels, apartment buildings, etc). And they pay dividends.

No, REITs are not the way you are going to get rich on real estate investing, but they are a good place to start for someone just trying to understand what it is all about. In general, publicly-traded REITs can be a sound investment choice.

 

3. Flipping Properties

If you have spent your Saturday afternoon watching HGTV, then you’ve probably thought, I wonder if I could do that? Show after show has couples buying run-down, forgotten properties and turning them into breathtaking masterpieces. Updated features, flooring, paint, remodeled bathrooms, and kitchens, etc. are all part of transforming a property.

Truth is, flipping properties is not necessarily as easy as it looks on television. First, how good are you at carpentry, plumbing, or electrical work? Do you know someone who is? Or will you have to pay an outside company to handle the work for you? Will you even know if that company is doing a good job, or cutting corners that will cost you later?

Even more, are you able to look at an investment and have a good idea of the costs it will take to renovate the space? And then, of course, you will have to compare all your investment costs with the market rate for re-selling the property. Will you make a profit? Is it a good deal?

Flipping properties involves a lot of strategy and calculations. It can make you a lot of money, but it can also cost you if you don’t know what you are doing.

 

4. Real Estate Crowdfunding

Real estate crowdfunding is investing in a group of others on either debt or equity. Debt investing means investing in a mortgage loan on a piece of property – then receiving a share of it when it is paid back. Equity investing means investing in the actual property and sharing ownership. You will receive money in however the property generates it.

While it may seem similar to REITs, crowdfunding for real estate investors involves investing in a project of your choosing and the minimum investments are usually higher. Because it is one piece of property, rather than investing in a collection, this type of investment is a little riskier.

 

5. Invest in Rental Properties

When you first think about investing in rental properties, you likely think about all landlords have to go through — and want to run the other way. But there is a huge difference between being real estate investors and being landlords.

Did you know that you can invest in rental properties, but leave the managing of the property to someone else?

Property managers are experts in handling rental properties. They can do everything from getting a rental property in shape to rent, marketing and advertising the property, tenant screening, lease signing and document management, routine maintenance and emergency repair, rent collection, inspections, monthly accounting documents, and more.

This means that you can focus solely on your investment portfolio while someone else helps you bring in the income by managing your properties. And, if you are new to real estate investing, this may be your safest option to get in the game.

When you are ready to jump into real estate investing you need to have a clear goal of what you are seeking — and how you are going to obtain it.

If investing in rental properties is your go-to method of investing, then Real Property Management Evolve may be able to help. Known as the best management company in the greater Phoenix area, your rental properties will be in good hands.

You can keep honing your investment skills and let Real Property Management Evolve do the rest.

 

Final Thought

Well, now you know available to start as real estate investors – short-term rentals, REITs, crowdfunding, flipping houses, or rental property investments. Dig deeper into each, reviewing the pros and cons. Then weigh your options with your skill level and determine what your first move should be.

Then, put your real estate investment strategy together. It’s time to do some investing!

“Ninety percent of all millionaires become so through owning real estate.” – Andrew Carnegie

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Property Management Tips

6 Things to Know About Managing Your Multifamily Real Estate

Managing multifamily real estate is a great way to generate passive income as an investor. Before you begin, here are 6 things to consider.

Most landlords and investors get their start with single-family homes. Learning to invest your money into rental properties or in those that will allow you to flip can be a great way to earn money investing – as well as building your portfolio.

While these present great opportunities, they are just a small portion of what is available for real estate investors. There comes a time when nearly all investors wonder whether or not multifamily real estate should be the next move.

Before you decide to jump head first into multifamily real estate as your next rental property, there are a few things you should consider.

 

1. Get Your Feet Wet Before You Dive In

You may have the process of managing your single-family home rental properties down to a science. Maybe you have been doing it for years or maybe you just really thought out the process before you went any further. Here’s the thing – it doesn’t matter how well you manage your properties because multifamily property management is entirely different.

Handling multifamily real estate can be a learning process. Buying too big of a property or too many multifamily properties in a short period of time can be overwhelming and stressful. And this could end up costing you big time.

In general, the most successful real estate investors start small.

 

2. Set Rules for Your Multifamily Real Estate 

In any building where you have multiple families living together, you are going to find yourself dealing with some issues. This can result from just about anything. It could be a noisy, disruptive neighbor. A family that has a pet who invades the space of other residents. Parking issues or complaints. And those are just a couple of examples.

Each family is different – and what they expect out of a living space will vary, one from the next. So, to help everyone get along a little better — and help you keep your sanity — you need to have some guidelines and rules in place for the community as a whole.

These rules should be made clear at the lease signing – and should, for best results, be listed within the lease. Making the expectations clear for all who reside at the property can lead to a better experience for everyone. Though, keep in mind, no matter how clear you are about the community guidelines, you may always have a tenant that pushes the limit and there will always be that tenant who wants to let you know about it.

