Central Ohio Real Estate News and Views

Business 101: What does your email address say about you?

Dennis Swartz (FirstService Residential Realty) — Mon, 26 Dec 2011 07:21:52 -0800

So one of the things that I do in my position is to hire new property managers to work with our firm so as you can imagine when we post a job we get tons of resumes. So I was sent one that appeared to be a pretty qualified person, had a nice resume, well written, no spelling errors (we'll save that for a later blog) and I was sending a reply email to set up a first telephone interview. As soon as I hit the "reply to" button I noticed her email address "onecrazymama@something.net" and I had to pause for a second.

So when you are a kid, normally a nickname is something someone tags you with, not your choice. But at home, when no one is watching, and you get to pick your own email address from the infinite amount of possibilities, what does your email address say about you? Would someone judge you, and your ability to get the job done, by your email moniker? Have you ever looked at someones email address and wonder what kind of person they are?

So needless to say I never sent that email to that person who may have been the best employee ever but her email address lost her the opportunity. So when you are looking for a job, a new listing, a new account to manage, whatever your line of work-what does your email address say about you? I have no issues with creativity or freedom of expression, but not when you need to be as normal and professional as you can.

My advice? Change your email address to one that reflects you as a professional, serious person. If you have a crazy one, or a novelty one, keep that for personal use and get a new one for business. There are tons of free providers out there happy to give you a free email, so get two-they are cheap.

How much money do you think your cute or funny email address has cost you over the years?

Can you be a successful residential property manager working 9-5?

Dennis Swartz (FirstService Residential Realty) — Sun, 18 Dec 2011 11:15:46 -0800

Here is the easy answer: Probably not!

Why you say? Unlike commercial property management you need to be able to be flexible to when tenants and prospective tenants are available. Residential tenants normally are busy during the day, so the best time to show properties, inspect units, and gain access to property to perform inspections is normally weekends and evenings. Without being available after normal hours it is going to make your job a bit more difficult.

Could you be successful working 9-5 in residential management? Maybe-but it will be more difficult. Best managers are available nights and weekends, at least occasionally, to take care of their prospects.

So if your goal is to be more successful as a current manager or getting into the field of residential property management, remember to be flexible with your time and you will be more successful.

Business 101: How much money do you lose not answering the phone?

Dennis Swartz (FirstService Residential Realty) — Sat, 17 Dec 2011 06:19:45 -0800

Its more and more common these days with all the electronic gadgets that companies and small business people have, like Realtors, that they now rely on technology instead of people to answer their telephones. Why? Ask them and they will tell you that it works better, they can be found 24/7, it is a great lead capturing technique, etc. But the real reason: They don't want to spend the money hiring someone!

But do you really save money or is it cutting off your nose to spite your face? Let me tell you about my friend the roofing company owner. I hired him to do a roof on a bank owned property because his prices are good, and he does good work. So I called on Monday to get an update on the job. I got an answering machine, with the standard press 1, press 2, etc. on it. So none of the choices I wanted were listed so I held, and then it clicked, beeped, more silence, then ringing again while the machine must have tried to find him. About a minute later (seems long when you are on hold) another voicemail came on and I left a message. On Wednesday they called me back, saying they were sorry but they found my message on their machine. Wednesday.

So here is the Business 101 question: Had I been a customer seeking a new roof, would I have left a message or just went to the next company I found on the internet or phone book? In the off chance that I would leave a message, would I have still needed a roof estimate 2 days later or would I have found a roofer? So is the $10 an hour they pay the receptionist that they saved better than the new roof they may have installed?

Bottom line: How much money does it cost you to not have your telephone answered, no matter what your business is, if you are selling something or providing a service. If you have a listing, do you think they will leave a message or call the next person on the list? If you have a vacant rental ti fill will they leave a message or if you call back 2 days later will they say they found something?

You have to be one or the other-Morning or Night?

Dennis Swartz (FirstService Residential Realty) — Fri, 16 Dec 2011 04:42:28 -0800

So are you a morning person or a night owl? I tend to be a morning person as I can get a ton of work done before most people get up. No phones, no distractions like TV, no one to bug you. I just get up and get on the computer that never shuts off and get my blogs done, my clients emailed, my searches done. Then when the paper comes I read for a bit, hop in the shower, and off I go.

