Tips on Being a Landlord

Let’s say you have a property that you are considering to rent out, either you are going to buy a new property or you are looking for somewhere else to live. Renting your property out is a great way to have some cash flowing your way but it is important to take a step back and understand the responsibilities of a landlord before jumping in. I have put together some tips for you to avoid some common mistakes and to be a step ahead of the game.

20160715042410-shutterstock-129797951First things first, it is crucial that you live near your rental property. If you are looking for a new rental property to buy, it would be helpful to do some research into the best investment areas around you. If you already have a property you want to rent out, make sure that your new living area is close by. Here are some reasons why: it allows you to be able to go over quickly when repairs are needed, it allows you to be able to check up on the property but not before giving your tenants notice, and you will be able to show the rental property often when it is time to list for rent again.

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Another piece of sound advice is to know your tenant-landlord laws, as these may vary from state to state. An easy was to do research now is online. Look up the area you will be renting in and familiarize yourself with the laws. Some of the primary areas to look into in regards to tenant landlord laws are: landlord disclosures, security deposit limits and returns, late feel rules, termination and eviction rules, and landlord access to rental property. There are obviously more to just those and I would recommend spending a good amount of time researching and reading about the laws of rental properties. The last thing that you would want is a lawsuit because you didn’t take a little extra time to read through the laws.

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Have a respectful but firm relationship with your tenants. This is not the time to be “too nice.” And trust me, people might try to take advantage by turning in the rent a few days late or not following certain rules you set in the lease. Be sure to be firm but on the other hand, manners and respect cost nothing. A friendly but disciplined relationship can truly make the difference in avoiding uncomfortable situations down the road.

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Make sure to include regular inspections in the lease and do them! Again, you would have to give the tenants proper notice (in California it is 24 hours notice of entry) but there is nothing unusual about inspections, this is your property in the end! I would suggest taking pictures before and saving them in your records to have proof of what the property looked like previous the tenants.

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Lastly, understand it takes money to make money. This simply won’t be a process in which you will be merely sitting on a couch receiving checks in the mail. While the check will definitely be a part of it, there is also a lot of work and money that go into being a landlord as well. You might need to invest in spending money on remodels before looking for tenants. You will have to purchase landlord insurance and be making payments on property taxes. You should also have some money saved up for unexpected repairs and maintenance.

Hopefully these tips have shed some light on the realities of being a landlord and what is to come with this endeavor. Good luck!

 

 

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Common Mistakes in Real Estate

Just like everything in life, there is a right way to do things and a wrong way. Real estate is no different and there are some common mistakes that people frequently make. Let’s discuss some of these possible mistakes so that you are aware and avoid these moves.

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A common misunderstanding that people have about real estate is that they will get rich quick. While there is a substantial amount of promise that real estate can financially offer you, it is a process and it is not something that happens over night. Real estate is just like an investment and investments need time to grow. You must be willing to work hard and to put in time, just like with any career, before you can see the fruits of your labor.

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Another mistake that new buyers make sometimes is planning as they go. Real estate is not a type of project that you can just “figure out” as you go along. You need to plan before purchase! Make sure that you’ve set a budget, go around the neighborhood and do some research. Buying property is not something that one can learn on the whim! While anyone can do it, it definitely requires a plan. Relating to the mistake of planning as you go, another common mistake is not having a back up plan. It would be wise that with every project and every property to have a Plan A and a Plan B. Heck, in some cases you might want to have a Plan C if both A and B fall through.

Some people make the mistake of not setting aside cash reserves. Cash reserves are crucial to any project because you don’t know what unexpected expenses might come up. You need to be prepared with a way to handle negative cash flow, repairs and other expenses that you can’t plan for.

It would also be crucial to educate yourself, and to jump in blind would be a mistake. There is so much information out there at our fingertips, it would behoove us to use it! Read up on markets and trends. Figure out the basics and be sure to have a firm grasp on your property and all that has to go with it. Read blogs (like this one) and follow influencers on social media platforms that you can learn tips and tricks from. One can never learn enough!

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Homeowners Association: Pros and Cons

Let’s say you are someone who is interested in joining roughly 20% of Americans that live in a condo, timeshare, or planned development. You might have different reasons why you are looking into owning a condominium or timeshare. These types of properties are called common interest developments (CID) and they are the fastest growing form of housing in the world today. Different personalities might be a better fit for these shared communities so it’s important to know what you’re getting into, including the homeowners association. Let’s take a closer look at what this association is and weigh some of the advantages and disadvantages they have.

