5 Tips For Setting Your Rent Price

One of the first questions I had when deciding to rent out my property was, how much rent can I ask for?

The answer to this question was going to determine if I would become a landlord or not.

I made a video for you to tell you how I went about setting the rent price for my first rental.

 (Let me know what you think about the glasses!)

 

In this video I talk about the 5 things that I used to set my very first Rental Price including:

1) Your Gut

2) Friends in the Industry

3) Comparables

4) Test Ads

5) What you need to be Cash Flow Positive

Let me know what you think in the comments below!

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Posted in: Cash Flow, Real Estate Market, Rent Price

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Being A Landlord.com Podcast Episode 1 Luxury vs. Low Income Rentals

I still struggle with this question. Should my next property be a luxury rental? Or should it be a low income rental?

My wife and I currently own one of each.

In this Podcast (The First Official Podcast of Being A Landlord.com!) I discuss the good points and the bad points of both.

Take a listen and let me know what you think in the comments!

 

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Posted in: Real Estate Market, Rental Property Type, Tenants

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Should You Allow Pets In Your Rental?

One question I get many times is, Should you allow pets in your rental.

I answer that here in this video. In the video I tell you my pet policy.

I also tell you my secret to making everyone happy and opening up the number of potential tenants that see your rental.

Let me know your thoughts on pets in your rental in the comments below.

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Which Property Type Is The Best For Rentals?

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There are many property types to choose from when deciding to rent out a property. Each type has it’s own positives and negatives depending on what you want, how much work you want to put in and the location of the property. Let’s take a look at different property types and some good and bad points about them.

 

Single Family Rental (SFR)

A single family rental (SFR) is your regular everyday stand alone house. These are typically found in suburbs and country sides. You could lump condominiums and townhouses into the Single Family Rental category but I am keeping them seperate here.

The “Single Family” just means that typically you are only allowed one family living in the house at a time. So you can’t have two different families renting the house out from you at the same time. In a single family rental there is usually one of everything: one living room, one dining room, one kitchen and a set of bedrooms. One positive point of a single family rental is that there is usually no association fee tacked on to the cost of the property. Another positive of a single family rental is that it is in many cases more attractive to a renter that can’t yet afford a downpayment to buy a house but still wants to live in a house. Single family rentals usually have more square footage and storage as well as privacy than other rental types. Single family rentals are also desirable to people relocating for their job. The person relocating many times has a family and a condo or apartment may not be big enough for the temporary housing they would need. The company that the person works for may be paying the rent while the employee finds permanent housing. This is great for you and great for the tenant since someone else is paying the bill.

There are downsides to Single Family Rentals. One negative is that single family rentals usually come with property like a front yard and a back yard. The yard requires maintenance which means you have to spend money to get the grass cut, shovel the snow or keep up the yard.

Another downside to single family stand alone rental is the insurance costs are higher. You are now responsible for everything from the structure of the house to the surrounding areas. This is as opposed to a condo or townhouse where you usually are just responsible for the floors and inside walls of the property.

Multi-Family Rental

Another property type is a multi-family property. This is a property where you have multiple units in the same property like a duplex or one unit upstairs and one unit downstairs. With this property you can have multiple families living in the same structure as long as the property is legally zoned as a multi-family.

One positive point to a multi-family rental is that you can typically receive more rent. Think about a duplex. A duplex is usually about the size of many 3 bedroom stand alone single family houses (at least the duplexes in my area). Let’s say you could get about $2,000 a month in rent for a 3 bedroom single family house. If you made that same house into a multi-family duplex and made one side of the house a 2 bedroom unit and the other side a 1 bedroom unit you could probably get $2,500 in rent for that property ($1,500 for the 2 bedroom and $1,000 for the one bedroom).

One negative point to a multi-family rental is that there is more to do as far as maintenance. You are now responsible for the maintenance of 2 families. You now have twice the risk. Many landlords higher a property manager once they get into renting out multi-family properties. This also raises your costs.