Of course I am dead by 8PM! I don't have an issue with it, but I am ready to go to bed early, around 9:30 or 10 and miss a lot of good TV shows. By Friday night I am pretty whipped and usually fall asleep after dinner on the couch. Works for me!

My wife, who claims she is a morning person and is not, gets annoyed that I fall asleep on the couch. But I am good with it. Bring on the sunrise and a good cup of coffee on a summer morning and I am good to go!

Condo Management: What's the little complex to do?

Dennis Swartz (FirstService Residential Realty) — Thu, 15 Dec 2011 05:12:28 -0800

So in the world on condo management, the large communities normally have a condo office and a full time maintenance staff to handle the duties of maintenance, rent collection, tenant disputes, supervision, etc. What about smaller communities? What do they do?

Well, they normally don't have the money or enough units to have a full time manager so the option for many is to self-manage. Self management is when the board of directors, who are nomally residents of the complex, elect one unlucky person to become president and then they get to manage, normally for free.

That person then normally gets to field all the calls from their neighbors and/or friends, such as someone's is not picking up after their pet, or they parked in the wrong spot, or the weeds are in the bushes again. Most of the time its not too bad, but it certainly changes the walk around the complex for you.

The difficult thing to do, however, is dues collection and enforcement. It is difficult to have to collect dues when they are delinquent from your friends and neighbors. It puts a resident in a bad spot, but it is essential to the condo owners that dues be paid, and someone is going to have to talk to the resident, post doors, and file court notices if needed.

So I have a suggestion. Why not hire a part-time manager? You would be surprised how reasonable they are in cost, many working for as low as $10 per unit per month. This will free you up from the phone calls, the maintenance issues that happen, and the unpleasant task of dues collection and policing your neighbors and friends.

For more details about condo management, give us a call. We specialize in all forms of management for condos, homeowner associations, and properties.

Tenant Story of the Week: Ghosts? Now what?

Dennis Swartz (FirstService Residential Realty) — Sat, 10 Dec 2011 07:33:01 -0800

So now what? Ghosts!

So I have a 2 family and unit 1 was vacating because they found somewhere else to live, and they did not get along with the tenants in unit 2. So the week they moved out the tenants in unit 2, 2 college men who shared a place called and said they wanted to move early because they were not getting along. I said that they needed to honor their lease. So about a week later one of them shot themselves in the apartment and committed suicide. Wait-it gets better!

So a few weeks later I rented unit 1 to a family, and unit 2 has been cleaned and rent ready and is on the market. So yesterday the new tenant in unit 1 calls and wants to know if I rented unit 2. I said no, why do you ask? She said that they think someone is living there as they have heard voices talking in the bedrooms upstairs.

Checking the unit, there is no sign of entry, no unlocked doors or windows, and no signs of anyone getting inside. What do you think I should do now? Do you believe in haunted homes? They also told me they heard a woman singing a child to sleep. It's actually freaking me out. Any ideas?

Tenant story of the week!

Dennis Swartz (FirstService Residential Realty) — Wed, 07 Dec 2011 05:16:01 -0800

Got a new place in with an anxious owner who wants his places rented about 2 weeks ago, sound like most of yours? So ran a special, had someone take an app, look at the place, and love it! They like the special on the rent, and would like to be in this weekend since they want in before the holiday. Sounds plausible, and my client is in love with the idea, and she seems nice enough-good income, decent dress, decent car.

So I pull her report. Nothing out of the ordinary shows until I hand run the eviction report, which shows a current eviction with a court hearing on the 14th. Hmmm.... So of course I ask the tenant what is up, and here is the story of the week:

There is no way that is me, I don't even know where those apartments are! Oh, wait...I helped my cousin get an apartment last year and signed for her and her friend and that may have been there. I had no idea that she was being evicted, wait till I get my hands on her. Is that eviction going to be on my record and not hers? How long? This is totally unbelievable!...

So my rental property owner friends and clients: What would you do? Without tailing her or following her and waiting in front of that ddress to se if she lives there, how would I know it is her or not. I suspect it is her, and I suspect this is a good story and hard to disprove, but my gut tells me this is her eviction.