 

3. Get to Know Your Tenants

As any landlord knows, you want to develop a healthy relationship with your tenants. This is true for multifamily properties, too. Not only does this make your tenants more comfortable coming to you with issues or concerns, but it also helps your tenants to have greater respect for each other.

Why does this matter?

Well, when your tenants are happy with where they are living (and you are happy with them), you will notice that your property vacancy and tenant turnover rates decrease greatly.

 

4. Make Your Multifamily Property More Enticing

There are those multifamily properties that are cold, dreary and just another stopping ground for renters until they find a more permanent location to call home. And then there are those properties that allow tenants to feel at home. They are welcoming, offer amenities, and feel cozy. You know, the type of places that just entice people to stay a little longer.

When it comes to managing multifamily real estate, you need to make sure your properties are the type that make tenants want to stay. You can do this by offering conveniences, such as offering more than one parking spot, ceiling fans throughout the residence, a dishwasher and garbage disposal, sectioned off dog parks, upgraded club house amenities, or even just a well-cared for landscape or playground for the kids.

 

5. Make Your Multifamily Real Estate Energy Efficient

It can be expensive to maintain larger properties – especially if you have a large amount of vacancies. Water, lighting, and other utilities can creep up on you if you are footing the bill. By being proactive and including appliances with energy-star, LED light bulbs, low-flow toilets, and the like, you are going to save yourself money down the road. In addition, these things are also able to grab the attention of potential tenants which is always a bonus.

 

6. Hire a Property Manager

While the ROI and such that you receive from investing in multifamily real estate can be great for you financially, the headache and weight of managing these properties can make you want to run in the other direction.

By hiring a property manager, you get the financial benefits that can come with investing in multifamily real estate without the frustrations that come with managing it. In other words, you are leaving the managing in the hands of those who do it professionally while you get to focus on what you do best – investing.

Property managers handle everything necessary for managing multifamily properties, such as:

  • Filling vacancies with high-quality, thoroughly screened tenants
  • Maintenance and repairs, both routine and emergency
  • Inspections, walk throughs
  • Rent collection
  • Property management marketing/advertising
  • Maintaining records and documentation for the property
  • Monthly and annual reporting

If you are a landlord or real estate investor who is considering a multifamily property, know that there is a difference and have a plan. Will you manage the property yourself? Have you assessed various management systems to handle it successfully? Are you willing to deal with the repairs and maintenance on larger properties? Do you have the manpower to get the job done?

There is so much to consider when it comes to managing multifamily properties. Hiring an experienced property manager is the best way to make sure you enter this new phase of investing in the most successful way imaginable.

As a top-ranked property manager in Phoenix area, Real Property Management Evolve has developed streamlined, efficient methods for handling small multifamily real estate with ease. There comes a time in every investor or landlord’s life when it just makes more financial sense to hand over the reins – and this usually always comes with multifamily properties.

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Phoenix Property Management

What to Expect in the Arizona Housing Market

As an investor or homeowner, it is imperative to know what to expect from the Arizona housing market for the rest of 2021 to best prepare and increase your return on investment.

There has been a lot of changes to life in the last year. The pandemic affected a lot of jobs and incomes. It affected where and how we worked. It also affected our schools, hospitals, and local dining and shopping places. COVID changed us.

And it has greatly changed the Arizona housing market.

The question is – what should expect for the rest of 2021? With eviction bans, increases in home sales, and a slow in new home builds, what does this mean for landlords and investors?

Let’s take a look at the Arizona housing market from a few different angles.

The Impact of Pre-Foreclosures

As we said, many people have lost their jobs or have suffered financially over the last year. This has sent a surge of homes into pre-foreclosure status. This is the time period that begins with the mortgager sends out a default notice. Payments have been missed, a foreclosure appears to be on the horizon, but no legal paperwork has been filed yet – and no writ has been issued.

No homeowner wants to lose their home to foreclosure, but sometimes the best option is to sell.

So, what does this mean for investors? Typically, pre-foreclosure homes are sold below the market value. They want to get out from under the house so they drop the price. Investors who swoop in and buy up these houses often end up with a decent property that has the potential to be turned into something great. A little renovation and may have just scored something incredible.

Though, investing in pre-foreclosures does not come without risk. There could be hefty repair issues within the property that you may or may not know about until after the closing. Plus, with the law allowing sellers the right to rescind, there is always that chance a transaction will be canceled no matter how good it looks.

Regardless, more and more investors seem to be taking the leap and jumping on these cheap properties.

Home Sales are on the Rise

Home sales are on the rise and the competition for them is on fire. Many are saying it is thanks to millennials who took advantage of super-low mortgage rates during the pandemic. And it is existing homes they were after.

Many industries slowed down during the pandemic – including the construction of new homes. This has pushed the influx of buyers to focus on the available inventory: existing homes. With new homeowners and investors seeking the same thing, there has been a lot of fighting to be the one in the buyer’s seat.

All this demand is bringing a slight increase in sale prices, but it is not likely to lead to any serious market crashes down the road. Not to mention that as more construction starts building back up again, the supply with be greater.

