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W. Darrow Fielder - The Right Time to Invest in Real Estate

When is the Right Time to Invest in Commercial Real Estate?

A market downturn can often be the opening you need to secure the commercial real estate you want. However, you’ll want to understand multiple factors that stand in between you from getting real estate at its cheapest point or getting it as it’s rising. Understand these factors skilled real estate investors use today when choosing to purchase commercial real estate.

Knowledge

Entering into a new market of commercial real estate that you haven’t dealt with before can be tempting if you’re looking for profits but you must stick to what you know. The reason you’ll want to stick to your knowledge is that you’ll be able to identify more easily properties that won’t bring you as much risk as going into a completely different industry. Over time, you’ll be able to even grow your knowledge of the industry you belong in by talking to other skilled investors. Ensure that you are always sticking with what you know when you are looking to invest in commercial real estate.

Local Experts

As you look beyond where you live, you might be tempted to invest in areas all around your country and around the world. It can be very profitable for you to split up your investments based on location but it’s key that you bring in local experts while doing so. Working with local experts will give you help in understanding key differences cities may have from one another such as real estate tax, how often property sells in a specific area, what type of people are moving in, and more. Make sure that you always partner up with local experts when looking to purchase commercial real estate in a specific area.

Historical Data

Over time, the pricing of real estate can change due to various market and city conditions but you must refer to historical data rather than just current data when purchasing commercial real estate. The reason for this is that you’ll be able to compare the previous prices of real estate that you’re looking for with more key information like how many people are moving into a city along with the type of businesses that would use your commercial real estate. You’ll just want to make sure though that you consult experts that can help you understand important links historical data can have in one area over the other. Looking over historical data before purchasing commercial real estate is just one of the many other ways you can make smart purchases.

How to Become a Fair, Reasonable, and Profitable Landlord in 6 Simple Steps

How to Become a Fair, Reasonable, and Profitable Landlord in 6 Simple Steps

Owning and managing rental properties can be exhilarating. From working with tenants to keeping the landscape fresh and clean, there are numerous ways of managing a property that can bring joy and profitability to not only you but your tenants, as well. You will profit financially, while they will profit from the value added to each property you lease to them. Becoming a landlord is no small task, but it is highly rewarding. Here are a list of ways to prepare to become a landlord.

1) Live Near Your Properties
Make sure you live near the properties you are interested in. If you purchase and manage properties that are far away from you, you will have a more difficult time keeping up with maintenance and making sure the staff is doing things correctly. Make sure to check the property regularly for any needs it may have.

2) Know the Law
There are many laws governing landlords and tenants and they vary from state to state. According to Laura Agadoni from Trulia.com, “Most states have specific landlord-tenant provisions that cover issues such as security deposits, level of access to the property, and how much notice you need to give your tenants when you want them to leave. There also are federal laws you need to know, such as habitability and anti-discrimination laws.” Knowing the law will keep both yourself and your tenants safe and sound.

3) Research, Purchase, and Prepare a Property for Lease
Make sure to find a property that has inherent value, whether that value is in its ability to be renovated and used or move-in ready. Find out ways to research properties in my blog on real estate investment here.

4) Review Each Potential Tenant
Make sure to run a background check on each tenant, as well as check their credit score. You should not sign on a tenant based on these two factors alone. Get two character references and two previous rental references from each tenant. Interview the potential tenants, as well. These vetting tactics should help you to have a broader idea of who the tenant is and what they are about. You will have a better idea of if they will be caring tenants who treat your property with respect and pay rent on time.

5) Make Tenants Pay Rent
If you are too chummy with your tenants, they can start to be “flexible” with when they pay the rent. Instead of paying the rent on time, they may slide back a few weeks. It is important to A) keep a professional relationship with tenants and B) enforce tenants to pay rent on time. One can enforce timely payment by making tenants pay late fees.

6) Make Specific Leases
If you are going to have leases for each rental property, it is important to hire a lawyer who can create the language for your leases. This will keep you safe financially and legally in the event that a tenant takes legal action against you or you need to take legal action against him/her.