So what would you do? Would you rent to her? Is she a dead deal or is there a workaround? I have already made a decision on her and am curious to see if your decision would be similar to mine, given the details of the story that you have.

How do you screen tenants?

Dennis Swartz (FirstService Residential Realty) — Mon, 28 Nov 2011 05:59:16 -0800

It's probably the number 1 question I get asked all the time when I talk to new property owners venturing into real estate investing. So let me give you the "book" answer then my real answer!

We look for 3 things in a tenant:

1. The ability to pay is very important. Our guideline is rent is not greater than 31-35% of their gross monthly income. The standard rule of thumb for many is income is 3 times rent. If their income is non-taxable income then we can give a little on this since we compute based on gross taxable income and not take home pay and if they pay no tax their take home is a bit higher.

2. Rental history is checked and very important. They need to have no evictions in the past 5 years, and have at least one good landlord reference in the past 24 months. Word of caution: Check who owns the property that the tenant rented last as many bad tenants will have their friends pretend to be the landlord and give them a good reference. If they fake this, it is easy with a few questions to trip them up.

3. Last, and not least, we check credit. We are not looking for good credit, as we understand many times the difference between tenant and homeowners is credit history. What we are looking for is collections from landlords, collections recently, and recent good or bad pay to see if they are trending up or down.

So what really matters? Rental history! They can be great on paper but a really bad tenant, or they can be bad on paper and a really good tenant. I tell my clients the way they treat their landlord is the way they will treat you! So the key is to get an honest landlord evaluation and beware of the landlord who wants them gone and gives good recommendation. Figure out a reason to visit them at home, a form you want to drop off or something, and see how they live there. If its a mess, then yours will be a mess. If they live good and treat the landlord good, they will treat you well.

Good luck to you and let me know if I can help!

Here's your free "Lifetime Membership" in Property Management

Dennis Swartz (FirstService Residential Realty) — Tue, 08 Nov 2011 22:02:00 -0800

So I got a flyer from my Allstate Inurance agent offering me a "free membership" in their Roadside Assistance program. Sounds like a pretty good deal since I don't have one of those, and you never know when you need a jump or have a flat tire. So I called my agent and they said they would sign me up and there was no charge unless you use it. If you have a flat they charge you when they get there!

So I said "Excuse me?" I had a membership in a club that is free as long as i didn't use it? Kind of like having free membership to Wendy's as long as you don't eat there. It would be like having a lifetime membership with the woman that cuts my hair, and its free until I get my hair cut.

What a brilliant marketing idea! So I am offering each of you lifetime free property management service as long as you never own an investment property. If you do, then you simply pay for any services you use. Sign up today as this is a limited time offer.

Brilliant!

Who got the "Tenant from Hell" this month?

Dennis Swartz (FirstService Residential Realty) — Wed, 07 Sep 2011 06:09:19 -0700

So who got the tenant from hell this month? I had them, then they passed to another. But the real question I want to ask is "Why don't landlords screen tenants effectively anymore?"

A few years ago if someone wanted to rent they would fill out an application and a landlord would check them out before renting to them. You would call their previous landlord, see if they had any evictions, pull their credit, check their police record, etc. until you had a well screened tenant. If I had a bad tenant, I would tell you if you called me, a kind of heads-up to another landlord kind of thing.

Now, we get a bad tenant, we take them to court and evict them. Mysteriously they move out before the hearing, on to some other landlord. But the issue is that no one ever called me from the new landlord checking them out. So, bottom line, someone now has that tenant without knowing the plague they will bring with them.

So why is that? Are we too busy to check out tenants? Do we rely on computerized checking programs that spit out a number and say they are approved? Are we too desperate for a tenant that we don't even care? Its baffling!

So, as a professional property manager let me give you some advice. In most cases no tenant is better than this tenant! Make sure you screen your tenants. If you have a manager and they rely on computer scanning that does not place calls to a previous landlord, get a new manager! Computers do not screen effectively and only tell you what has been filed as a public record, and many tenants know this so they move before court. Unless you want this tenant next month, screens your tenants!

Property Owners-What's the best story you have heard?