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A homeowners association is a private association that markets, manages and sells property in the shared community space. Associates are required to pay either a monthly or annual fee. They are also expected to follow a set of rules known as the covenants, conditions, and restrictions (CC&Rs). Some rules can be pretty easy to follow, for example to not have any lawn furniture on front yards while others might be a bit more intrusive, for example not allowing a garage to serve as storage but only can be used to park your car there. Some rule breaking can involve just a warning while other violations could mean a fee. It would be crucial to look into the CC&Rs before buying a home in the area. If you are unable to find the rules for a certain community online, a real estate agent or someone on the homeowners board might be able to assist you.

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Benefits:

There are various reasons as to why some homeowner’s would be interested in buying properties in these shared communities. One of the perks is that some of the fees that you have to pay to the association take care of maintenance and management services of the grounds. Meaning that you might not have to mow your lawn every week. Another benefit is that many of these groups of housing includes amenities such as pools, gyms or small parks. Though there can be a laundry list of rules and regulations that the homeowners need to follow, a perk of those rules is that often community appearance is enforced which could lead to higher property values. Some people also argue that a perk of being a part of a homeowners association is low maintenance. The association takes care of a lot that other homeowners would have to take care of on their own in another setting.

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Disadvantages:

The list of CC&Rs can be a potential disadvantage. Many homeowners want to incorporate their own style into their property and you might be limited to what you can add to enhance the property if it goes against the rules. For example, some associations have a set of colors that you can color the outside of your home, and no exceptions will be made. Another disadvantage are association fees. These fees can range from $200-400 and are used to maintain common areas and the amenities.

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Quick Tips Before Buying a Home and MLS and Clue Report

It could be overwhelming to decide on a new home to buy. Here are some tips and some tools that can be used before you take the plunge.

Some crucial steps to do before purchasing a home or new property are:

–       Establish a budget and decide on what you can and can not afford

–       Ensure that your credit is built up and solid

–       Make sure to save for the down payment as well as the closing costs

–       Plan on living in the property for at least 5 years (most financial experts argue that you make up any of the expenses back until you live in the property for a minimum of five years)

–       Weigh the pros and cons of buying to renting (even though Trulia has found that buying a home is roughly 35% cheaper in the long run)

–       Know the home buying process

–       Learn as much as you can about the prospective home that you want to buy

–       And most importantly, make sure you like the home!

 

Some crucial tools that we will be exploring tin this post are:

–       MLS.com and MLS, and

–       CLUE report

 

MLS.com and MLS:

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MLS.com is a free multiple listing search for you to find real estate listings by realtors and other realty professionals. MLS.com can help you find foreclosures, find new homes, find condos, look into international real estate, moving quotes, and even some real estate training. Though MLS is one tool to use when looking into buying a home, there are hundreds of private MLS that are maintained and paid for by real estate professionals. MLS stands for multiple listing services or multiple listing system. Plain and simple, it is a database of home listing but at the same time, it is much more than that. An MLS database provides brokers access to information about properties and different assets that they might be interested in. Not just anyone can post onto an MLS and access to posting to the database is limited to brokers and licensed agents that pay for their membership. A way that buyers, aka you, can benefit from MLS-listed properties is from obtaining information about all of these properties while only having to work with one broker, if you chose to explore the private MLS listings.

CLUE Report: 

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When looking into buying a new home it would essential to have a CLUE report about the property. A CLUE report provides information on insurance claims and policy numbers relating to the home. The report will also list the dates of the claims made, the amounts paid for losses, and if a claim was denied. Some of the types of claims that can be listed could be fire, weather related losses, vandalism, theft, and water damage to name a few. However, you will need to ask the homeowner where the property was damaged as this information is not provided in the report. If you ask for a CLUE report and it comes back blank, there could be two reasons for this. One, it could be that there have not been any claims made for that property in the past seven years, or secondly, it could be that the home was covered by an insurance company that does not participate in CLUE. It is important to note that only the owner of the property has access to the CLUE report so you must request it from the owner of the home that you are considering to buy.

The home buying process will be extensive and should require lots of research but hopefully these two tools can assist in your home buying process!