DIY Upgrades That Make Your Property Feel Like a Luxury Rental

Renovations can be expensive, especially when you want to turn your property into a luxury rental to attract higher-paying tenants. While materials and furniture can be expensive, the prices really start to climb when you bring a professional into the mix. Luckily for your budget, that isn’t always necessary.

Instead, try these DIY upgrades, all of which will make your property feel like a truly luxurious rental.

Update the Kitchen Cabinets

The kitchen isn’t just a place to cook and eat; it’s often the space where tenants spend time with friends and family. A simple way to turn the kitchen in the most lavish space in the home is to update the kitchen cabinets. This gives the space an instant facelift at a fraction of the cost of re-doing the entire space.

The lowest-cost update is to paint the cabinets a fresh new color. If you have a little more budget, consider refacing the current cabinets or replacing them altogether. Finally, take it one step further and replace the hardware on your cabinets for another visually impactful, yet simple DIY project.

Source: Freshome.com

Update the Fireplace

The fireplace is a coveted feature, but one that’s not in top condition can be an eyesore and detract from your property’s value. Not to mention, it’s a centerpiece of the home, which means the smallest changes can make a big difference. A few ways to upgrade the fireplace include:

1. Replace the doors with tinted glass: Tinted glass looks classy, and keeps the mess covered: “Your fireplace is the ugliest place in your home. It’s covered with soot, ashes, and is a grayish blackish mess. Glass doors with tinted glass do a great job of hiding the unsightly mess. It’s like closets. No matter how well organized they are, most people still like a door to keep them out of sight,” says Sam Wilhoit, of Brick-Anew.

2. Paint the brick: Bring your fireplace to life with a fresh coat of paint. Consider re-staining or painting the mantle as well to create an entirely new look that elevates the entire room.

Update the Backsplash

An easy and economical DIY project is updating the backsplash in the kitchen. Fresh tile has a significant visual impact without being expensive. “This is another tenant appreciated upgrade that can be very economical if you get tiles on sale and install yourself. Even if the tiles are not on sale, you’re usually only covering an area that is 2 feet by 10 feet = 20 square feet of area = 20 tiles,” shares Nathan Richard with Revnyou.com.

If you want to skip the sometimes-tricky installation, go with peel and stick subway tiles instead. These are both inexpensive and easy to use, giving the kitchen a luxurious look without the high price tag or extensive sweat equity.

Update the Garage Door

One of the easiest and most cost effective ways to boost curb appeal and the value of your property is to replace the garage doors. Having worn out or out of date garage doors can make a poor first impression, losing potential tenants before they even step inside.

The best part: garage doors can easily be replaced, and you can also upgrade or replace the hardware on the doors to make an impact without the extra work of a full replacement.

Upgrade Lighting

Lighting has an immediate impact on the feel of a home, making it feel dark and closed off or well-lit, open, and inviting. “One of the worst things about rental units has got to be the outdated light fixtures. Luckily, this is also one of the easiest switches. Simply swap out that light fixture for something more your style. Just be sure to reattach the original fixture before moving out,” says Keri Sanders with HGTV.com.

Updating lighting fixtures can be as inexpensive as your budget needs, with a wide variety of options at varying price points. Consider some of the most popular modern styles, including unique chandeliers and wood and metal materials.

Finally: Clean the Property

Never underestimate the impact of a clean rental, especially if you want it to have that luxurious feel—it’s hard to sell relaxation when the space is filthy: “Nothing will turn off a potential renter more than a dirty place,” says Patricia-Anne Tom with Realtor.com.

It can seem almost too simple, but a good cleaning is a great opportunity to make the rental shine—literally—to prospective tenants. Deep clean the rental twice yearly, if possible, and hire a professional if possible. Don’t forget the often overlooked areas like baseboards, window treatments, ceiling fans and appliances.

A small budget can go a long way to turning a mediocre rental into one that looks could be in a luxury home magazine. Use these ideas to take your space up a notch and attract renters who are ready to spend more.

Find out which rental property kitchen and bath trends are making a statement in 2017.

Original article: https://www.propertyware.com/blog/diy-rental-upgrades/?utm_source=twitter&utm_medium=social&utm_campaign=diy-rental-upgrades&utm_term=20170822-tpw&hootPostID=8f976df8d8034c60cbe1a343bfe91da9

Michigan Landlords Can Say No To Marijuana

LANSING, Mich. — Michigan Gov. Rick Snyder has signed legislation that lets landlords prohibit medical marijuana patients from growing or smoking the drug on leased residential property.

The law enacted Tuesday adds another exception to a 2008 voter-approved law that legalized the use of marijuana for medical purposes.