Mortgages are Hard to Come By

Unless you’ve got a great credit score and a chunk of money for a down payment (at least 20%), you may not find it easy to get a mortgage. Lenders are dealing with a lot of open mortgages and even more missed payments. And with all the uncertainty that comes with the economy right now, they don’t know when payments are going to start coming in – if at all. As a result, incredibly strict lending standards have been put into place.

The good news is that thanks to these stricter lending guidelines, there are less likely to be any issues with the Arizona housing market in the future like we saw 15 or so years ago.

What do you do if you are an investor? Well, if you are an investor, you may want to consider other types of funding in order to purchase your properties.

The Arizona Housing Market is Doing Better Than You Think

The rental market took a hard hit over the last year with many landlords scrambling to make mortgage payments on their rental properties – especially with many renters unable to afford rent. Thanks to government assistance, those who owed back rent were able to get caught or reduce the money owed, at least.

The current situation has turned many potential investors away from rental properties and it has brought great concern among those who are already there. But what is to come? Will the rental market stay stagnant, or will there be a blossoming in the near future?

Most of those who spend their time analyzing the market feel that rents will recover, especially as life returns to normal thanks to herd immunity. Something to keep an eye on are those properties in more rural areas. With more and more people working from home, convenient commutes are no longer a top priority.

The important thing to remember is that not everyone is going to purchase a home. There will always be renters. Now more than ever, though, you will want to make sure you have a well-established tenant screening reporting process. While it may not do much to counteract unforeseen issues like the global pandemic, we have learned a lot about what could go wrong – and what to look for.

Property managers have been working hard throughout this last year learning ways to keep rental vacancy rates low and rent payments coming in despite everything. If you do end up investing in a new rental property, you may want to let the professionals handle it.

At Real Property Management Evolve, we have a deep understanding of the local Arizona housing market. We recognize that rental rates don’t seem to be improving just yet, but they will.

Final Thought

The pandemic is slowly lifting and everything is starting to show signs of life again. The Arizona housing market has changed quite a bit since this time last year – in ways we never could have imagined. But as our economy begins to really open up and improve, home sales continue to be up, rental rates stagnant – change is sure to come that will even everything back out soon enough.

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Property Management Tips

10 Things Local Property Management Does a Nationwide Realtor Can’t

When choosing a management company for your rental, you with have the option of choosing a local property management company, or a large nationwide realtor. Which is best for you? Here are 10 things a local manager can do that a large nationwide chain cannot.

First things first, bigger is not always better. Read that again – bigger is not always better. All too often, we find ourselves getting excited over the latest release or idea of a major corporation and tend to overlook the little guy. Truth is, that little guy is hungry. He is working to make something big. He has the drive to work hard for his success. And his results show it.

There is no hiding the fact that Zillow is trying to enter the field of property management with its new Zillow Rent Manager program. Truth is, Zillow has been successful at listing properties for sale around the country – but there are some things that major players in the game just can’t do as well as the little guy.

In fact, here are 10 things that local property management will do that a nationwide realtor can’t.

1. Local Property Managers Know Their Market Personally

Local property management companies often have extensive knowledge of their home area. They know the trends and the communities which give them the best guidance for setting rental rates and marketing to the right future tenants.

Nationwide realtors may be well-versed in the process from a larger scale, they aren’t going to have an in-depth knowledge of an area like the locals do.

2. Local Managers Bring a Human Connection

Human connection is important. Would you rent your property without ever talking to a tenant? Nationwide realtors will not be there to interview potential tenants.

You can learn a lot about someone just by having a conversation face-to-face. When it comes to screening tenants, sometimes engaging can help you make your decision. Of course, should you choose to rent your property to someone, you want them to feel like they have a good understanding of who they are renting from, as well.

It doesn’t matter how technologically advanced we get in this world; human connection is vital.

3. Local Property Management Thoroughly Screens Applicants

Nationwide realtors, like Zillow, have a lot of fancy software programs that can do some savvy things – including tenant screening. But do you know what a local property manager can do?

Local property management companies have access to major tenant screening platforms. Instead of relying solely upon the computer-based outcome, they also have an expertly trained eye to look for scams and deceit. You will find that these managers are better equipped with experience and technology to find high-quality tenants for your property.

4. Local Property Managers Handle Rent Collection – Especially from Renters Who Don’t Pay

When your renters aren’t paying their rent, will a nationwide realtor make phone calls or knock on the door of your rental property? Not at all. This would be left up to you to handle. As a landlord looking for help, you won’t find it.

Local property managers have a detailed process down for rent collection and dealing with renters who are late or not paying at all. And, as the landlord, you won’t have to worry about it.

5. Local Managers Will Follow Through with the Eviction Process When Necessary

When those renters reach a point when they are facing eviction, local property managers will follow through with the eviction process and see it through all the necessary legal actions without you having to lift a finger.

Eviction services are not something that is generally handled by nationwide realtors.

6. Local Property Management Know the Laws of their State and Community

When you are dealing with rental properties and housing, there are many laws that you have to abide by, such as Federal Fair Housing laws as well as state and local landlord-tenant laws and the like. Because of what could happen if you don’t, you always want to make sure you are following the law 100% of the time.

