Investing in rental properties can be just as scary as it can be lucrative. Are you having troubles finding what direction to land your first step in this Real Estate Investment Journey? In this post, I will draw a basic road map to help you reach your Investment Destination. This article is for beginner investors seeking to invest in rental property.
Location, location, location!
This is an oldie but goodie. Location is key to finding a rental home to purchase. I'm sure you've heard the "dollar per square foot" term before in the Real Estate Sales World. Rental homes are valued per square foot as well dependent on their location just like a Real Estate sales Transaction is. Each zip code has a general market value calculated for every square foot. A knowledgeable Property Management Company will have the tools to calculate this value to the cent per square foot for you.
Believe it or not, there are different trends for larger units compared to smaller units. For example, if you are purchasing a 1 bedroom property, be sure to choose a location close to transportation, restaurants, downtown, etc. For larger units, the investments property would tend to cater to families. In this case, the location should be close to grocery stores, parks, and desirable school districts. Location will set your rental units apart from other in less desirable areas. It can make your property stand out among others, and a good location will make up for that outdated kitchen or storage issues. Renters typically select their home based on location first, and other features second. You can't remodel the location so make sure to put the most thought into the location of your investments as opposed to the upgrades.
Is it Ready to be Rented? Tic Toc
Your vacancy rate and renovation costs will impact your year end returns significantly. It is important to fill your vacancies as quickly as possible to maximize your return on investment. Ideally, your property is rent ready with little to no work. You can find a property manager before escrow closes and start the advertisement immediately and have your first rent payment within weeks of closing. If you purchase a project it will be just that... a project. This means it could than planned, Minimizing your Return on Investments. Leave those timely projects for the flippers. You've got residual income to make. Remember Time is Money. Tic Toc.
Is it already rented? Not always Trash to Treasure
Purchasing a property that is already rented is the most effective way to buy Investments properties. It will yield the highest ROI providing instant rental payments. If you do your research, it could also be the safest way to invest in real estate. Reaching out to current Property Management Companies and inquiring if any of their investors are ready to liquidate their real estate portfolio is a great way to start your search. Just as you are ready to begin your investments property journey, there may be somebody ending theirs. If you are lucky, you can find a property that is already rented. This approach is a win-win. You can close on the property and start collecting rent immediately. The referring management company will more than likely have an established relationship with the tenant and know the history of the home. This saves you time on interviewing and selecting a qualified Property Management Company. Make sure to review the current lease with the tenant and payment history to ensure that the tenant is a qualified tenant. Qualified tenants that have long term plans to stay in the home add value. Some are skeptical on this approach as they question why the current investor is selling. Is it too good to be true? It is important to consider that this investor may have had a long fruitful history with this property and simply just is ready to cash out. Ask to see their year-end profit and loss sheet from their current management company for the last few years. It may not be Trashed but certainly can be Treasure.
Is it even rentable?
Some subdivisions and planned communities do not allow renters at all. It is important to look in the bi-laws and determine this before purchasing the property. Most single-family homes don't come with rental restrictions unless they are in a subdivision with an Home Owners Association. While HOA's are designed to protect their community, this protection tends to be more geared toward owners occupying the property instead of their renters. The issues between HOA's and investors and their renters stem from their fear of the property values lowering because of the lack of property maintenance and or lack of pride of ownership a renter might come with. This is a large misconception that can be squashed with the representation of a reputable Property Management Company with a track record of finding qualified quality tenants. A good property management will also have established relationships with many of the different Home Owner Association management staff.
If you're considering purchasing a condo or townhouse, check on the rental restrictions and application process. Some communities have a ratio of renters to owner occupied units that they need to maintain. Others have a screening process for tenants while others may not have any rental restrictions. Be aware of what the application cost, process and turn around time is. Some Associations only approve applications once per month. Many tenants can't wait a month to be approved as the typical search starts about 30 days before they need to move. Be careful when selecting a community with no rental restrictions. A community that is selective with its residents will provide a safer environment for your future tenants. Safety is one of the most important factors prospective tenants look for. Finding the right community with the right restriction have a positive impact on the value of your investments home.