That law already does not require insurers to reimburse people for medical marijuana, nor does it mandate that employers accommodate employees’ use of the drug for medical purposes.

The bill’s sponsor, Republican Sen. Rick Jones of Grand Ledge, says two rental homes in his district were destroyed after they were “turned into greenhouses to grow marijuana without permission.” He says growing marijuana for medical purposes “doesn’t trump safety or private property rights.”

Jones says the law codifies a 2011 state attorney general opinion.

Original Article: http://www.newsbug.info/business/snyder-signs-bill-to-let-landlords-bar-marijuana-in-rentals/article_5ada3752-cce4-5ec7-b9db-b9aa7a1208d8.html

Recent Analysis Shows Many Big-City Renters that Earn Enough to Buy, Prefer Convenience of Renting

SEATTLE, WA – Across the country’s largest rental markets, almost 14 percent of on-market renters have strong credit scores, relatively high incomes and could afford to buy the median home in their market.

As the homeownership rate has declined over the past decade, a broader socio-economic swath of Americans are renting than at any time in recent history. That means people who could afford to buy are renting instead, increasing competition for limited available homes for rent, according to an analysis of financial qualifications reported via the Zillow Renter Profile feature.

San Jose, San Diego, and San Francisco have the largest segments of on-market renters who have the credit score and income necessary to purchase a home, making those metros highly competitive for renters. Los Angeles, New York and Seattle also made the list of metros with large segments of current renters who are financially qualified to buy a home.

To determine which markets have the highest number of financially stable and thus most competitive renters vying for the attention of landlords and property managers, Zillow examined the self-reported credit scores and incomes of renters who were on the market during the first half of 2016. Zillow also looked at regional median rental and home values and competition to determine the markets with the highest share of renters who reported a monthly income equal to or greater than necessary to afford the typical rental and median home in the metro area.

There are also long-term demographic trends impacting renter qualifications and competition: young adults, both the affluent and otherwise, are renting longer than ever before as they delay many of the hallmarks of adulthood that typically lead to homeownership, such as finishing their education and starting families.

In general, markets with lower homeownership rates have higher proportions of on-market renters with both strong credit and high incomes. That said, even when controlling for the homeownership rate, booming markets closely associated with the tech industry – such as San Jose and San Francisco – tend to have exceptionally high proportions of highly qualified, on-market renters.

At the other extreme, markets that tend to have higher homeownership rates, such as Houston, and metros that were particularly hard hit during the housing bust and foreclosure crisis, including Cleveland and Detroit, have lower shares of renters who report both strong credit and high incomes.

“When faced with hurdles of high prices and low inventory, first-time homebuyers are renting longer than ever before even if they are qualified to buy,” said Zillow Chief Economist Dr. Svenja Gudell. “San Jose, San Diego and Seattle are among the most competitive places for buyers, and the going isn’t any easier for renters – as they are competing against throngs of financially sound applicants with strong credit and high incomes. This is a conundrum for many young people who move to those cities because of their strong job markets, only to find tight inventory and steep competition standing between them and their dream home.”


Courtesy of: http://www.multifamilybiz.com/News/7107/Recent_Analysis_Shows_Many_BigCity_Renters_that_Ea…

Detroit Landlords Get A Firm Warning

The city on Friday put out a call to Detroit landlords to register their rental properties ahead of stepped-up enforcement next year.

Mayor Mike Duggan warned the city is gearing up for “a serious enforcement period” in January for rental owners who fail to register and undergo required city inspections.

“We have an ordinance that requires you to register your properties — nobody has enforced that in years. We are going to get back to that,” Duggan told a crowd of more than 100 current and prospective landlords at City Hall.

“What we’re trying to figure out how to do is take the strong landlords and help them grow and succeed and thrive, and take those who are abusing the system and not make it attractive for you to stay in the city. We are giving you notice now.”

The Friday seminar is believed to be the first of its kind for Detroit as officials ramp up efforts to get owners of rental homes or apartments to gain compliance with the regulations.

David Bell, director of the city’s Buildings Safety Engineering & Environmental Department, said officials want landlords with vacant rentals to get them registered within 30 days. For occupied properties, they want them to begin the process immediately.

Landlords are required to register with the building department and get annual certificates of compliance showing they are safe and inhabitable.

The majority of rentals, though, aren’t registered. The city has about 2,500 rental addresses registered, while U.S. Census data estimate there are more than 136,000 rental housing units in the city.

Failure to register or get a certificate of compliance are both punishable by $250 fines, officials said.

Duggan on Friday said he plans to ask Detroit’s City Council to sign off on an ordinance amendment that would require rental owners be current on property taxes to obtain a certificate of compliance for their properties in 2017.