Local property management is well-versed in federal, state, and local laws. You can rest easy knowing that you won’t find yourself in any legal hot water. And, if you ever have any questions, you always have a go-to source for information.

7. Local Property Managers Offer Landlords Clear, Affordable Rates

Nationwide realtors often have hidden fees or unclear terms. With a local property manager, such as Real Property Management Evolve, the fees are very transparent. You always know what you are to pay and the services you are paying for.

8. Local Managers Handle Showings and Walk-Throughs

Zillow Property Management is not going to show up at your rental property and handle your showings or walk-throughs. It just doesn’t work that way with nationwide realtors. If you don’t mind doing them yourself, then that’s fine. But, if you are looking for a manager to handle your rental property – and everything that comes with it – that means handling showings, walk-throughs, and inspections.

This is where a local property manager comes in.

9. Local Management Companies Handle Repairs and Routine Maintenance

Your rental property is sure to need routine maintenance and even emergency repairs. Getting these things taken care of in a timely manner can help in tenant retention – and lower vacancy rates. Local property managers have trusted relationships with local vendors and service techs in the area to handle any need that arises in an efficient, proper manner.

The best property managers in Phoenix often get significant discounts with maintenance vendors based on the relationships built over time. This simply doesn’t exist as an opportunity with nationwide property management companies.

10. Local Property Managers Don’t Require the Landlord to Do Anything

Nationwide realtors may offer a service for landlords, but they don’t take over the job of a landlord. If you are looking for someone to thoroughly manage your properties so you can focus on other things, then you need a local property manager.

You won’t have to do anything because your property manager will handle everything from marketing the property to tenant screening, leasing, rent collection, and so much more.

Conclusion

It is easy to get swayed by big companies – with the thought that they are so big because they do things better. At Real Property Management Evolve, we know that Zillow is a great platform, but we also know that for detailed service and effective property management, you need a local property management company. Experience the difference. Give our team a call today!

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Property Management Tips

9 Ways to Reduce Your Rental Property Vacancy Rate

As a homeowner or investor, your rental property vacancy rate directly impacts your ROI. These 9 tips can help you reduce property vacancy, thus increasing your return.

Your rental property vacancy rate is something you need to keep an eye on if you want to have a healthy ROI. After all, vacancies mean no rent collection, which, in turn, means a reduced profit. The more this happens, the harder it can impact your business.  

As a landlord, you know that you either need to find new tenants as soon as possible or keep the ones you have. Let’s take a look at 9 ways to make this happen and reduce your rental property vacancy rate.

1. Understand Your Market

Having a good idea of your market is essential. As renters begin searching for new homes, they are becoming well-versed in the rental rates in the area. You should be, too. Your property should be listed at a comparable rate as others in the area. If it is priced too high, it will turn potential tenants away. If it is priced too low, it will make people wonder what is wrong with the place – so don’t appear desperate.

2. Market Your Property Properly

As you market your property, you want to do so in a way that gets it in front of the right people. Get your property seen – and then spark interest by showing how valuable the property is. Focus on the features, the amenities, the surrounding community, and more.

3. Have a Thorough Tenant Screening Process

Good, high-quality tenants are gems. They pay rent on time, treat the rental property with care, and usually choose to renew their lease. These individuals don’t seem to be very transient. Investing in a thorough tenant screening process means you have a better chance of getting these great tenants.

Not only do quality tenants reduce your risk of missed rental payments, but they also reduce your risk of having to find new tenants after the lease is up.

Your tenant screening process needs to look intricately at important things like:

It’s important to know what to look for in your tenant screening report. Perfect your tenant screening process, and you will find high-quality tenants which, in turn, will reduce your property vacancy rate.

4. Make Repairs Promptly

If you want good tenants, then your tenants need a good landlord. When something breaks or an issue arises, your tenants need to feel like they can count on you to promptly make repairs. They need to feel confident that if the refrigerator stops cooling the day before Thanksgiving, that they can call you, and you will take care of it.

Not many tenants have that confidence in their landlord. When they find it, they want to keep it. 

5. Offer Incentives or Move-In Bonus

Sometimes offering a little can be the difference between a vacancy and no vacancy. For instance, if you have prospective tenants who are torn between your property and one on the next block, offering a move-in bonus or another incentive could be all that is needed to help them make their decision.

If you make them feel like they are getting a deal, they may be more likely to sign the lease.

Just for the record, we are not talking about giving up huge amounts of money here. You can offer 10% off the first month’s rent, a free tv after lease signing, or even a gift card to a local dining favorite. It is all about making them feel good.

6. Suggest an Extended Lease Term

The standard lease is for one year, but it is not unheard of for tenants to sign a two-year lease or one even longer. There are both pros and cons with this type of offer – and all should be weighed and considered, such as:

  • An extended lease avoids the possibility of a higher vacancy rate for a while.
  • You may find that the new tenants with the three-year lease are not the most ideal after all.