Dennis Swartz (FirstService Residential Realty) — Wed, 10 Aug 2011 06:27:03 -0700

As a property manager with hundreds of units over multiple states, I get stories from my tenants and my managers every day that just make me shake my head in disbelief or sometimes just laugh out loud. It got me to wondering what are some of the best stories you have heard for not paying rent, or maybe maintenance stories, or just general tenant stories that you have come across?

Here's one I got a chuckle out of yesterday: One of my managers called and said they were collecting rent from a tenant whom we are going to evict for nonpayment. He told her he has a friend interested in one of the vacant units, and wanted to know if he gave us his name, could he get a referral fee? Understand he can't pay his own rent, yet he thinks of his friend and he can refer him and get a few bucks? Seriously?

I told him I would knock off one of his late fees!

Let me know the best fairy tale you have heard.

Marketing 101- How to lose customers quickly and easily!

Dennis Swartz (FirstService Residential Realty) — Sun, 07 Aug 2011 10:15:07 -0700

I didn't create this lesson, I actually was taught it by my bank since 1994, Fifth/3rd Bank, a major lender in the Ohio area. While working on my marketing degree we always focused on the cost of capturing new customers while it is relatively inexpensive to keep an existing customer. See new customers need special deals, special pricing, special offers, recruiting, marketing, and additional costs.

So my lesson begins on a hot Sunday afternoon where somehow my credit card, which I use a lot and carry a balance and pay interest and pay promptly on time, became bent in my pocket in the heat while I was outside. Did I mention being a loyal customer since 1994? So my newly curved credit card, shaped like the blade of a hockey stick wanting to lift a shot high into the net, would no longer swipe at the credit machines.

Simple solution. Call my bank (did I mention I have been a customer since 1994?) and have them send me a new one. Easy enough, a few minutes on the phone and a new plastic card would be on its way and the world would be good again.

Imagine my horror when they told me it was a $10 charge to replace my card, first time I have ever asked for a new card since, let me think, 1994! $10!! Are your freaking kidding me? I have been a 5th/3rd Bank customer since when? 1994! Each month paying my bills on time, spurning offers from other banks, paying interest and using my card. They are going to charge me $10 to get a new piece of plastic that I can use to buy things that I will pay interest on and make them money. Did someone hit me with the stupid stick?

So if you know of a bank that would like a loyal customer who pays their bills on time, with interest, but about once evey 17 years may need a new plastic credit card replaced, let me know. In the meantime I will apply this lesson from 5th/3rd Bank in my everyday life.

So instead of spending thousands of dollars to get new clients, have you thought of working your existing and past customers?

So who do your tenants call at 3 am?

Dennis Swartz (FirstService Residential Realty) — Wed, 20 Jul 2011 06:57:42 -0700

So why does everything break in the middle of the night or on the weekend? Its a question I have long pondered in my over 20 years of property management. I used to ask my brother-in-law why he never invested in real estate and instead kept his money in the bank. His answer? "My money doesn't call me at 3 AM". Got to admit that's a strong argument.

So who do your tenants call at 3 AM? The answer to that question many times takes real estate investing to a business from a hobby. Our tenants have a 24 hour answering service they can call that will contact an on-call property manager who will then dispatch a service person. One of the advantages of using a professsional property management firm.

If you get to the point that you don't want those calls, it may be time to either hire a property manager or at least invest in an answering service. Most calls that come in at 3 AM can be handled the next day, but tenants like to be able to talk to someone. Happy tenants is the goal, right!

If you are to the point of seeking a professional management company, you might be surprised how inexpensive it really is.

Looking for a new and great position? Need an Illinois Broker!

Dennis Swartz (FirstService Residential Realty) — Wed, 27 Apr 2011 15:13:09 -0700

We need an Illinois managing broker for one of our property manager compnaies in Illinois. You can commute if you want, and continue to work your own business but this may be an opportunity for you to earn some extra money while broadening your career! We are one of the largest firms in the United States, and this could be the start of something great! Interested? Contact me at 614-367-1190! You must be licensed as a broker in Illinois.

Is Your Property Manager Legal?

Dennis Swartz (FirstService Residential Realty) — Tue, 19 Apr 2011 06:18:54 -0700

Bet that's a question you've never thought of, is it? You simply found a manager, through the paper or in an ad, and they called themselves property managers, they looked like property managers, and they had clients that used them. So what's wrong with that?

