Selling costs are a popular item for procrastination as you work up your budget in the early project stages. But selling costs can end up taking a fair chunk out of the profit if the flipper or wholesaler hasn’t made sufficient allowance for them. What do you need to know about selling costs even before you negotiate the purchase price?   Don’t budget assuming you’ll give away most closing costs to the buyer, even if you can. The buyer will take all of their share of closing costs – including their agent’s commission – into their calculation of what they Read more…

“Time is Money” – never is that more true than in a real estate investor’s flip project. Each project property is running a dollar meter every day until it sells to a homebuyer. Beware of these pitfalls that can cause project delays and drain your cash on your carrying costs, including utilities, insurance, interest on borrowed funds, etc. Do-It-Yourself work, followed by professional do-over’sNew investors are told this until their ears bleed – and still some will overestimate their ability to save a few bucks with a DIY. If you can’t do it to the same standard as an expert Read more…

Experienced real estate investors have learned to appreciate those title companies with personnel that will work with them and do a great job. But new investors may be thoroughly confused – what is it that title companies do that result in all the charges and fees? What should you expect from your “favorite” title company?   First, know that your local title company is eager to talk with you and explain what they do, even before you do business with them. As a real estate investor you are a wanted repeat-business customer. Take them up on their open door. Let Read more…

When is a buy & hold rental property strategy a better choice than a buy & flip? These 6 key criteria can help you determine when the time is right to add a rental property to your portfolio – and when it isn’t.   If you need a more stable and reliable income stream,a buy & hold rental property can help keep your family afloat through the ups and downs of flip projects. If you need to free up all the capital you can get your hands on to keep funding new projects, it is not the right time to Read more…

I want to give you a quick-and-dirty snapshot of some of the important tax considerations of rental properties, if you are not already somewhat versed in rental income. Be aware that this is just a brief introduction, far short of a comprehensive study of passive income taxation!   In my recent blog posts about your strategies for flipping vs. renting (Strategic Decisions: Capital Gains vs Passive Income and Strategic Decisions: A Dual Approach) I mentioned that rental income is taxed as passive income, and receives better tax treatment than either earned income (salaries and wages) or capital gains (profits on Read more…

In today’s financial system, cash and credit are two different things, but both are valuable as a source of project financing. You may have one but not the other! A partnership between someone with credit but no cash and someone else with cash but no more credit can be a powerful combination.   It’s possible to have a good credit rating and a generous credit line without having kept cash on hand. On the other hand, someone else may have cash to invest, but their credit lines are already maxed.   Credit is a valuable commodity in real estate investing, Read more…

Doing due diligence on prospective tenants helps you make sure that you are not moving a landlord’s nightmare into one of your most important assets. Tenant screening can be time-consuming and sometimes troublesome, but you can save thousands of dollars over using professional leasing agents or property management companies.   Here are four essential must-do’s to help you find pleasant, responsible tenants:   Do not be in a hurry to sign a leasewith the first applicant that comes alongsimply to fill a vacancy, unless they fully check out as an excellent prospective tenant. Waiting for the best tenant will be Read more…

So, you’ve decided that property management is the way to go for your investment property. Perhaps this is because you live far from the property, don’t have the time, or lack experience yourself and want a professional on the job. I’ll share my experiencewith a word to be sure every item on this checklist is covered before committing!   Communications   By some reports, the number one complaint that property owners have about property management companies is lack of communication. Make this a top priority, not an afterthought.   How quickly are phone calls returned by someone who can address Read more…

My experience with property managers shows that there aregenerally three types. Those types are the good, the bad, and the ugly! Some do an credible job of providing a valuable service for both the property owner and the tenants. But, I have found that some can do more harm than good for a property owner who is paying a considerable sum for their services. Here are six lies to be aware of when you are screening to hire a property manager: 1)    Claims that they can lease the property for more than anyone else.No, they haven’t cornered the market. Anyone Read more…

Hiring a property management company to do the work may sound like a relaxing way to maintain an investment rental property … but you need to be aware of these 6 pitfalls before you commit!   1)      Skipping calling other client property owners for references on this property manager. Don’t assume the manager won’t give you unsatisfied clients as references – the manager may not know what their property owners really think. Or, they may not have any better references to give and are betting you won’t call! Even better if you can find one or more clients on your Read more…