Experience with Tenant Placement
I have been providing property management in the Orlando area for the last 17 years. This experience has made me efficient at the management of residential properties. The first thing I do for clients is locate an acceptable tenant. This is done through internet advertising. I use several large sites as well as my own website. The listings are sent out to a broad range of advertising venues, which attracts a lot of activity. This means more showings, and it also means more choices for owners when it comes to selecting a tenant. Once we have an application, that tenant is vetted through a stringent screening process. I check credit and criminal histories, and I verify their background.
I present the findings to the owner, and a decision is made. This one step is a very critical step in property management. It’s the most important thing you can do to avoid headaches and problems. I cannot stress this enough. Once the tenant is in the property, maintaining a good relationship is important. Communication needs to be positive and reinforced during property inspections, which helps with the upkeep of your home. I always conduct inspections during lease periods.
Property Maintenance
I use vendors that are approved, insured, and bonded. These are people I have used for years. I trust them, and they don’t overcharge. Maintaining your home is important. The worst thing an investor can have is a poorly managed home. You want to make sure your rent revenues are generated and the expenses are managed. Make plans to rehab or update your investment property before it’s time to sell it or re-rent it. Making improvements over time is a good idea, and it prevents you from falling under market value when you’re selling or renting.
Perhaps you plan to return to your home in the future, or you want to hold onto it for depreciation and tax deductions, or cash flow. If you want all those things to work in your favor, it has to be in market-ready condition. I frequently work on projects with investors in central Florida and all over the world on remodeling and rehabbing homes. I work with contractors to make sure all that work is done before they get paid.
If you decide you want a rental home or you want to add to your portfolio, I would be happy to answer any questions you might have, and provide a free no-obligation market analysis.
If you have any questions about Orlando property management, please contact us at JML Realty Investments.
Property Management Orlando vs. Real Estate
In recent years, many real estate offices have jumped into the management arena. You need to know that property management is very different from sales. They don’t correlate at all. When you’re looking for a property manager, you need experience, skill, and knowledge.Processes and Experience
When you’re screening and selecting a property management company, look at their processes and how they conduct business. You also want to look at the property manager. That person represents your boots on the ground. They are usually working with a broker, and you may never speak to that broker unless there’s a problem. So, you want to make sure you’re asking about the manager’s actual experience.Attention to Detail and Communication
Another important consideration when you’re selecting a property manager is attention to detail. Are they problem solvers? There’s no room for an owner to be taken advantage of. It’s important to establish a proactive relationship between the manager and the tenants and between the manager and the owner. The communication lines need to remain open. You want to be sure your manager will stay on top of maintenance. You need someone who can balance taking care of necessary maintenance with avoiding unnecessary repairs and inflated costs. It’s important to get the best return on your investment.Vacancies and Tenant Selection
Another thing to watch for is how your property manager will minimize vacancies between tenants. How will they get someone in there as quick as possible and make sure you don’t have a long vacancy? You need to know what their tenant selection process is. Find out if they are selecting arbitrarily or strategically, and if you will be asked to give a stamp of approval on the tenant.
Those are some of the things to consider. If you have any questions about our Orlando property management services, please contact us at JML Realty Investments, LLC.
Pre-Qualifying Tenants
Prior to showing the property, you’ll place an ad and get inquiries. When people inquire, you can ask questions to qualify or disqualify them. Ask why they’re moving. Valid reasons include wanting to be closer to school or work, or because they’re relocating. If they are having a landlord dispute, check into it further. You don’t want to assume what you’re hearing is right.