These are simple steps you can take to become a landlord that is fair and reasonable with tenants and profitable at the same time. They are logical steps that make sense in the process of managing and maintaining properties. Make sure to keep in mind that owning and leasing properties do not make your rich fast, but in the long haul, they will richly pay off.

5 Ways to Add Value to Your Apartment Rentals

5 Ways to Add Value to Your Apartment Rentals

Adding value to your apartment homes will give you the opportunity to increase rent and show tenants you are available and willing to assist them with any need. There are numerous ways you could increase the value of your apartment homes. Here are five ways to do so.

1) Increase Rent 1-3% Annually

Make sure to stay on top of your competition. Research their amenities, apartments, and rents. You can even go for a tour of your competition’s apartments to see what they offer to their tenants. This will allow you to make educated assumptions of how much you can increase your rent. According to Blake Hilgemann of Time Magazine, “Make sure you know the rents in the area, researching sites such as Zillow, Rentometer, Craigslist, and the MLS if you have access. You may find there is plenty of room to increase your revenue a small amount each year (1%-3%) while remaining competitive.” With these tactics in mind, there are plenty of other ways you can increase the rent, as well, in such a way that will keep tenants with you instead of leave you for the apartment complex down the street.

2) Make Updates to Increase the Rent

Paint walls with neutral, earthy tones, and use accent walls to add a home-like feeling. These types of paints can add serious value to tenants. For new tenants, it will draw them in and will likely have them feeling at home just by entering the apartment. While with current tenants, it will show them that your are serious about increasing the value of their apartment homes. Replace aged appliances with new, stainless steel appliances. This adds a clean look that will add value to your tenants’ and future tenants’ apartments. This will likely have them willing to pay an increase on rent come the end of their annual lease agreement.

3) Add a Swimming Pool

Adding a pool to the property will pique potential tenants’ interests, as it is one of the first amenities tenants will want to check out.

Keeping a pool clean and chemically balanced is vitally important if you add a pool in your apartment community. Make sure to have it thoroughly cleaned weekly and have certain maintenance checks done daily, according to your pool guys’ recommendations.

4) Utilize Landscapers for Beautiful Curb Appeal

Keeping a landscape fresh and trimmed is an excellent way to add value to your apartment rental properties. Using a landscaper to do this for you will keep you in the seat of managing the property instead of doing it yourself and possibly wasting your time. This can be a great investment to draw in your audience.

5) Take Safety Precautions

Switch out utility equipment indoors and outdoors for increased safety. Keep outdoor lighting fresh and bright to light up the areas in which they touch. Lighting streets significantly reduces crime. Keep them on timers so that they come on right when it is getting dark. Make sure to change the timers with daylight savings times! Replace the bulbs with eco-friendly, energy-efficient bulbs to reduce costs.

Use bulbs that are around 2000-3000 kelvin to provide light that looks warmer and cozier for areas such as living rooms and bedrooms. Use bulbs that are between 3100-4500 kelvin for bathrooms to help wake tenants up in the morning and for work areas, such as basements. Use bulbs that are 4600 kelvin and above for security lighting outside and garages.

Hire a night guard to show tenants you take safety seriously. Wall in the community and install gates to enter and exit the community. You can even hire someone to screen incoming automobiles at the entrances of apartment communities for added security. These all help increase the safety and security in and around apartment communities.

These are all ways you can increase the value of your apartment rental properties and your profit at the same time. What ways have you increased your rental properties’ values? What are some ideas you would share with others? Tweet me @WDarrowFiedler with any questions or thoughts!

10 Red Flags Real Estate Investment

10 Red Flags When Considering a Real Estate Investment

If you are looking for real estate to invest in, then you certainly want to read this blog. Make sure to stay away from the ten biggest red flags that you can encounter when searching for properties.

1) Demands a Deposit
When you have not seen the property yet, do not put down a deposit. Oftentimes, scammers will pull legitimate properties from legitimate sites and then take down the posting and disappear once they get your money.

2) Pressure to Act Immediately
Scammers will pressure you to put money down and act quickly. This is typical of scammers. Doing so can cost you money and legal fees to deal with them after the fact. Go at your own pace and make sure to consult trusted people about your purchase before moving forward.