The city is also slated to go live with an online database that will show all of Detroit’s rental properties with the proper certificates and approvals, he said.

“I envision a city in 2017 where every single tenant in this city can go online and in a minute find out whether their rental property is legally authorized and operating in the city,” Duggan said. “But we’re saying here today: Get a head start on this before the rush is coming.”

Rich Salem and Peter Sirr own about a dozen single-family rentals in the city and their Royal Oak-based management company oversees another 150 to 175 homes, primarily in Detroit.

The pair said they’ve already been working to register the homes with the city and came out Friday to learn more.

“Personally, I look at this and think it’s a great thing. You can eliminate all the slum landlords,” said Sirr, of Preferred Homes Michigan. “If you do everything the right way it’s going to cost you a few extra bucks, but it’s not a big deal.”

Duggan noted the city’s land bank owns about 30,000 vacant houses. About 5,000 of the properties could be rehabbed and another 5,000 are occupied with squatters, former homeowners or renters with landlords who failed to pay taxes.

“People who are tenants who were paying rent to a landlord every month had no idea the landlord wasn’t paying taxes,” he said. “…we can’t let this continue to happen.”

The Friday presentation gave attendees tips on crime prevention, squatters, fire and lead safety. Officials also distributed registration steps and requirements and inspections information.

The city launched pilot programs in East English Village and the Bagley neighborhoods to boost registration and inspections.

To help identify landlords, Bell has said the city is using records from the Detroit Water and Sewerage Department.

“We are here to partner with you to increase the quality of life in Detroit,” Bell said. “For too long its been an adversarial relationship and it doesn’t have to be that way. We can’t bring this city back without you.”

Detroit resident and landlord James Lovejoy said he’s worried about the financial impact the changes will have on property owners and tenants.

“I’ve got a property and I’m already charging a set amount of rent, and now the city comes and hands me a bill for inspections,” said Lovejoy, who has three occupied rentals. “I’ll get it all up to code but now the taxes are raised up and I’m going to have to raise my rent on the tenants. People are already struggling to pay rent.”

To register properties online, visit the city’s website.

Written by: Christine Ferretti. http://www.detroitnews.com/staff/27525/christine-ferretti. Staff writer Christine MacDonald contributed.

20 Real Estate Experts Reveal Top Mistakes Made By First-Time Investors

For many first-time real estate investors, taking the leap and buying an investment property is one of the scariest things they’ll ever do. After all, there is a lot at risk if things go south.
I asked real estate experts and successful investors a simple question:

If you could list 3 common mistakes made by first-time real estate investors, which 3 would you list?

I wanted to know plain and simple which three mistakes most often derailed first-time real estate investors when getting started in their investment careers.

Read on to discover the three most common mistakes made by first-time investors, as listed by 20 of the industry’s top real estate experts and investors.

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Bill Gassett, Top 5 Real Estate Agent in Southborough Massachusetts 

As far as mistakes go from real estate investors, I have seen some of the same things repeated more than once.
The most common issue I see is when an investor buys a rehab and underestimate the costs involved in bringing the property into what would be considered appropriate for the market and neighborhood. I have seen numerous cases where the investor actually loses money because they have either overpaid or not done enough home work on what it will actually take to renovate the property correctly.

The second mistake is buying a home that would be considered at the top of the market for a particular town and/or neighborhood. You never want to be the “cream of the crop” property when you are an investor. Middle of the market to the lower end is always a better place to be as the properties that are above you bring up your value.

The third mistake I have seen but not quite as often is an investor buying a property that has some form of functional obsolescence that makes it difficult to sell. Usually these are structural issues that cannot really be changed. For example having to walk through a formal dining room to get to a bedroom in an older home. These are all things that can squash an investors plan of making the money they thought they would!

Marco Santarelli, Investor, Author, Founder of Norada Real Estate

Here are three common mistakes that I would put at the top of your page:

Investing in your local market only. Although your local market might offer you the best opportunities, the reality is that more often than not the best deals are found in other markets, often out-of-state.

Speculating on appreciation. Appreciation is nice but if your property doesn’t make sense the day you buy it then you are probably speculating.

Buying with financing (all cash). Leverage is one of the greatest benefits of investment real estate. It increases you cash-on-cash returns and allows you to buy more property.

Brandon Turner, Investor, VP Marketing at BiggerPockets

The biggest mistakes I see new investors make are:

Not Doing the Math. They simple rely on “gut feeling” when making a decision, which tends to lead to problems and bad investments. The math is not tough, and doesn’t take a lot of time, but can mean the difference between success and failure.

“Shiny Object Syndrome” – where the new investor bounces back and forth between new ideas constantly, never focusing. I believe you can succeed in any niche of real estate, so it’s important to pick something and stick with it.