Why would this work?

To make this an easier decision, consider offering an extended lease to a tenant you already have. If you have a quality tenant whose lease is almost up and they want to renew, why not offer an extended lease? You know how they are as a tenant, and it would keep you from having to worry about your vacancy rate for a couple of years.

7. Develop a Healthy Rapport With Your Tenants

You don’t need to go and have coffee with your tenants every Saturday but keeping the lines of communication open is a good thing. When you develop a healthy relationship with your tenants, you make it comfortable for them to contact you when there is a need or issue with the property or have a personal struggle that affects their ability to pay rent.

If you make reaching out to you a welcoming experience rather than a dreaded one, you may keep your tenants longer.

8. Begin Marketing Before the Vacancy Happens

You don’t want your property to stay vacant too long. When a tenant gives notice that they won’t be renewing their lease, it is time to start marketing your property. You may have to get creative to show the place, and you will need to allow time in between to get it move-in ready, but this may save you from having to wait another 30 days or more to rent out the unit.

9. Hire a Property Manager

Finally, hiring a property manager is one of the best ways to reduce your rental property vacancy rate. See, property management companies have everything organized and streamlined, so there is minimal downtime between tenants. Perhaps the best part is that you do not have to worry about doing any of it because it will all be handled for you.

At Real Property Management Evolve, our team of professionals work to keep your rental homes filled with high-quality tenants at every step of the way. From top-notch tenant screening to fast repair response times and tried-and-true marketing practices, we take all the steps necessary to ensure that you reduce your rental property vacancy rate and increase your profits.

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Property Management Tips

11 Questions to Ask A Property Manager Before Hiring

These 11 questions to ask a property manager before you hire them will help to ensure that you choose the best possible company for your property’s needs.

As a rental property homeowner or investor, you want to protect your property. You handle everything necessary to ensure that your rentals are in top shape and that your vacancy rate is low. All this hard work, though, can make you wish for some help.

It could be that you are overwhelmed with the stress that comes with managing rental properties. Maybe it is because you would like to focus solely on investing. Or perhaps it is something else entirely.

Whatever brings you to the place of hiring a company for your rental properties, there are 11 questions to ask a property manager before you sign any agreements.

1. Can I Verify Your License? 

One of the most important questions to ask a property manager is to verify their license. Nearly all states in the U.S., including the state of Arizona, require property managers to have a license through the state in which they do business. Arizona law states that to operate as a property manager, a real estate broker’s license is required.

Before you go any further in asking questions – and surely before signing a contract – be sure to verify the property manager’s license and confirm that it is active and in good standing with the state.

2. How Long Have You Been in the Area? 

If it is a Phoenix property manager you are looking for, then you want to find out how long they have been in the area – both in business and personally. You are looking for someone very familiar with the entire area. Not to mention that those with ties to the community usually have a solid network of support.

3. What Services Do You Offer? 

There is a lot to do when it comes to managing properties. Some property managers offer full service; others may charge an additional fee for certain services. Does the company perform thorough tenant screening? Property management marketing? Get to know what is included in their services and what all they can take off of your plate for you.

4. How Much are Your Property Management Fees? 

Every property manager is going to charge a fee for handling your property. Though keep in mind that this could vary based on the services you want them to do. Most companies will charge you a fee based on the amount of rent that is charged for the properties.

Be sure to discuss any additional fees that may be charged, whether for maintenance, legal issues, tenant screening, and more.

Trust your gut. If a property manager is telling you something that sounds too good, there is likely to be a catch down the road. Most property managers hide fees inside of their management agreements so always make sure to get a copy of the agreement, and read it, before signing. At RPM Evolve we believe in transparency – you won’t find any hidden fees in our contracts!

5. How Do You Collect Rent? 

When seeking a property manager, you need someone who invests in technology to streamline their management processes – and this includes collecting rent. Online payment options are what you are looking for.

6. How are Requests for Service Repairs Addressed? 

Other important questions to ask a property manager before hiring include discussing property maintenance. You want to make sure that your rental property is cared for. When a repair is needed, you need to feel confident that these repairs will be addressed promptly. After all, the longer a minor repair goes untouched, the more major the repair becomes – and the more costly for you.

Discuss how the repairs are addressed, if there are scheduled property inspections, who handles the repair payment, if you have a say in final decisions, and so on. The process should be effective and clear so that everyone is on the same page.

7. Do You Send Reports? Will I have Access to a Portal? 

With technology the way it is today, you should be able to have access to info about your properties anytime, day or night. Ask to look at the reports and to see what information you will have access to within their system.

Keeping track of your properties this way will give you a good idea of how well you are or are not doing with your rentals.

8. What is Your Vacancy Rate? 

The vacancy rate will give you an idea of how many properties are sitting vacant at any given time. You want this rate to be small. Too high of a vacancy rate will tell you that either they don’t have much success marketing the property or finding tenants. Or that they have a high turnover rate – which could signal that their tenant screening process may not be too effective.