Condo or Townhouse Rental

Another property type to rent out is a condominium or a townhouse. This is how I started landlording. These types of properties are usually more affordable in both purchase price and rent.

A positive point about a condo or townhouse is that there is very little maintenance as compared to multi-family properties or stand alone houses.The association pretty much takes care of all of the yard maintenance and the outside upkeep of the property. Another positive with this type of property is that you have a larger tenant pool to choose from. Because this type of property is usually a little lower priced than say a stand alone house you have a bigger group of people that can afford the rent.

One negative of a condo or townhouse is the association fee. I know I state that the association can be a positive because the maintenance is on their shoulders, but the fee can also be a negative. This fee never goes away (you can’t pay it off to get rid of it like you can a mortgage) and it usually gets higher and higher every year.

 

I hope this brief summary of a few rental property types has helped you to get a clearer picture of what type of rental property would be right for you.

Let me know in the comments which type of property you prefer or if you know of a property type that I didn’t cover here.

 

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Do You Really Need A Real Estate Investment Mentor?

When starting out in Real Estate Investing such as rental properties, how important is it to have a mentor? Do you really need one? Or can you do very well even without a mentor?

The short answer to these questions is No. Of course you don’t NEED a Real Estate Investment mentor. There is no law that requires one of course. I’m sure plenty of people have gone on to become successful investing in Real Estate without a mentor.

But…I’m sure the most successful Real Estate investors have or have had mentors. A great mentor is worth their weight in gold. Platinum even. Great investors will save you years of headaches and doing things the wrong way.Telemachus_and_Mentor1

A great Real Estate mentor will help you to reach profitability light years faster than not having a mentor. They will provide you with a plan or a blueprint to follow. The blueprint will have the same steps they used to become successful just without all the mistakes and missteps that they went through. That’s the value of a mentor. They made the mistakes so you don’t have to.

A mentor does not have to cost money. There are many “mentors” out there on the internet that would love to be your mentor….for a price. They may ask you to buy their book or their online video course or buy “mentor” hours of consultation from them. You can do this if you want but you don’t have to.

You could find a mentor just buy starting on your real estate investment journey. By taking the steps necessary to begin your investment journey you are bound to come into contact with an individual who may make a great mentor. Maybe a real estate agent or real estate lawyer.

You could also start to attend your local real estate investment group meetings. These are full of people who have done many deals and are in the know. You may also choose to find your mentor on the internet. If you go this route just make sure the potential mentor shows that he or she cares much more about helping you than they do about selling you their next product. It will be pretty apparent right away.

In my case, my mentor happens to be in my family. My real estate mentor is my father-in-law. He has been in the business of rentals, flips and building homes for many years. I am always bouncing things off my mentor and asking for his advice. We have even done a few deals together and not only made money but had fun in the process.

You may not be as lucky as I am having a mentor right in the family but there are still many ways to find a mentor. Start with a book on Amazon or go to BiggerPockets.com and browse around. There are tons of folks on BiggerPockets that love to help the beginning real estate investor.

Of course I am here to help too! Feel free to send me your questions and I will respond personally. Good luck investing and don’t be afraid to ask for help.

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Do You Have These 3 A-Team Members On Your Real Estate Team?

ATeamYou have often heard that it takes a team of people to make one successful. While that is usually hard for me to accept (I’m very much an “I can do it myself” person), I truly do believe it and I have seen proof that this quote is true. I will often spend hours working on something trying to figure my problem out by myself at my computer in my basement. The next day I’ll ask someone for help and BAM! The person has a solution right away for me.

This of course also rings true in Real Estate and rentals. You are only going to be as strong as your team. So make sure your team is top notch. Of course you may not be able to do this when you are first starting out. Which is why it is really great to offer to be on someone else’s team. Be their gopher. Offer to do leg work for free. You’ll gain a ton of experience and when the time comes that you need help these folks will be more than happy to be on your team.

 

So what types of people should you have on your real estate team? Well, that depends on what type of skills you bring to the table. You will obviously want to fill the skill gaps on your team with other folks that may have those skills.


