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Archive for December, 2009

5 Tips to be a Better Landlord

December 18th, 2009

Become a better landlord by using the following 5 tips for landlords to ward off problems before they even occur.

Screen Tenants

It’s important to screen every applicant before you choose them to be your tenant. Screen for criminal pasts, credit records, references, and job history. Learn as much as possible about their ability and propensity to pay their bills on time regularly. It’s also important that everyone be screened in the same way no matter what.

Warranty of Habitability

Each rental property comes with an implied warranty of habitability, it’s your job as the landlord to make sure that your property is livable throughout the residents’ stay. Learn state and local laws related to building codes, health and safety issues and maintain your property’s habitability.

Lower Crime Risk

Take steps to deter criminals from targeting your property by installing lighting, trimming hedges, installing smart key locks and any other steps that may be required or recommended by your local ordinances.

Be Accessible

Whether it’s the landlord themselves or an appointed property manager, make sure that you are accessible for tenants when they have issues and that you respond in a prompt manner. Whether they have a simple noise complaint or a safety concern, everything should be dealt with as promptly as possible.

Establish Protocol

Set a procedure for everything whether it’s just you running the business or a staff. It’s important that everything is handled the same way every time or you could be setting yourself up for discrimination suits.

Managing Rental Properties during Cold Winter Months

December 17th, 2009

Owning a rental property means staying on top of things 12 months out of the year. That being said, circumstances change along with the seasons. With the winter months closing in, you need to think about what this means to you, your tenants, and your rental properties.

First things first, you need to make sure that your tenants have a working furnace to keep them warm. If they don?t, this is something you need to fix now, not later. Simply put, they have every right to withhold rent if you do not supply them with livable conditions.

Does your rental property get buried in snow during the winter months? If so, make sure you are ready to clear the proper areas during these rough times. For most, this includes walkways, steps, and sidewalks. Even if you have to pay somebody to do this it is a responsibility that you cannot forget about.

When the weather turns cold you need to think long and hard about what this means as a rental property manager. Are all your properties ready for winter? If not, now is the time to make a visit and get all the proper details in order.

photo credit:?jpctalbot

Should I stretch my Budget to Buy an Investment Property?

December 16th, 2009

It is not uncommon to be intrigued by an investment property that is just out of your price range. In this situation, you have one of two options. You can stick to your budget and continue to look for something else, or you can stretch to see if you can make ends meet. Which one is best for you?

Whether or not you stretch your budget to buy an investment property depends on many factors. To start, how far do you have to stretch? For example, you may have a budget of $100k but are interested in a home for $125k. This is much better than a budget of $100k and trying to stretch to $200k. The smaller the difference between your budget and the cost of the property the better chance there is that you can make it work.

How can I make stretching my budget as easy as possible? One way of doing this is by coming up with more money. While this is easier said than done, you may be surprised at all the places you can find additional money for a down payment.

Of course, you only want to stretch if you are 100 percent confident that the property is good for your portfolio. Why would you want to take a risk on something that might not work out?

It is your decision. Some investors stretch their budget time after time and it always pays off. Others get in too deep and end up having to dig their way out. What are you going to decide to do?

How Much House can you Afford

December 15th, 2009

Determining how much you can afford to borrow for a new home is the first step in finding a property you wish to buy. This is something you should estimate on your own, but it’s also something that your mortgage lender will be very concerned about.

The first step in determining how much you can afford to borrow is looking at your debt to income ratio. Then after looking at your current debt level and your income it’s time to look at the front end and the back end ratios.

The front end is the cost of the house. Determining a front end ratio is looking at how much of your gross monthly income will go to your mortgage. This means your principal, interest, taxes and insurance payments. The goal is to have the front end that is ideally less than 28% of your gross income.

The back end is figured by looking at how much of your total gross income goes to all debts, mortgage included. The goal is to have your back end stay under 36% of your gross income each month.

Both of these, the front end and back end ratios, are examined before your mortgage broker decides on how much you can borrow. Use the following percentages to figure out an estimate of what you can afford before you see a broker and you’ll be better prepared for their results.

photo credit:?patriotweb

Adjustable Rate Mortgages

December 14th, 2009

An adjustable rate mortgage is often referred to as an ARM and the basic premise is that the interest rate changes with the market which means the monthly payments can also change.

Most adjustable rate mortgages have a fixed rate period where the rate is set at a certain level and doesn’t change, then this is followed by a period where the rate changes regularly. The hook here is that this fixed rate period is typically set at an interest rate that is less than the current rate and more inviting than a fixed rate mortgage which is why it’s a popular way to go.

With the adjustable interest rate you never know if it’s going to go up or down, this is the risk that people who opt for an adjustable rate mortgage agree to. In some cases people with an ARM do quite well with their loans and in others the interest rate has been known to sky rocket and any early savings earned during the low fixed rate period are wiped out.

There are different adjustable rate mortgages out there and each one has its own benefits and downfalls so research each ARM option carefully before you fall for the early honeymoon period low interest rate.

Fixed Rate Mortgages

December 11th, 2009

There are several different types of mortgages out in the market these days and most of them are pretty legitimate, a few years ago in the housing boom there were a number of unscrupulous mortgages that have since disappeared.