Not Asking for Help – People think they need to do everything on their own, or that there is some kind of competition that stops them from asking others for advice. People would find greater success (and avoid mistakes) if they only asked for more help!

Maya Paveza, Real Estate Coach, Investor and Strategist 

Great question.

My first instinct answer is the following, there are SO many more mistakes.

1. Rookie Mistake: Pick a REALTOR you are related to, or know, but might only work part-time or has never worked with investors. Do your due diligence in finding the right REALTOR to work with. Ask for references, check references and schedule a consultation with them prior to beginning your working relationship. Make sure they have experience in the investment process. A rookie mistake can cost you a LOT. When I train agents to work with investors I make sure the agents know about “due diligence” inspections and options for special insurance to cover lost rental income, and even system failures. It’s not an everyday real estate transaction, it’s a long term relationship. Take your time, if you are not sure then sign a short term Exclusive Buyer Agency Agreement. But committ to a single agent so you don’t waste your time, and their time. Show dedication to them and amazing things might happen, Agents who are active enough in that area may have notice before a new property hits the market, and if you are committed to your agent you will be top of mind when they get that call. They will also have leases they can share with you, and references to others you might need in the process of purchasing and owning investment properties.

2. Rookies Mistake: Purchasing an investment property with a regular mortgage product. Oops! You can buy a few this way, but at some point you need a commercial loan or a line of credit. It’s much easier to draw upon and a faster way to go when you have to act quickly, especially if in a competitive situation perhaps with a cash buyer. After acquiring a few properties use the equity (which you should have if you are investing properly) to secure a commercial line of credit which can act as cash when need be.

Have your finances ready. Better to have a commercial loan ready to go, and a company set up to protect your personal assets from your investments. There are a lot of risks for investors who own properties, especially those that are rental units. Lost rental income insurance coverage is available, and a home warranty is a great option. Have a GREAT accountant who is familiar with real estate investments and the timeline, you want to avoid showing too much gain and need to know when to turn a property over and acquire a new one.
3. Rookie Mistake: No hiring a property manager or management firm because of the bottom line effect.

You are running a business when you own investment properties, you aren’t playing guys this is the fastest way to build wealth. Cheaping out in this aspect will be the difference between true success and an expensive hobby. Consider it an additional stream of revenue while values increase. Your time is worth money, you need to really value it properly and not become your own handy man or bill collector.

Be sure to read, research and learn about the rental process in your ara, what you should be looking for, what rents are in your area, as your REALTOR ot introduce you to a reputable, and proven, property manager, it’s well worth the expense to have someone else handle the potential issues, maintenance and even licensing required in some area. A client once had a call on Christmas Eve that there had been a fire at one of his properties, he was a few hours away but because he had secured a relationship with a reputable property manager they were notified by the fire department and handled all the arrangements to secure the property, meet the insurance adjuster and act on behalf of the owner without their needing to leave their family gathering. I got the call after it all had occurred, and my client was extremely grateful I had introduced him to his property manager.

Learn the market, trust your REALTOR. They do this everyday, and if you chose the right one you won’t have to worry about the potential ROI of the property you purchase because your agent should be able to easily demonstrate that information via market analysis and statistics.

Ben Leybovich, Real Estate Investor, Entrepreneur and Speaker

Assuming you need money to invest in RE.
Assuming the bricks and mortar are the only value centers in a transaction – there are many others.

Confusing knowledge with wisdom – they are not one and the same, and we need both!

Joshua Dorkin, Founder and CEO at BiggerPockets

Overpay b/c of lack of understanding of how to evaluate deals

paralysis analysis

financially unprepared to support REI

Michael Blank, Expert Apartment Building Investor

I’ll answer the question for apartment building investing:

Mistake # 1: Not having enough cash: either to complete due diligence and get to closing, and running out of cash while owning the building. You need a reserve in case something happens. Sometimes you get into a deal and discover that half the tenants aren’t actually paying rent, or your boiler blows up etc. Once you have a handle on it and it’s stable, you can pull out some of the reserve fund and substitute that with funding the reserve out of cash flow (the rule of thumb is $250 per door per year).
Mistake # 2: Not verifying the actual rents collected. In fact, I just wrote a BiggerPockets article on this here.
Mistake # 3: Not being clear or not sticking to your underwriting guidelines. Before starting to make offers, know exactly what returns you’re looking for. In other words, how will you recognize a good investment when you see it? How do you know it’s good? I look at the IRR (the returns) for the investors – everything else is secondary. So # 1, what are your investment return requirements. Then # 2, make sure you’re underwriting the deal conservatively. Use a 10% vacancy factor, take into account bad debt (i.e uncollected rent) if your property is affected by this. Use a rule of thumb for expenses of 50% of income, and if landlord is paying utilities, increase that to 55% or even 60%.