Another important question concerning the vacancy rate is to find out whether the property manager collects management fees on vacant units. This is not a typical practice. Not receiving fees from you should push the team to work harder to fill the vacancy. Otherwise, they are receiving money, and you are not – and that isn’t making you a priority.

9. How Many Rental Properties Are You Managing? 

While it may be impressive to hear that a company has a roster of 1,500 properties they manage, it may mean you are just another client. Then again, it could mean they are doing something right. If personal service is what you are looking for, smaller local property management companies may be more beneficial.

10. What Properties Do You Primarily Manage? 

You are looking for a property manager that is familiar with the types of rentals you own. For instance, you don’t want to take your multi-unit apartment building to a management team that is well-versed in handling single-family homes. Sometimes, their portfolio may include multiple types of properties which proves they are successful in both types of management. You want to ensure that your property manager has your best interest in mind, and that includes proven success with your type of property.

11. Do You Have Any References? 

A property manager should have clients or a network of business associates that are willing to vouch for their work. If they don’t, that’s a sure sign to run.

As you begin your quest for a property management firm, look for the best. You want someone who is going to be transparent in their services and costs while providing you with open communication. And you want a company that has perfected its management process so that it is streamlined and efficient. These 11 questions to ask a property manager before hiring will give you bountiful insight into the type of company that they are.

Real Property Management Evolve is the top property management team in the Phoenix area that can give you all of these and more. With a customer-focused management process, your property is our priority.

Categories
Landlord Property Management Tips

Landlord Responsibilities: 9 Things You Need to Know As A Homeowner

There are many landlord responsibilities to be aware of when deciding to rent out rental properties – here is what you should know. 

Many people choose to invest in a rental property and become landlords with the idea of earning income without actually having to work. So you buy a rental property, let tenants move in, and sit back collecting rent. Simple, right? Wrong.

While the idea sounds fantastic, the actuality of it is not. The truth is that there are a handful of landlord responsibilities – and they take on a lot of work. It does not take much time for those new to the industry to feel overwhelmed and stressed.

Understanding Your Landlord Responsibilities

If you are considering investing in a rental property or you are currently a landlord who is feeling the struggle, putting a few practices in place can help you tremendously. When it comes to landlord responsibilities, here are nine things you should know.

1. Perfect the Art of Tenant Screening 

Before new tenants move into your rental property, they need to be properly screened. You are looking for high-quality tenants with steady employment, a positive rental history, and a good credit score. Of course, the specifics of what you require will vary on your own preferences or the tenant’s personal situation. The idea is to thoroughly screen your tenants to weed through those that may cause problems or not be able to afford the rent. Watching out for scammers is essential, too.

Having a screening process in place helps reduce risk and brings you peace of mind.

2. Maintain Open Communication with Your Tenants

Communication is key when it comes to your landlord-tenant relationship. They need to know that they can count on you to respond when they reach out – and you need to know the same. You must be available for your tenants and share your preferred method of communication. Knowing they can count on you increases the chance that they will properly care for your property.

3. Address Repair Requests ASAP

As a landlord, you do not want to hear that a repair is needed at one of your properties. It is just one more thing you have to take care of. However, you must address these repair requests as soon as possible. Not only does it mean they will call you next time something else breaks, but it also keeps you from facing major repair bills.

Minor repairs, such as a leaky faucet, can be an easy fix. However, if left alone, this small plumbing issue could turn into a major, more expensive repair down the road. Not to mention, this lack of action may be disheartening to the tenants – who may not call you the next time a repair is needed – which can cost you big time. 

4. Keep Yourself Organized

With so many responsibilities, landlords need to be organized. This is even more important if you have multiple properties. Tenant applications, signed lease agreements, repair orders, move-in / move-out reports, rent payments and receipt, and so on all need to be maintained and organized for each tenant at each property.

It may be overwhelming at first, but finding a system of organization will help ease the burden a bit.

5. Make Sure Your Lease is Legal, Effective, and Thorough

Many new landlords jump online and print off a generic lease agreement. If you want to protect yourself and your rental property, you want to make sure you have a well-written, thorough, and legal lease. Consider speaking to an attorney or a professional within the field who can guide you with this process.

Your lease is a contractual agreement between you and the person(s) living in your rental – and it is there to protect you.

6. Be Proactive with Property Maintenance

Maintaining your properties regularly can help reduce the need for major repairs. And it can help you stay focused without having to worry about additional issues arising. Have a set schedule throughout the year when preventative and/or routine inspections is to be performed.

7. Stay on Top of Market Trends

You are a landlord, but you are also an investor. Therefore, you need to stay on top of market trends to ensure that your property is set at the right rental amount to reduce vacancy while also keeping you from selling yourself short.

8. Have a Clear Understanding of Applicable Laws 

There are laws that landlords are to know and have a clear understanding of, such as fair housing laws and landlord-tenant laws. Unless you want to find yourself in hot water, do your due diligence and know the law as it applies to you at the federal, state, and local levels. This also includes understanding eviction laws, as well as when and how to use them.