And if it’s not skills you need per say then it’s abilities. Such as the ability to access things a real estate agent may have access to that you don’t (if you are not a real estate agent). Like the agent version of the multiple listing service. The agent version of the MLS is a must-have tool. This provides you with comps so you can tell if you are getting a property below market value.


So I would say a real estate agent is on A-Team member you must have on your team. They will be in the “know” regarding your target area or the area that you have rental property in. They will see what other people are renting for. The agent will be able to spread the word quickly when you have a property for rent or if you are looking for a property to buy.


Another person you need on your team is a banker or lender. The banker will be able to loan you money when you need it. They will know you and trust you (hopefully). The banker is the person who will enable you to hold multiple rental properties. They will save you tons of money by getting you the best deal on financing saving you money on interest rates and points. Make sure you have a banker on your team.


The third member to round out an A-Team of Real Estate is the lawyer. This may have more to do with where you do business but in New Jersey, having a lawyer on your team enables real estate deals to happen very quickly. The alternative is going to some random lawyer who doesn’t know you from anybody and also practices a million and one types of law besides real estate. This type of lawyer will not process your deal quickly. They will sit on your deal and delay closings. They will give you issues when trying to evict bad tenants because they would rather be working on the higher paying cases. So make sure you find a good real estate lawyer and make them part of your team. You will save money and be able to close deals quickly by having this A-Team person on your side.

There are of course more than 3 people that you should have on your team but if you are just starting out I think these 3 folks are key to have working with you. I would throw in a bonus fourth person who will save you from yourself. That is a real estate mentor.


A good real estate mentor is worth their weight in gold. They will save you time from chasing down the wrong deal. They will save you money by showing you a cheaper way to to go about a deal. They will make you money by networking you into the best deals. A great real estate mentor may take you some time to find but always be on the lookout for one.


So who does your real estate team consist of? Who did I leave out? Tell me in the comments!

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7 Ways To Fund Your First Rental Property

There are many simple and also creative ways to finance your first rental property. If you are brand new to the real estate investment world you may not realize how many ways there are to get financing, especially if you have great credit and a good reliable income source.

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Of course you don’t want to over leverage yourself but you do want to take advantage of what is available to you. By not taking advantage of real estate investment opportunities you are leaving money on the table.


1)      The best way to get financing for your first rental property is to live in the property yourself for the first 12-36 months depending on the laws in your area or rules of the lender. By making your rental property your primary residence first, you will get the best financing possible for your mortgage. This is what I did with my first rental property. In this case you can get a simple 30 year mortgage at a great rate. You can even put a lot less down for your down payment. I’m talking in the single digits! Of course this works better if you are young, single and can easily move around. But not everyone can do that and I could not do that now since I am married and have two children. So thankfully there are other options.


2)      A 5 year ARM mortgage. I know, I feel like the ARM mortgages are what many folks got burned on with the housing bubble blow-up. But the dust has settled and banks are much better at loaning their money to people that can actually afford it. So if you can stomach it, a 5 year ARM mortgage may be the way to start.


3)      Private Investors. Investors are out there and they are willing to back you. Especially now that the real estate market is looking better than ever. Do your homework though. Make sure they have experience in loaning out money. Make sure they have a college degree, no criminal records, proof that they know what they are doing. Make sure you know what you are getting into. And it doesn’t hurt to have a lawyer read over your contract.


4)      Seller Financing. It can happen. So this is kind of like Private Investors but the person selling the rental property is going to finance you. This can easily happen especially if you are buying a rental property from a landlord. The landlord may just want to cash out and retire. What better way for the landlord\seller to retire than to get payments of principal and interest from you each and every month. Just like Private Investors, make sure you check the credentials of the seller too. You want to make sure you are dealing with someone who is solid.


5)      Good old CASH. If you have it you win. It’s just a pure investment at that point. Most of us don’t have tons of cash just lying around which is why I squished this option in the middle.