Seth Williams, Founder of REtipster.com

Don’t pay for improvements and services that don’t add value.

There will always be opportunities to pay for improvements for your properties or added services in your business. These things can certainly help your operation run smoother and allow your properties to generate more revenue with shorter turnaround (both of which will be very important to the long term help of your investment portfolio).

On the same coin, we all have to sift through MANY temptations that entice us to spend our hard earned cash on things that look flashy and appealing, but just don’t add much to the bottom line. Use great discernment when it comes to the things you spend money on (especially in the beginning, when money isn’t “growing on trees” just yet). Choose your battles wisely and only invest your cash in the things that will effectively bring your business to the next level.

Don’t buy properties that cost more than they make.
Let’s face it – in order for a property to be an actual “investment”, it needs to generate a profit.
In other words, after all of your expenses are paid – how much money will you actually be able to KEEP at the end of each year? It comes as a surprise to many new investors that t’s harder than it looks to pull this off. There are an endless number of things that can (and will) eat away at your revenue and become obstacles to you making (and keeping) money. If you want to avoid the trap of owning a property that costs more than it makes – be sure to do through due diligence before you buy it and leave no stone unturned in the process. It may be tedious work that requires great patience, but you’ll thank yourself for a lifetime as a result of laying the groundwork properly.

Don’t hesitate to pay for the right expertise.

It’s the same reason I take my car to a mechanic when it needs fixing, the same reason I go to a doctor when I’m sick, and the same reason I don’t dare to pick up a hammer to fix my own properties… because I don’t have the right set of skills to do it myself.

Mark Ferguson, Realtor, Investor and Author

Buying a rental property for appreciation and ignoring negative cash flow.
Buying a fix and flip and not calculating all the costs or trying to save money by doing all the work themselves.

Spending $20,000 on a real estate guru to teach them how to invest.

There are many programs out there that use low priced or free seminars to get investors in the door and then up charge them for more and more services until they finally bring out the big guns with a30k or 20k program that walks them through how to invest with financing. In the end they are mostly worthless and you could have bought a house with that money.

Joe Manausa, Real Estate Blogger, Broker and Investor

From the hip…

No clearly defined goal – If you are going to invest in real estate, you should have an ROI/IRR goal. Your money will have to be removed from its existing use and put into real estate, so what is your minimum required return on investment?

Not understanding active vs. passive – buy and flip is a job, not an investment. You have to take an active role in this type of “investment” so yo should not compare it with other passive investments.

Looking at properties vs. looking at numbers – investing in real estate requires you to find a property that will meet your financial needs. Too often, new investors go and look at properties that they have yet to financially qualify as feasible investments. Do the numbers first.

Tracy Royce, Short Sale Realtor, Investor and Foreclosure Expert

3 common mistakes made by first time real estate investors is not sticking with it, chasing rabbits, and getting emotional over a deal. I tell anyone who starts, you’re probably going to get a paycheck 6 months from the day you start working diligently on lead generation. So many people drop off after a few weeks/months, and lose hope.
Secondly, when they start getting calls/lead flow, they chase “rabbits” that aren’t ever going to be an actual deal for one reason or another. If someone’s motivated, you’ll know. Don’t waste your time on the majority of leads that aren’t ever going to convert.
Lastly, don’t over improve a house, or buy based on emotion. Let the numbers talk and show you if there’s a deal. You can buy a lot of houses, overpay, overimprove and lose your ass pretty quickly, so your emotions need to take a back seat. It’s not worth buying a bunch of property just so you can brag to your friends you’re in real estate investing. It’s a business; think like an owner from day 1 and you’ll already be ahead of the crowd.”
Don Campbell, Best Selling Real Estate Author, Investor and Senior Market Analyst

The three most common mistakes of real estate investors:
Not understanding the economic fundamentals of their target market. What is driving the market, (speculation or long term economics), is it sustainable and is it attracting the type of tenants I want for instance those with increasing income and strong job prospects.
Buying a property because it is ‘cheap.’ Too many investors buy property without understanding value. Price is not value. Just because it is cheaper than it used to be, or it is cheaper than in other cities doesn’t mean it is a good deal. What matters is Yield – what long-term income stream are you buying when you close on the property. Is it higher than you can get in other areas or investments? Is this yield sustainable or is it just a short term shortage blip.

Not planning a ‘sustainability fund’ when they purchase properties. We often call this the sleep at night fund. It is made up of 3 months of mortgage payment equivalent in readily available cash reserve, for EACH property. This money becomes the buffer for unforeseen repairs, vacancies and other issues. Without this sitting on the sidelines, the investor is simply adding too much unnecessary financial risk to their portfolio. With it, they can go on vacation, sleep at night or just get on with their life with fewer “What if” worries. Treat investing in real estate like the business that it is.