Ask who will live at the property. If it’s a one bedroom condo, four people moving in would be a problem. Ask about pets, and if you’re accepting a pet, ask what breed. Don’t accept a bully breed. That’s an insurance risk and a bite risk. If it’s an acceptable pet, you would be asking for a pet bite policy and a renter’s insurance policy. You also want to be sure you get vet records for the pet. Make sure they’re current. If it’s a service dog, any breed would have to be accepted.
Another question is - when are you looking to move? They might say two to three months. If your property is vacant, you don’t want to wait. Vacant properties should be filled within two or three weeks. Even if it overlaps with their current lease, a good tenant will accommodate your timing. If you have a tenant in place, you want to make the move-in date closer to the move-out date of your current tenant.
Screening for Credit
Ask about credit. A lot of people don’t really know their credit score, but you can ask for basic information such as whether they owe creditors or have past due bills. If they talk about potentially filing bankruptcy, that might be a problem. It could be costlier to evict them, and it will take longer to get them out if you need to. Asking these questions up front can save you trips to the property and helps you to qualify them prior to showing.
Criminal screenings can show everything from criminal arrests to traffic tickets. Sometimes people have very common names, and you’ll see that you can’t tell if the person is a match. Your credit provider should be able to determine these things and verify a match. Don’t just guess; you need to know.
Verify Employment and Rental History
Verify work and income after running credit and criminal checks. Ask them for a pay stub, which usually has Year to Date income on it. If the tenant is an independent contractor or owns a business, they should be able to provide a Schedule C or 1099 to show their annual income.
Call the employer, and talk to the current landlord. Ask if rent was paid on time, and what the condition of the property is. You can go further and ask previous landlords the same questions. Ask about late rent and NSF checks.
Tenant Communication
Let the tenants know how long it will take to get the application processed and finalized. If you take too long, people will continue shopping for properties. It’s best to jump on the process and do your verifications and run your credit and criminal checks. If you cannot move forward with prospective tenants, send a letter stating why they were not accepted. Give them the name and number of the credit agency you used to run their criminal and credit reports.
One more thing to remember: be aware of fair housing laws. You can unintentionally make a statement that could be perceived as discriminatory. Even if you didn’t realize you were doing it – be aware of it.
If you have any questions about tenant screening, I’d be happy to answer them. Please contact us at JML Realty Investments with any Orlando property management needs.
Supervised Showings and Your Rental Agreement
The first thing you want to mention to your tenants is that you’ll be showing the property by appointment only. Let them know you’re not going to come over unannounced, and you won’t have an open house while they’re there. Explain you will be with the people the whole time they’re in the house. I’ve also explained that this is spelled out in the lease, which they agreed to when they signed the rental agreement.
Showing the property is something you have to do, because you don’t want a vacancy. If the tenants continue to be stubborn, mention that it’s possible for them to avoid having showings if they want to pay their last month’s rent and then pay an additional month’s rent to cover your vacancy time. No one wants to do that, and no one has ever taken me up on that. It usually ends the conversation.
Landlord Rights and Expectations
I always let the tenants know that I understand they want to maintain their privacy. But, the faster we find a tenant, the faster we’re out of their hair. Ask them to keep the property clean. This can be hard when people are moving, but it needs to be kept up while you’re showing it. Talk about specific times of the day and days of the week that work best for the tenant. Then, they won’t dodge showings. If there’s a dog at the property, make sure the tenants are home with the dog during the showing. Or, they can kennel the dog during that time.Maximize Your Showings
When you’re there with the prospective tenants, you could point out the positives of the property. It also allows you to ask them questions about their motives; why they want to move. Get to know their story. Encourage them to apply, because outside of the qualifying questions you ask, you don’t know much about them until you do a background check. I have been surprised at times while checking credit and criminal backgrounds, so I always encourage prospective tenants to apply.
Florida Landlord Tenant Law
For stubborn current tenants who still want to argue about this, go ahead and forward them Florida Statute 83.53. It states you can enter the home with 12 hours of notice, between the hours of 7:30 a.m. and 8:00 p.m. This is spelled out in the law, and they cannot dispute it.