The most common and the most popular mortgage is the fixed rate mortgage. Fixed rate mortgages are pretty basic in that you pay your loan off at a set percentage range for a predetermined period of time, typically 15 or 30 years.

Fixed rate mortgages are popular with the masses because it’s simple with standard interest rates and payments that never change throughout the life of the loan. It depends on the mortgage company but these loans are fairly stable and are very predictable.

The 15 year fixed rate mortgages are popular with many because they build equity much quicker and the interest rates are lower than the 30 year loans.

The 30 year fixed rate mortgages are popular because the longer term spreads the payments out and makes it possible for the borrower to afford a higher priced home and have lower monthly loan payments.

There are advantages and disadvantages to both 30 and 15 year fixed mortgages but this type of mortgage, the fixed rate mortgage, is by far the most popular with both home borrowers and home lenders.

How much Money to put into an Investment Property

December 10th, 2009

Upon buying an investment property you may realize that some repairs and upgrades are needed. While there is nothing wrong with this, you need to strike a happy medium between spending too much and not enough. If you are not careful you could go overboard.

Do what needs to be done before all else. For instance, repairing a broken furnace is more important than planting a few bushes along a walkway. Not only is this more important right now, but it will be in the future as well ? especially if you are going to be dealing with tenants.

Set a budget. Just like your own home, you need to have a budget when upgrading an investment property. This will help to ensure that you don?t spend more money than you have. And for most investors, the less money they spend the more money they earn in the long run. Hopefully you want to fit into this group.

Think about how much money you will have to put into an investment property before you buy it. This way you are not surprised once the keys are yours. If you know what you are getting into, you should be able to make things work out from a monetary point of view.

photo credit:?patriotweb

3 Ways To Deal With Difficult Tenants

December 9th, 2009

If you’re managing your property yourself, it’s almost inevitable that you’ll strike it unlucky and end up at some stage with a difficult tenant – one who pays their rent late, or doesn’t take care of the property, or simple doesn’t answer your calls. Here are a few tips that might help you deal with a difficult tenant:

Use Multiple Channels of Communication

Make sure you have more than one way to contact your tenant – by post, by phone and by email, and if possible, with other contact details such as the employer’s name or a relative. Sometimes tenants might appear difficult simply because they prefer to communicate one particular way – if you figure out your tenant is most likely to respond when sent a physical letter by post, then give up the convenience of the phone or email and write them a letter.

Try To Stay in Regular Contact

You can avoid the problem of poor communication (and of course, good communication is essential for resolving all tenant problems) by keeping an open, regular relationship with your tenant. Whether this is a regular phone call to check everything is in order, or a monthly email summarising the rent paid and the rent owing, whatever it is – if you’re in contact regularly, difficulties are less likely to emerge.

Be Firm, But Fair

Don’t wildly threaten eviction every time the rent is a day late, but don’t be too easy, either. You might need to remind your tenant that you also have bills or a mortgage on the property to pay, and if they don’t pay rent, that causes you a lot of problems – some tenants actually forget this part of the equation, but will be more helpful when reminded. Give them warnings, too, but clearly explain your expectations as regards care of the property and rental payments, and stick to what you say.

Avoid Responsibility for Crime on your Property

December 8th, 2009

Landlords risk the possibility of being held responsible for criminal acts that occur on their property. Limit the chance of being liable in this situation by taking preemptive steps and then reacting appropriately if something does occur.

Security Laws

It’s important that landlords start with an awareness of state and local laws regarding tenant safety and then follow those laws to the T, installing proper locks, lighting and other safety precautions.

Tenant Education

Provide tenants with an information sheet that gives them tips to help prevent crime, you may even want to incorporate this information into regular newsletters, common area bulletin postings, and tenant meetings. Keep tenants vigilant and cautious as well.

Listen

Listen to tenants, professional contacts, local governmental officials, police officers or anyone who talks about crime in the area. Learn about the most common types and frequency of crime in your area and take steps to prevent it. Follow up on tenant security issues as promptly as possible.

Handle Tenants

If you have tenants engaging in illegal activities it’s important to take steps to immediately remedy the situation. Even if a tenant is paying rent on time and doesn’t require a lot of attention, if they’re committing crimes on your property and you know about it you can be held responsible. They’re also inviting an unknown quantity onto your property which could be catastrophic.

photo credit:?conner395

Shelter in Place

December 7th, 2009

It’s something you see on the news more frequently, toxic spills that force a sort of quarantine where people are instructed to stay in their homes in rooms with very little ventilation. This is called shelter in place and for landlords and property managers it’s an interesting situation.

Property owners are expected to cooperate with public officials by letting people take shelter in place on their property. For landlords who own businesses this may be more challenging as the accommodations are not as homey as they would be in an apartment building. But even in an apartment situation the property owners are expected to take in all visitors, employees and others who happen to be on the premises.

Once you get a notice of shelter in place you should inform everyone and ask that they stay, although you cannot force them to stay. Lead them to the predefined safe places and bring any disaster supplies. Plastic sheeting, tape and garbage bags are extremely useful as they can block air leaks and prevent toxic fumes from entering the space.

Shelter in place orders rarely last for more than a few hours. If a chemical spill is especially large or toxic government officials will evacuate an area so shelter in place is really only for smaller contaminants.