Actually, nothing is wrong with that, until you get caught! There are ton's of people practicing as illegal property managers. The State of Ohio requires that anyone that does property management, for a fee, has to do it in the name of a licensed real estate broker. Can an agent do it as a side business? Absolutely, as long as they perform the services through their broker. Can you help your grandma perform management services without a real estate license? Absolutely, as long as you don;t recive a fee or anything of value for doing it. Can you manage properties you own without a license? Absolutely! Can you be an employee of a company that owns their own property and manage them for a fee without a license? Yes!

The issue is when you perform the service, for others, for a fee. That's the part that you need a license for. Why? To protect you, the public, from deceit, theft, and poor money handling skills. A dishonest person could really do someone some financial damage if they did a poor or dishonest job with collecting rent money. Just think if you had 10 properties each paying $750 per month in rent, that would be over $7500 per month in rent collections that would be at risk. And if a manager had 100 properties they managed, that could be a real issue!

A property manager that is a licensed brokerage offers you a level of protection and oversight by the state. If you feel you have been done wrong, you can file complaints to the state, and the state can investigate. They are held to a higher standard than others who do not have a license.

So, if you have a property manager, ask them for a copy of their broker's license. If you are looking for a manager, make sure they are a licensed brioker and the business is run under the brokerage. Its for your own protection!

So why blog?

Dennis Swartz (FirstService Residential Realty) — Fri, 15 Apr 2011 06:19:43 -0700

I was teaching a real estate class last night and we talked about blogging, and if it was successful. So the answer, of course, was maybe. Then another student asked why? I thought...good question. Why?

I am not really sure. Does it give good information to people about topics that could be beneficial to them? Is it a way for me to give or share my knowledge with the public? Will it bring me recipricol business? Or maybe it is something to do when I can't sleep at night?

So tell me, why do you blog? What advice would you give me to tell my students?

Excellent class for budding or stuck real estate agents

Dennis Swartz (FirstService Residential Realty) — Fri, 25 Mar 2011 05:36:09 -0700

Remember the days when you would go to your real estate office and have a training class with your office manager or your training director? Thats the way real estate was 10 to 20 years ago, when the managers used to train you to succeed. Now with everyone working at home trying to survive going to your office for training is normally not done anymore.

So where do new agents get trained without having to buy a program or a system? We have a class called REAL121 Residential Sales Practices at Columbus State Community College, where we meet for 11 Thursday nights in a row for 3 hours and we teach you all the basics of residential real estate. The cost is only about $300 and you get 3 hours of college credit towards your degree in real estate or whatever subject you want. Most credits transfer to other colleges also.

We will teach you about prospecting for 2011, working with buyers, working with sellers, building a business plan for yourself, working numbers, the latest real estate tools and market studies, and much more! Its a great class for real estate professsionals that are stuck and need a push or maybe are new and don't know where to start.

So now for the excuses. Busy on Thursday nights or live too far from Columbus? I teach the same class online, so you can take it anytime from anywhere, and at the same price. Any more excuses? If the class is not for you, maybe someone in your office needs the class and you can pass it to them.

Go to www.cscc.edu and enroll. Hurry-classes start Monday!

Should I rent my home?

Dennis Swartz (FirstService Residential Realty) — Fri, 04 Mar 2011 06:22:30 -0800

Thats a question that may come to your mind at some point in the home sale process. At which point is hard to tell, but almost everytime someone tries to sell their home in this market this will come up. So what is the answer?

Well, as a professional property manager I tell people that maybe its a good idea. Why let all the investors offer you way lower than market value and sell your home when you don't need to take that big loss. Why not rent it out, cover your house payment for a year or two, and then sell it when the market comes back a bit?

Is it scary to put a tenant in your home? Definately. Will they scratch your fresh painted walls? Yep. Will their kids spill stuff in your carpet? Most definately? Will their dog dig holes in your yard? More than likely. Will I make an profit renting it out? Probably not.