3) Instructions to Not Consult Others
Speaking more on the topic consulting others, make sure to consult your lawyers and lenders before moving forward. Discussing all investments with trusted professionals before moving forward is vital to a successful purchase.

4) Upfront Fees
Before services are actually given, no fees are allowed to be made, according to the FTC’s Mortgage Assistance Relief Services Rule.

5) Extravagant Guarantees
When someone guarantees that they can expect to make a certain ROI in a certain amount of time and that this would work for anyone buying this property, it’s time to think about another property to invest in.

6) Lack of Documentation
Some scammers promise documents, such as titles and deeds, but they never show. Make sure to get all the documentation necessary to make this deal go through before taking any steps forward.

7) Location is in a Bad Neighborhood
Many factors play into buying a home, but location is the most important. You have probably heard the common phrase, “Location, location, location!” If the home is a great place in a poor or vandalized area, proceed with caution. Stay away from slummy or run down areas. You want to make sure a location has a great school system and economy, as well as an active local police enforcement to protect the citizens.

8) Businesses Are Closing
If you are looking to invest in an area that has businesses closing, beware. You want to invest in an area that has a great economy and demand for residents. If businesses are closing, it’s likely that people are moving out of the area to better locations.

9) Photographs Looked Altered
If you are looking at a property online and the photographs look altered, you may be making contact with a scam artist. People will alter photographs to make a property look better than it really is. Make sure to visit the property first hand before making any big decisions.

10) The Property Requires Too Much Maintenance
A property that requires a lot of maintenance or seems like it would need a lot of maintenance is not a good buy. You do not want your expenses to exceed your income from the property. One way to tell if a property is like this is to see how long it has been on the market. Make sure to do your research on properties to find out if they have been on the market for too long.

Do you think there are other red flags to watch out for? Tweet me @wdarrowfiedler, and we can talk about it!

What to Consider When Investing in Real Estate with a Partner

Investing in real estate is a great way to add to your investment portfolio by securing a physical property that will net you returns in the future. Even so, the prospect of buying an investment property can be daunting for many people, which makes it much more appealing for a lot of first-time investors to go into their first deal with a partner. A partnership helps defray the cost of the investment, and it also provides a buffer for error by distributing responsibility across multiple parties, instead of just one. Still, there are a few aspects of partnerships in real estate investing that can be troublesome if both parties are not knowledgeable about potential pitfalls. Here are three aspects of real estate investing partnerships to be aware of before signing on the dotted line.

1) Who will supervise and pay for work on the property? Part of investing in real estate is often performing standard renovations to make sure that the property nets the highest amount of revenue when it gets put on the market. Before you put money down, have a frank discussion with your potential business partner about whose responsibility it will be to handle the work on the property – who is paying for it, who is supervising it, and who is completing the punch list once it has been completed. This conversation will help to inform both parties about their individual responsibilities, and it will save you an uncomfortable discussion later on if and when important details fall through the cracks.

2) How are you splitting equity? Presumably, the intention of investing in real estate is to increase its value and net greater returns on the property over time. It’s important to mutually agree on a split in equity before the property makes it to the market; if you wait until afterwards, you’ll automatically increase the likelihood that you’ll end up having an acrimonious, partnership-ending conflict over the split in equity later on, which could cost you not only a business partner, but also a significant amount of money.

3) What will you do if one party wants to leave the partnership? As with any business, it’s important to draw up a contract between both parties that clearly and irrefutably outlines what the terms of the agreement are and what will happen if one person decides that they no longer want to be involved in the ownership of the property. If you have a contract in place, then there will be no miscommunication about the roles and responsibilities of each person down the line, and there will be no conflict when one person decides to disengage, because you’ll already have a plan in place for this exact situation and others like it.

While it can be challenging to invest in real estate with a partner, it can also be infinitely more rewarding and significantly more lucrative. So, then, as long as you go into your business arrangement with open eyes and clear guidelines for the functions and division of labor for your business, you will set yourself – and your business partner – up for success in the rewarding world of real estate investing.

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