Lynn Pineda, Expert Realtor

Investing in Real Estate for the first time is a very exciting adventure for first time Investors with the hopes for great returns on their investments. Proper planning and preparation is key in anything we do and the same holds true for investing in Real Estate. Likely the most common mistakes made by first time Investors are the following:

Not completing your local Real Estate market research

This is a big deal if you haven’t done your research when deciding on a Real Estate property to purchase. You want to make sure you’re buying in an area where you can anticipate price appreciations and/or steady demands for rentals, if you’re renting opposed to fixing and selling a property. Making the wrong investment due to lack of research is a hard lesson to learn when you end up losing money.

Not budgeting properly for owning Real Estate

It’s so easy to get all wrapped up in the excitement of a first time property purchase that you fail to consider the expenses that go along with property ownership. You need to budget for utilities, repairs and down times, if renting. Will you have the money to fix the A/C when it breaks? What about the month or two you miss out on with no Tenant, when the prior Tenant moved out and you couldn’t immediately find a new Tenant?

Taking shortcuts on any needed repairs or remodeling
Shoddy repairs and/or remodeling will not benefit an Investor. Have you quality contractors in place before you purchase an investment property. Taking short cuts to save a buck will not bring Buyers wanting to buy your property when you’re ready to sell or you won’t have Tenants interested in paying you top dollar for a rental unit. Quality will always pay.

Raphael St. James, Expert Realtor

Not sticking to a plan or the numbers to fulfill your goal (Paying too much, not having enough capital for unexpected repairs, etc.)
Being too short-sighted on immediate returns and not the long-term end goal.

Buying off of impulse or emotion instead of the parameters of the property (cap rate, etc.)

Ilyce Glink, Award-winning real estate & personal finance expert

Timing Issues. Too many people sign a year-long rental agreement and then decide to buy.

Not understanding where you are in the cycle of life. Don’t buy a 1b/1ba and then find a long-term partner or get married and have a baby. You’ll be squished.

Not educating yourself. Read up on the process. (Buy my books, 100 Questions Every First-time Home Buyer Should Ask and Buy Close Move In!) Get educated. It’s the single biggest purchase you’ll ever make. Don’t wing it and don’t rely on people who have never been through the process.

Andrew Fortune, Expert Realtor

1.) Not being realistic about the learning curve. – First time investors are usually pumped full of info from blogs, seminars, and books. Most of the info that they receive will convince them that anyone can be successful investing in real estate. In reality, the chances of a first time investor doing well on their first few deals are slim to none. There will always be an unexpected expense and/or problems that will eat into profits. If you are prepared to make a few mistakes, you will learn from them and adapt with each deal. If you are not prepared to make mistakes, these unforeseen problems will crush your motivation to try it again.

2.) Remodeling for Personal Taste and Not What’s Currently Selling – First time investors have something to prove when they enter the business. One of the ways they express their abilities is through the design choices that they make throughout the remodel process. Unless the investor is looking at homes on a regular basis and noticing what materials are currently selling homes, chances are high that they will over spend on materials, or pick materials that are not desirable to the masses. Tip: Hang out with local home builders who build plenty of homes and use the materials that they use. These builders have years worth of experience dealing with choosing materials that sell homes fast for minimal cost.

3.) Getting Caught Up in the Small Stuff – As an investor, your first home remodel is exciting. It becomes personal. Once emotions and personal feelings get involved, the chances are high that small details will become more noticeable and important. Small cosmetic flaws will start to pop out everywhere you look the longer you are in the property working on it. It takes experience to know what to spend time on and what to avoid. First time investors are known for overdoing their first few rehabs because they get caught up on the small cosmetic issues that home buyers usually never notice when they look at a home. Some examples might be painting inside closets, remodeling under bathroom cabinets, or changing out light fixtures in the garage. Just stick to the main selling points and get the job done on time with minimal cost.
Debbie Drummond, Expert Realtor