Geez Dennis, you make it sound so appealing! Sorry, but its not appealing. What's appealing is when you bought your home with the plan that in 5-7 years you would sell for a large profit. Well, that may still be the case but not likely this year. Now we survive and keep from losing, and isn't that the best strategy today? Tread water until the tide comes back in?

Some advantages to renting are that if you break even you can last another year or two and not take a huge loss on your home. And did you know that if you rent your home you can claim a whole bunch of new deductions, like depreciation? With those deductions, you might even get a bit of a refund on your taxes next year. Those dinged up walls? Paint them, its not so bad. Did I mention painting walls in a rental unit is tax deductible? Hmmm... maybe this will work out.

Curse me today, you'll thank me tommorrow!

Real Estate Investing, Chapter 4 Picking a property manager

Dennis Swartz (FirstService Residential Realty) — Mon, 14 Feb 2011 05:58:31 -0800

So to recap, in chapter 3 we talked about building our team to help us in our quest to be real estate investors. Well, no team would be complete without management of our property. There are two ways we could do this, by either managing the property ourselves or hiring a manager.

For most investors buying your first property, management is not too difficult. Normally one tenant is not too difficult to find or manage as there is only so many calls a tenant can make. However, as you acquire more properties the decision is going to have to be whether you want to quit your job and focus on running your investment business full time, or hiring a manager.

If you decide to hire a manager, there are many considerations. First and foremost, make sure you hire a manager who is licensed in your state. In most states the manager is required to be a licensed real estate broker, but that does not stop many unlicensed people from calling themselves property managers. The advantage to hiring a broker is that they have oversight from the state real estate agency, and if they do not perform, then you can complain to them.

Next consideration is experience. Some are good at many things, and some specialize. You want to make sure that the manager your hire has experience in the types of property that you own. How long have they been managing property, how many units do they manage, how long have they done it, do they have references?

Maintenance is a huge consideration. How do they perform it and how do they bill for it? Many large companies have in house staff that performs the work and you get billed for that service. Others have companies they deal with and you get billed for that work and maybe a small supervision fee. I suggest using a company that does not have in-house staff, as they will always need to keep them busy and may perform unneeded work. I like the idea of outside vendors to perform the work and you get a copy of the bill.

Lastly, what fee do they charge? Most managers get paid on a percentage basis, normally this ranges from 7-10% based on your rents and the number of properties that you have, and also a finders fee when renting to a new tenant of 50 to 100% of the first months rent. Here is a few things to consider when comparing fees:

Do thyey charge fees when the unit is vacant?
Is there a fee for advertising when units are vacant?
Is there a lease renewal fee?
Is there a fee and annual inspections?
How often do you get a statement?
How long till you get your check?

I hope that this has been helpful to you, and we will begin our discussion next time about evaluating properties?

Make money this year with managment referrals!

Dennis Swartz (FirstService Residential Realty) — Sun, 02 Jan 2011 07:31:17 -0800

Seems like about the only thing selling now is foreclosures and bargain priced homes and buildings! Mostly who is buying them is investors. Many investors will put lipstick on them and hang up a sign again and make a few bucks. A lot of the smart ones will put a tenant in them to generate income and when the market turns, and we all know it will, then they will sell them to the tenant or another owner/investor for a large profit.

So how does that benefit you? You make commission when they buy, and hopefully when they sell, but what about in the middle? Interested in how to make a few dollars for doing one simple thing?

I know that most real estate companies do not perform property management services, but we do. These investors who are accumulating these rent and hold units start out managing their own but once they get a few it begins to become a full time job. They start looking around for someone to help them with the day to day maintenance and management of the units.

This is where you come in! You might not perform property managment services, but we do! Refer your clients to us, and depending how many units they own, we can send you a tidy little sum for that! You could make thousands of extra dollars just for referring clients to us and we will provide full service property managment services for them. And when they want to sell, we will send them back to you for the listing and selling. Its a huge win-win for you!

Give us a call or send an email if you want more info, but referrrals are the fast and easy way for you to make money this year. We have coverage in almost every state as well!

Real Estate Investing, Chapter 3

Dennis Swartz (FirstService Residential Realty) — Wed, 15 Dec 2010 06:56:12 -0800

In chapter 1 we talked about your plan for investing, and in chapter 2 we discussed the importance of geting financing. Now, in this chapter we will talk about building your "Investment Team".