9. Be Respectful and Courteous

Most importantly, tenants want a landlord who is respectful and courteous. They are renting a property from you, but they do not need to be made to feel less than you. Speak kindly. In addition, respect your tenant’s right to privacy while residing in your property.

How a Property Manager Can Help

Renting properties is a lot of work with many landlord responsibilities. Even the most well-seasoned landlords can get overwhelmed with the stress that owning rental property brings.

The best solution? Hiring a property manager. After attempting to handle everything independently for a while, many landlords decide that hiring a property manager can bring a sense of relief.

A property management team professionally handles rental properties, which means they have everything down to a science. Thorough tenant screening, repairs and routine maintenance, rent collection, an effective lease agreement, and more follow and tried-and-true process to gain and keep high-quality tenants – while keeping landlords happy and free.

At Real Property Management Evolve, we are the best property management team in the greater Phoenix area. We make it our job to know the laws, the current market and strive to reach nothing but the best for your rental properties.

If you are a landlord who is new to the arena or find yourself feeling overwhelmed from all of your landlord responsibilities, a property manager can help. It is what we do.

Categories
Homeowners

8 Ways to Improve Your Rental Property ROI

As a property owner, you want to ensure that you receive the highest returns possible. Here are 8 ways to improve your rental property ROI.

Your rental property is an investment. You did your research and bought the property intending to earn money. After all, it is no secret that owning rental property is a great way to earn passive income. With the average return on investment falling between 6% and 10% per annum, it is a great investment opportunity. 

To calculate your current rate of return, you will divide your net profit by your incurred costs. The formula will look something like this: 

 

ROI = Investment Gain – Cost of Investment
                            Cost of Investment

 

If you are not satisfied with your calculation and would like to make your rental property ROI more appealing, you can. That is one of the perks of rental property investment – you can take steps to increase your ROI and earn higher returns. This involves making the rental property more enticing, offering additional services or conveniences, and making wise decisions. Here are eight ways you can improve your rental property ROI.

1. Always Evaluate Rental Rates 

The market is constantly changing, so it is important to keep tabs on it, always evaluating current rental rates. Make sure you are not shorting yourself – keep your rental rates within the market average. Don’t make the mistake of going too high outside the margin, or you will likely have a high turnover rate resulting in vacancy and even a damaged ROI.

2. Advertise a Home Office

Today, more people are working from home than ever before. If your rental has a small bedroom, why not refer to it as a home office? It will make your property seem more appealing – and more beneficial to the renters’ needs. Help the potential tenant see the value (a home office) in that tiny bedroom or extra space. 

3. Go Green

As a society, we are becoming more and more aware that our earth is the only one we will ever get. Taking steps to go green is two-fold. Not only does it show that you are a landlord who cares, but it also gives future renters the ability to save money. 

Going green doesn’t mean engaging in huge renovations. Rather, replace your bulbs with LED light bulbs, use only energy-efficient appliances, and consider investing in plumbing fixtures that minimize water usage.

Another way to increase rental property ROI while maintaining energy efficiency is to include solar in your property. Say you are a landlord that includes electric costs in your rent price, which allows you to increase rent by $200 per month, but most of the year there is no electric bill for your tenant. It allows you as the homeowner to increase your recurring revenue.

These small investments can win over new tenants big time – thus helping your increase your rental property ROI.

4. New Flooring, Fresh Paint, and New Hardware

Tenants want their home to look good, even if it is a rental. Having worn flooring or stained carpet is not going to spark interest at all. If you add new flooring that will look good and last a long time, you will increase its marketability. 

Just like new flooring, a fresh coat of paint can make a huge difference, too. It can make some of the oldest places look brand new. Adding small upgrades, like replacing knobs and pulls on cabinets in the kitchen and the bathroom, can give the space a makeover. 

These are relatively cheap ways to freshen up the rental, bring more money into your pocket, and, in turn, up your rental property ROI. 

5. Vamp Up Your Tenant Screening

You want high-quality tenants that you can keep long-term. Having to put out money to clean and repair the place every year or ending up with tenants who cause damage or do not pay can really do some damage to your rate of return. 

Put time and effort into developing a thorough and effective tenant screening so that you get the prime tenants every time. 

6. Landscaping

Pulling up to a rental that has curb appeal is already going to be more marketable than one that does not. Make it look good. Then, if you would like, add a landscaping service to your rent so that you can charge a bit more. Knowing their rental home will look good without effort on their part is always a win-win for a tenant. 

The extra money the landscaped yard will bring in throughout the year can increase your ROI.

7. Include Home Warranties

Home warranties are a great way to improve ROI as they can cover large replacement costs like air conditioning and water heaters. As a landlord, it is up to you to ensure these major appliances work well, and when they need repair, well that falls on you too. With a warranty, appliance breakdowns will be met swiftly, keeping your tenants happy, while allowing you to increase your ROI.

8. Hire a Property Manager 

One of the best decisions you can make when it comes to increasing your rate of return is to hire a property manager. They do more than just manage your property – they work to nurture your investment and increase your rental property ROI.