#1. The most common issue we see is first time investors who buy with emotion. We’ve seen in-experienced investors who pass up great opportunities because something about the home doesn’t “Wow” them. It may be an investment but they are drawn to homes they could picture themselves living in.
An experienced investor will look at how quick homes in the neighborhood rent and how much rental income it will produce. They’ll leave the “Wow” factor for their own home and focus on the numbers for the investment property. Experienced investors are more likely to buy site unseen based on the numbers and thorough inspections.
#2. Many first time investors see the world thru rose colored glasses. They expect to get the property rented right away, rent checks to arrive on time and not have major issues.
They don’t allow for management fees, occasional repairs and the cost of having a property sit vacant. The expenses involved in evicting a tenant who doesn’t pay can add up. It’s always a good idea to have additional funds out away to cover the unexpected.
#3. First time investors sometimes neglect making little improvements which will help the property rent quick. Most of our investors will spend $5-$10K, depending on size and condition of the property. The extra investment adds updated light fixtures, new flooring, paint and desertscaped back yards, etc. Many of our investors buy used appliances from a local store.
Tenants see stainless appliances, nice flooring and the property rents quick for a good price. The first time investor lists the home for rent with minimal improvement and it sits on the market until they lower the price to get a tenant.
Kyle Hiscock, Real Estate Expert

I’d be happy to give the top 3 mistakes made by real estate investors.
Misjudging cash flow – An investor who purchases an investment expecting to have a positive cash flow of $10,000 after all expenses only to find out after owning for a year the cash flow is $5,000.
Thinking they will get rich fast – Investors purchasing one investment home believing they will get rich quick. Building an investment portfolio takes years and years to do. It doesn’t happen after just one property!

Overpaying for properties – This is a huge no-no. In experienced investors sometimes will stretch when buying an investment because they have the “itch.” This often leads to a poor cash flow and poor investment. It’s important for investors to stick to the numbers and not overpay for properties if the numbers don’t work!

Karen Highland, Real Estate Expert

When considering an investment property purchase, the investor must know going into the project, whether they are going to buy, rehab and flip, or whether they are going to keep the home and rent it out. There are two different approaches, depending on each of these plans. Sometimes first-time investors are not clear on their goals and may change their minds when they get into the renovations on a home. The problem is, then they may have already over-invested, or underinvested.

For example, if the investor plans to renovate and flip the home, then they need to do their research and learn what buyers in that price range and in that neighborhood expect in a home. If the comparable homes are fitted with granite counters and upgraded appliance packages, hardwoods and upgraded bathroom features, then they need to have that cost figured in to the project. If they get into the renovation and find that they are short on finances, then skimping on these features will make the home less desirable to buyers in that market.

If the investor plans to own the home and rent it out for a while, then fitting the home with upgraded features is an expense that they may regret. Renters tend to be hard on a home, no matter if the finishes are less expensive, or more expensive. The wear and tear on expensive upgrades will be more costly to fix and replace down the road, compared to less expensive finishes.
Knowing whether the final product will sell for a profit depends on knowing the comps. Knowing whether it will rent well, depends on the same knowledge, but switching from one plan to the other can end in a disaster. If they find that the home doesn’t sell, or that it doesn’t rent for the money that will cover the cost that they put into it, then they have an entirely new set of problems to deal with.

Richard Silver, Real Estate Expert

My thoughts….

Think long term…
Decide whether income will trump capital appreciation… Or vice versa…what are your goals…

What value can you add with minimal cost??

All of this goes with knowing the market and rules affecting landlords and tenants…
Written By: Jacob Grant Property Management | August 19, 2014 | link to fill article here.

10 Reasons the World Would Not Be The Same Without Michigan

Written by: Morgan Detvay | Rental Management One

It’s nearly impossible to think about a world where the Mitten State doesn’t exist. But sometimes we need a few reminders of just how awesome Michigan is and what is has to contributed to the USA and beyond. 

Here are 10 absolutely undeniable reasons why the world would not be the same without Michigan.

1. Best beaches in the country.

The coasts think they’ve got the beach thing on lock, but seriously, the beaches in Michigan are truly a hidden gem.

2. Jackson, Mich. is the birthplace of the Republican Party.


Regardless of your political affiliation, you have to admit the influence of the Republican Party has been a monumental part of our nation’s history.

3. Michigan has a sports team for every major professional league.


You a sports fan? Michigan’s got you covered!

4. Michigan has the most lighthouses of any state.


These lakeside structures have such a rich history. Go ahead, check them out and be awestruck by both the architecture and water views.

5. Michigan was home to one of the very first modern-day shopping malls.


As urban centers across the country began to experience sprawl, shopping malls like Northland Center in metro Detroit began popping up. In fact, Northland was one of the very first in the 1950s.

6. Michigan’s got some of the very best pizza.


New York and Chicago have their reputations in the pizza game, but Michigan’s square deep dish is truly one of those hidden foodie gems

7. Motown, and all the sub-genres of American pop culture were established in Michigan.


The world has Michigan to thank for the Motown artists, who got their start in Detroit.

8. Michigan is the birthplace of the Arsenal of Democracy.


Starting from World War II, Michigan’s manufacturing industry jumped onto the defense bandwagon. The result: lots of jobs for Americans and a successful middle class America.