So here is what I need you to understand: Investing in real estate is almost impossible to be successful without support team members. There is too much to know to try to do this on your own, and you need to build a team of players that will both support you and provide guidance. It is important for you to understand that teamwork goes both ways; if they support you, you need to support them back.

So, if I was building a team I would start by looking in the mirror and deciding 2 things: what am I strong at, and what tasks do I want to perform. For example, since I am an agent I am a master of finding properties. And I can paint, chop, haul, clean out, etc. but put a plumbing torch in my hand and I will burn your house down! So start by picking team members that will perform those services for you that you either don't want to do, or have the skill to do. So who are the team memebrs to consider?

First, a qualified real estate agent that specializes in the properties that you want to purchase based on your plan, and someone who will not compete with you for the homes. Make sure they are competant, ask for references, ask them how long they have been working in real estate and how much they have sold. If they have skill in writing offers and closing deals, you can save on attorney fees as well.

Next, someone with money and financing skill. The best plan won't work if you can't get financing. Find a local lender or a mortgage broker that has skill in investment property, or forge a relationship with a banker and get a line of credit. You need to have access to financing so when you find a place you can put in an offer.

A general contractor is very helpful. You need someone who can walk through the home with you and give you an idea on the repairs you will need and the estimated cost. It is impossible to see if a home is a good value based on the asking price alone. You need to know the cost of the property, the estimated repairs to make it rent ready, and the anticipated rent to make a good decision to purchase or not. Here's what you need to know however: If you use the contractor for estimates, buy the home, and then use someone else for the repairs to save a dollar you will burn this contractor from ever working with you in the future. Remember, a team only works if they support you and you support them.

If your strategy is rent and hold, who is going to manage your property? Most people say they will, until they start getting that 3 AM no heat call, or that no rent comes in call, or that "My neighbor is parking in my driveway"call. Then it starts becoming not so fun. So you might want to have a manager in place to help you find tenants, manage the repairs, and answer the complaints. In our next chapter we will talk about how to find a good manager.

So, who else might you add? Maybe an attorney, a title company, an accountant, specialized contractors like roofing, plumbing, etc and others. Remember, it starts by looking in the mirror and finding people who can complement you and your individual skill set. Do not hire "yes-men" but people who can look at properties differently than you do and provide good advice!

Real Estate Investing, Chapter 2

Dennis Swartz (FirstService Residential Realty) — Sun, 28 Nov 2010 07:27:44 -0800

In chapter 1 we decided that the first step was to have a plan. It is important to have a plan and stick to your plan. It does not matter which plan you have chosen, but the important lesson is to have a plan to follow.

So now that we have the plan it is time for the next step, That next step is to have financing in place so that when you are ready to start investing you have the money in place to execute the plan.

There are a few basics ways to invest in real estate, but they generally fall into one of 3 categories: cash, owner occupied investment, and straight investor financing.

Cash is the easiest way to invest. It normally comes from one of two sources, either you have it in the bank or you have an asset that you can tap for the cash, like your home. If so, it is a simple as getting your bank letter and your approval threshold established and be ready to write a check for a deal.

There is also owner-occupied financing, which is when you are going to live in you investment and rent part of it out. FHA financing is available if you are willing to live in the property for a 2 year minimum, and you can purchase up to a 4 unit building with a down payment as low as 3.5% of the purchase price. You could buy a double or four family, take advantage of the low down payment, live in one unit and rent the others out! A great deal for someone to start their investment career.

Straight investior financing is the toughest to get, and you will need good credit, a good property to buy, and a down payment of 25 to 30% or more down. Not all lenders will finance investment homes any longer, so I would start with a good mortgage broker or a small local bank that wants to invest in the community.

Having the financing in place before you go any further in your quest is my recommendation. It does you no good to spend time finding your investment and then not be able to buy it! Make sure you have a plan for your financing before you look at homes or make offers as the good deals don't last forever and you need to be ready to pounce!

Real Estate Investing Chapter I

Dennis Swartz (FirstService Residential Realty) — Wed, 24 Nov 2010 05:55:07 -0800

When I teach my real estate investing class at Columbus State Community College we get a lot of students that would like to become a real estate investor, or may already have dabbled in the real estate market. One of the things we always preach to students is that the successful investor has a plan, and just doesn't buy any house in any location for any price.