See, as a regular part of their process, they handle repairs, landscaping, charge pet fees, perform thorough tenant screening to gain the best tenants, offer innovative and automated solutions, and so much more.

At Real Property Management Evolve, we are Phoenix’s best of the best when it comes to caring for your property. We know that you are an investor and that your rental property is a means of income. That is why we do everything we can to ensure that you maximize those profits.   

Do not risk losing money while trying to figure out how to gain money. Instead, leave it to the professionals – and hire a property manager.

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Uncategorized

Using the BRRRR Method to Diversify Your Rental Property Portfolio

The BRRRR method is a proven strategy to help you diversify your rental property portfolio within the Phoenix area; here’s what you should know.

As an investor in rental properties – whether you have one or an entire portfolio – you know how important it is to finds strategies and methods that work well for you. If you stood in a room of 100 investors, there is a good chance that each individual would have a different strategy or method when it comes to finding the best properties and the soundest investments.

The critical thing to remember is that the goal of one investor may differ from another. And, truth be told, what one may think is a great strategy may be flawed.

If you truly want to diversify your rental property portfolio with an established investment strategy that has been proven to work, then you need to consider the BRRRR method.

 

The BRRRR Method: An Overview

Investing in rental property means that you need to find something valuable and create a lot of cash flow. After all, that is the end goal here, right? Thinking of traditional investments, most rental properties are purchased using financing. You apply for a loan through your bank, give a down payment (often at least 20%), fix up the property, and rent it out. It works, yes. But is it efficient? Not so much.

Using the BRRRR method, you cut out the financing and down payment. There is no need to waste time-saving up money on the side so you can make things look good for the bank. Instead, you find yourself moving the process quickly, rehabbing, renting, and refinancing so you can do it all again. It is, honestly, one of the best ways to keep a well-stocked, diversified portfolio – while maintaining a healthy cash flow.

The acronym BRRRR, stands for Buy, Rehab, Rent, Refinance, Repeat. Let’s take a look at each one of these steps.

 

Buy

You want to buy property as an investment because you are looking to make money. Before you can even think of buying, though, you have to find the property that works for you – meaning type, location, price range, and so on. Once you find what you are looking for, you could look to traditional bank financing, but you must know it is not your only choice.

Consider looking at other options for buying your new rental property:

  • Cash: Not everyone has a stack of cash in the bank, but if you do, you may want to consider moving forward with a cash investment in the rental property.
  • Private funding: If you know someone who wants to financially back your purchase or you have a friend or family who can loan you the money, this could be an option for you.
  • A home equity loan: Borrow against a property you already have.
  • Hard money loan: For those who don’t have the best credit or financial history but still want to diversify your portfolio in hopes of turning your financial situation around, hard money loans using tangible collateral could be an option.
  • Cash-out refinance: Again, if you currently own a property, you can always refinance and use the cash to put it towards your new investment.

As we stated, there are many different options for buying new rental properties, so you can find what works for you.

 

Rehab

The idea behind the BRRRR method of property investment is to look for a promising rental that needs some work – and then purchase it below market value. This allows you to go forward and renovate it and, in turn, increase its value.

Rehabs will vary in cost but can be upwards of $40,000.00 on average. You may encounter simple renovations, such as a leak, new carpet, or new coats of paint. Or you may find yourself having to do some significant renovations with the roof, appliances, remodeling of the kitchen or bathroom, and so on. This is when costs can increase significantly.

Remember that you do not always have to do major repairs to see a great increase in value. Sometimes, just small changes, such as bringing curb appeal to the property, can increase its value to your portfolio.

 

Rent

If you want a sound investment, you cannot skimp when it comes to finding tenants. You need to rent your property to suitable tenants so that they not only care for your property but pay monthly rent regularly and on time.

The tenant screening process requires a bit of time and skill. Sometimes leaving this to the experts may prove to be a wise choice. Property managers have a deep understanding of the local market and know the proper way to screen tenants. This means they also know how to find high-quality tenants while avoiding scammers.

Think about it this way – you are investing in a rental to gain quality tenants – and keep them happy – so you can maintain an income from this property. You need to place value in the entire process – and a property manager can help. 

 

Refinance

The next step in the BRRRR method is to refinance the rental property. Timing is crucial with this step as you want to wait approximately 6 to 12 months after you gain renters before you reach out to the lender. Be sure you have a clear understanding of your guidelines – and have a backup plan – before you rely too heavily on the cash from this refinance. 

 

Repeat

If you are like most investors, you are always looking for the next property. With the money you receive from the refinance we just talked about above, you can purchase your next property – and repeat the whole process.

That’s how you diversify that rental portfolio of yours!

Having professionals by your side always makes the process run a bit more smoothly. While you network with lenders, real estate agents, and other investors, don’t forget to find a property management team, too.

At Real Property Management Evolve, our seasoned team works to keep the Rent portion of the BRRRR method under control for all of your rental properties. That’s what makes us the best property management company in the greater Phoenix area.