9. When most of the rest of the country is drying out, Michigan will be wet.


Many parts of the country deal with drought conditions. If only they were surrounded by these Great Lakes.

10. Michigan is the birthplace of the modern assembly line.


Thanks to the ingenuity of Henry Ford at the turn of the 20th century, American manufacturing on all levels is streamlined, safe, and provides for jobs for millions of people.

We ought to be thankful to have the Great Lakes State in all our lives. Tell us though, what are you most appreciative of in this great state of Michigan?

Why Invest in Rental Property?

Michigan Real Estate 1

Some people invest to get rich. Others invest to get out of a job. Still others invest so their children have an inheritance and grand kids have a college education. Whatever your reason for investing – investing in rental property can help you get there – and can be one of the quickest and safest investment vehicles around. Rental property allows you to take advantage of several distinct benefits:

  • Leverage– Leverage is the ability to use only a small amount of cash to purchase a much larger investment. When investing in real estate, you don’t necessarily have to pay the full amount for the property. Instead, you can pay a “down payment” and get a bank or private investor to fund the remaining. While you may only have 10-20% down (or as low as 3.5% with an FHA Loan) you are able to control 100% of the property and take advantage of 100% of the appreciation, cash-flow, and other benefits.
  • Security– Investing in rental property is generally considered one of the most secure investments you can make, as contrast to methods like flipping or speculation. When you buy smart* you are able to make more monthly income from rent than what it costs to own the property, and the extra monthly incomes (cash flow) can be used to cover the times when the property is vacant or needs repairs.
  • Tax Benefits– The government likes real estate investors, because they provide housing for millions of Americans, and as such – they reward rental property owners with tax breaks and incentives to encourage this type of investing. Benefits like depreciation or the ability to “trade up” to larger properties without paying any tax (1031 Exchanges) can help compound your wealth even faster.
  • Directly Actionable– Finally, investing in rental property gives you an investment that you can directly control. When you buy a stock, you have very very little (if any) control over what the company does and how it operates. Your trust is placed 100% in the hands of Wall Street types and when things go south – your only option is to sell the stock or hang on. When investing in rental property, YOU get to actively take a role in the destiny of your property. You can maintain it, improve it, choose the right tenants, pick the right manager, correct problems, and influence local government to support you.

Different Methods of Investing

There are several different ways that you can invest in rental property, which this section is going to look at. This is not a comprehensive list, but simply a sampling of what is possible.

  • Single Family Homes – Perhaps the most popular method for investing in rental property, the single family home is a house that you can rent out to a single family (or individual.) Generally, these properties are fairly easy to find and fairly easy to finance. Single family homes generally have a higher likelihood of obtaining long-term renters thus an increased chance for stability. On the down-side, when a single family home is vacant, you lose 100% of the rent for that time.
  • Small Multifamily Properties – A personal favorite of mine, the small multifamily is typically between two and four units and can be found in practically every area of the world. The small multifamily offers the ability to receive multiple rents from multiple different tenants, thus diversifying your income to compensate for times of vacancy. In other word – when one unit goes vacant, you still have income from the other units to help pay the bills. Another unique advantage of small multifamily properties is the ability to finance using conventional loans from banks (just like a normal mortgage you would get on a single family house.) This is especially helpful when you plan on living in one of the units, so you can take advantage of the 3.5% down payment requirements given by FHA insured loans.
  • Large Multifamily– Investing in rental property with five units or more becomes a slightly different game, at least in terms of lending. When buying this kind of property, you will be using a “commercial loan” which typically requires higher down payments and interest rates, but shorter term lengths. However, if purchased at a good price, large multifamily properties can quickly produce significant cash flow and a high return on investment.

How to Get Started Investing in Rental Property

Your first step in investing in rental property is to get educated. Congratulations – you’ve already started on step one!

Your next step is to create a plan. As I often say, you wouldn’t take a road trip from Canada to Argentina knowing only that it’s South. You need to have a road map to guide you . Your plan is your road map, and it will help you stay on the right path and avoid dead-ends, wrong-roads, and “shiny objects.” Your plan includes

  • your starting point;
  • your goal/destination;
  • deciding what kind of investing you want to get;
  • how much you want to pay;
  • where you want to buy (neighborhood, tenant type, etc);
  • the level of risk you want to take;
  • the financing you plan on using and
  • your property management team!

Once you have done some of your homework, call Rental Management One to help you get your plan in place. We work with investors just like you who want to trust their property to a professional firm who will take the guess work out of property management. For a free property evaluation click here.

 

 

Article written by Brandon Turner, April 2013. (https://www.biggerpockets.com/renewsblog/2013/04/23/investing-in-rental-property/)