So to start off this series on investing, the first thing I want to tell anyone about investing in real estate is you need to start with a plan. And the first part of that plan is to determine what goal you want to achieve at a later date.

You need to understand that there are basically 2 ways to invest in real estate, the short term and the long term. Short term is cash now, while long term is appreciation later. Generally properties will fall into 3 categories: Flip and sell, short term cash flow, or long term price growth. It is very difficult to gain both cash flow and long term appreciation on the same property.

Homes that produce cash flow are normally lower priced, multi-family dwellings in areas with mid to high rents. The upside is that you may have a $65,000 double with a $600 mortgage payment that rents for $700 a side-a nice positive cash flow. The bad part is that in about 10 years you could expect to sell that double for right around $65,000.

More expensive single family homes in better areas may run you about $150,000 and have a mortgage payment (PITI) of $1200 and if you are lucky will rent for maybe $1150 a month. You may have to subsidize the payment a bit each month, and you need to save up in case it goes vacant for a month or two. The positive side? That home, in 10 years, may be worth $200,000 to $225,000.

See the difference? So back to square one: to be a successful investor you need to have a plan, and the plan starts with a goal. Do you want to accumulate monthly cash flow now and save that up, or do you want a place that breaks even and you acquire wealth through future appreciation? Or, what if you had a few of each type?

Stay tuned for future articles.....

The case of the stuck toilet.....

Dennis Swartz (FirstService Residential Realty) — Mon, 22 Nov 2010 05:05:16 -0800

So I got this call from one of our owners on a home that is currently vacant and we are attempting to rent out. She called frantically saying that there must be a water leak as she just received her water bill for the last 3 months and it was over $300.00, wjhich is about $200 too high on a vacant home (who knew you had a minimum water bill even if the water is turned off).

So we hurried to the home, expecting to see flooded basement and soggy drywall, and nothing. Not a peep. No drips, no sounds, no leaks, nothing. So it must be a bad meter reading? Nope, took the reading, compared it to the city reading-the same! Okay, meter must have malfunctioned. Called the city, had them remove the meter and test it, nothing. Hmmm...

So about a week later I was showing the home and there it was, the sound of the water kicking on in the toilet! So what was up? Called a plumber friend and he said to put a package of red (or blue) kool-aid in the toilet tank, come back tomorrow, and call him.

So I did as he said, put a pack of red koolaid in the toilet tank, which quickly changed colors in the tank, and left. Next day went back to the toilet, opened the lid, and viola! The water in the toilet was now red. Called the plumber and he said the seal was bad in the tank letting just a few drops of water into the bowl from the tank and about every half hour or so the water level would drop enough to kick on the water. Amazing that over 3 months that was a huge water bill!

The solution? $15 for a flush kit and a $45 labor bill stopped at $200 per quarter water bill!

Have you poured koolaid into your toilets lately?

So, how much does it cost to hire a property manager anyway?

Dennis Swartz (FirstService Residential Realty) — Sun, 21 Nov 2010 08:02:18 -0800

That is always a question that comes to mind when you consider hiring a manager for your home. You have to decide if it is worth the hassle to rent out your home, and then decide who is going to deal with that hassle. And what if your job takes you to another city where it will be hard to respond to tenants? And what if the cost to hire a manager is more than the profit that you will receive from your house?

So let's start with the easy question. How much should you pay to have someone manage your home? The answer varies from home to home, and from area to area but most property managers are commission based, with a minimum fee. For residential single family homes, you are looking for about 8-10% of the monthly rent. So if you hire a manager at 9%, and the rent collected that month is $1,000 then the fee would be $90. Not bad, huh? Most managers collect the rent, keep their fee, and send the rest to you. If your home is vacant there is normally a small fee set for unoccupied homes as well.

Some other fees that are customary are fees for finding new tenants (like a bonus), advertising fees, cleaning fees, re-inspecting fees, eviction fees and lease renewal fees. The key to remember is that all these fees are negotiable, and you need to find out all the fees before hiring a property manager. But overall, it is normally very reasonable to hire a property manager.