As long as you play by the rules and they do too, you’ll have a minimal vacancy. You’re only making money when rent is coming in.
If you have any questions about how to handle this, or you need help with Orlando property management, please contact us at JML Realty Investments, LLC.
Market Comparables
When you’re looking for your investment home, compare the property you’re buying with what has been on the market for the last six months and has sold. Look at what’s pending, too. Sold properties would be good comparables, and they need to be similar to your property. You cannot compare a remodeled and updated home to an older, dated home. Look at the properties within 200 square feet of the house you’re considering. When you have those comparables, you’ll know what to pay for the house. Don’t over pay. You can fall in love with a property, but if you overpay, it may take a long time to earn any ROI.
Calculate Your Rent and Expenses
Look at your monthly costs, which include your taxes and insurance and HOA dues. If you’re including pool and lawn service, add those as well. Figure in all of your monthly costs that are associated with the property, and you’ll know what is coming out from your cash flow every month. Then, you can look at your rent range, which you can estimate from homes on the market currently. Compare properties with the same square footage that are in the same condition and neighborhood. Compare the rent those homes are getting to what has leased in the last six months. You’ll know your rent range. You can start at the high end, and in two weeks if you don’t have an application or any activity, you’ll know your price is a little high or there’s something about the property that turns off renters. Ask the prospective tenants who come to see it what they like and don’t like.
Rental Management and Tax Deductions
Some tax deductions can be taken in the year that you pay for them. For example, straight deductions like rental management fees and repairs can be deducted right away. If you have to fix the air conditioning or a faucet or the fridge, you can deduct the expenses on that year’s tax return. However, improvements like new floors or a new roof or a new appliance must be deducted over time. Consider all these things before you purchase your property.
Unless you’re up on all the tax laws, the best thing you can do is work with a great accountant who understands investment properties. Professionals can tell you about the deductions you could take. You don’t want to miss anything significant. And, keep good receipts because the IRS is watching. Show what you did in the property and have the backup for it.
If you have any questions about this, or you’re considering purchasing an investment property and you want to talk about the potential rental range, please call me. You can always contact us at JML Realty Investments, LLC for any help with Orlando property management.
When you’re looking for property management services in Orlando, there are many good reasons to work with us at Debbie Gloss Properties. I have been involved in property management for the last 17 years, eight of which have been with my own company. The work is enjoyable, and I still love the challenge. Today, we’re talking about a few things to consider when you’re looking for a property manager.
Property Management Orlando: Marketing and Tenant Selection
You want a well-managed property where your investment is maintained, rental income is generated, and expenses are managed effectively. The first step in accomplishing this is to select an acceptable tenant. At JML Realty Investments, LLC., we do this through internet marketing. Web advertisements are posted on my own website, and those ads are sent out to other sites, providing a broad range of coverage. It helps to get a number of showings because in the end, this additional activity will give you more choices when it comes to tenant selection.
Property Management Orlando: Application and Screening
The next step in tenant selection is processing the application. We look at credit and criminal histories, and we verify background. In verifying the background, I’m also looking to verify that the tenants have paid their rent on time and maintained the properties in previous rentals. Ask former landlords what the property’s condition was when the tenant moved out. Check income as well, and make sure the applicant is qualified to rent the property. Tenant selection is a critical factor. You’re asking if the tenant can pay the rent and take care of the property. This cannot be overemphasized. It’s the start of good property management.
Property Management Orlando: Communication and Maintenance
Once a tenant moves into the home, it’s good to maintain the relationship with positive reinforcement. During inspections, you want to look at the condition of the property. See if there’s any work that may have been neglected. This is also an opportunity to talk about the tenant’s concerns. Communication with your tenant is important to maintaining your home and retaining the tenants long-term.
If you’re thinking of rehab work or remodeling, it may be easier to do that over time. It seems to work better that way without having a large cash outlay all at one time. You want to maintain your home and avoid deferred maintenance so your ready if your going to sell or re-rent the property. If you have deferred maintenance, you’re going to fall below market value. Weather you want to hold onto your home for tax deductions, appreciation, or cash flow, you need to be market ready at all times.
If you would like to talk more about Orlando property management or you’d like a free rental analysis with no obligation, please contact us at JML Realty Investments, LLC.
Property Management Orlando: Competition
With the increase in qualified tenants, we sometimes have a scenario where there are multiple applications for the same property. This creates a sense of urgency for people who are looking at a property. They realize they need to apply right away or it will be gone. This competition is good for the rental market and its investors.
Cash Flow and Tax Benefits
If your property cash flows after expenses, it’s a perfect scenario. However, all investment properties have tax advantages and deductions associated with the rental property. An accountant can help you navigate the tax code and help you take advantage of everything you have. You might also want to consider using a self-directed IRA for your investments. If you’re purchasing one home or building up your portfolio, check into it.
Property Management Orlando: What to Buy
There are many desirable areas in Orlando where you can invest. Tenants look for a home that’s in good condition, as well as the neighborhood or location. If they are looking for a specific school district, that will matter a lot, and they might also want something that’s an easy commute to work. The tenants in Orlando might be looking at one or all those things. Once you’ve located a potential investment home, a good Orlando property management company can help you get the property ready for the rental market.
There are many great reasons to invest in the Orlando area. If you have any questions about investing or Orlando property management, please contact us at JML Realty Investments, LLC. We’d be happy to help you.
A problem you may encounter is a tenant not paying rent. Today, we’re talking about this topic and sharing some steps you can take if you find yourself in this situation.
Tenant Communication
First, ask questions. Find out why your tenant is late with the rent payment. If they have had a life event, that’s going to require a different approach than if it’s a small monetary setback. There might have been some unexpected expense that they encountered, and they’ll be able to catch up with rent quickly. If they pay you when they say they’re going to pay you, check your lease and the charge the proper late fee. You can accept the rent and move on. However, if there’s been a divorce, a job loss, or something big that’s happened, it may be insurmountable and things won’t look like they’re going to improve quickly. In these cases, you probably want to ask them to vacate.
Agreement to Vacate
If your tenant cannot catch up with rent, ask them to sign an agreement to vacate. This agreement states they have a specific date by which they need to move out. If they agree to sign this, you know that they will cooperate and it’s more than likely you will avoid an eviction. That’s good news because evictions are costly and time consuming, and you want to avoid them if you can.
Three Day Notice to Vacate
If your tenants aren’t willing to sign an agreement to vacate, you want to serve a Three Day Notice to Vacate. This tells them they have three days to pay the rent or leave the property. You have to avoid holidays, and you cannot count weekends in the notice period. Post this on the door. Either it will get their attention and they’ll come up with the money, or the three days will pass and you have the right to start the eviction process. At this point, hire an attorney to help you, or gather the paperwork yourself that you can file at the county courthouse in the county where your property is located.
Property Management Orlando: Screening
You’ll want to get through the eviction quickly and move onto the next tenant. Make sure you vet and screen your tenants well before you rent to them. You want to know they earn enough money and have good credit. Make sure they have a good rental history and can take care of your property. Paying attention to these things will help you avoid renting to someone who stops paying rent and ultimately needs to be evicted. If you don’t settle on someone and you pick the right tenant, you avoid a lot of this.
If you have any questions about Orlando property management, please contact us at JML Realty Investments, LLC. We know this is a confusing issue, and it can be hard to move forward. We’d be happy to talk about it with you.
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- ARE YOU HAVING TROUBLE FINDING WHAT DIRECTION TO LAND YOUR FIRST STEP IN THIS REAL ESTATE INVESTMENTS JOURNEY?
- Why You Can Trust JML Realty Investments to Manage Your Orlando Rental Property
- What to Look Out for When Hiring a Property Manager in Orlando
- JML Realty Investments, LLC
- JML Realty Investments