6)      Hard Money Lenders. This route is a little more complex but very helpful if you find a steal of a property and need the financing fast. Borrowing money from a hard money lender gives you a few months to a year to get a tenant and start proving that the property could become cash flow positive. If you are able to make it work then you would want to go the conventional mortgage route when your hard money loan term is up. If you are able to get a year out of your hard money loan and you have a tenant signed up for a long term rental contract you are in good shape. The banks will be more willing to give you the conventional mortgage since you have proven the property can be cash flow positive.


7)      Home Equity Loan. This is a loan you would take on a property that you already own. Usually a bank will loan you a percentage of the equity you have built up in the property you already own. These loans have rates that are higher than a mortgage but not as high as a hard money lender would charge. You also have loan lengths that are long such as 10 or 20 years. This is a great option if you have a property that is showing great cash flow possibilities and you have a good amount of equity in a property you already own.


So there are 7 options I was able to quickly lay out for you to purchase your first rental property. So what are you waiting for? Go out and get it done!

 

 
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Motivational Monday: My Past Part 2

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Motivational Monday: My Past Part 2

 

So last week I started this category of Motivational Monday and I wrote a little about my past Part 1. You can read it here. This week I want to tell you a little about how I actually became a landlord.

 

I’ll start by saying that I didn’t plan on being a landlord. I didn’t have a grand plan to be some real estate mogul. I just knew that I had a great townhouse in a desirable location. I knew that the longer I could hold on to it the more money it would be worth. So I held on. And I am so glad that I did. Here is how it started.

 

I met my wife while we were in graduate school. We both worked full time while attending graduate school at night. The whole class became close. I guess when you all go through a journey like that you find strength in each other. A bunch of us would go to our Thursday night class after work and then go out for some fun in New Brunswick. The Thursday Night group was pretty big at first. As the months went on, the group got smaller and smaller. One-by-one each person in the group dropped out. And then after some more time went by there was just my future wife and myself hanging out on Thursday nights in New Brunswick.

 

When we first started attending class and going out on Thursdays we didn’t really know each other. The more we hung out the more we realized that we could be good friends. That went on for a while and then before we knew it we admitted that there was something there. We were officially a couple a few months after that.

 

We both graduated and decided to get married. I had my townhouse and she was living with her parents. We knew we wanted start off married life in a single family house. And we both knew that I should hold on to my townhouse if I could. So I did.

 

The thought was that I would hold on to the townhouse until it got too rough. If I went too many months without a tenant or if I had any bad experiences I would just sell the house. I felt comfortable with that. I knew it could be a few months time before I sold it if I need to take that route. But I had a gut feeling that we would be fine either way. And we were.

 

So fine in fact that after nine years I still have the townhouse and I just signed my tenants on for another year. I love it! It’s a great feeling. It gives me a second income stream. I run it like a business and that is fun also. I make tweaks to increase my cash flow and profit. I meet great people (tenants) and it’s a win-win. I give them a great place to call home and they give me money and they take care of the day to day things regarding the house.

 

I did not know anyone that was a landlord before becoming a landlord myself. I got myself a “Dummies” book on property management and I took the leap. That’s it! Of course there were a bunch of things I learned along the way. Things that, if I knew, could have made me a bigger profit much earlier in my landlording career. But that’s OK. I can now share that knowledge with all of you so you don’t make the same mistakes.

 

So if you are thinking about becoming a landlord and the numbers seem to make sense then…CHARGE FORWARD! Go ahead! Do it! I know you can!

 

How do I know? Because I did it. And I know you can too!

 

I look forward to reading your questions and comments about this. Please post them below and I will answer them.

Thanks for your time!

 

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Motivational Monday: My Past Part 1

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Motivational Monday

So even though Monday is almost done here on the East Coast, I figured I would try this out as a weekly post. I know sometimes I need the most motivation and strength on Sunday and Monday nights so maybe you can benefit from this.

Here it is:

I KNOW YOU CAN DO THIS!

I know you can become a landlord! I did it. You can too.

I know you hear that a lot and I have a feeling most people use that phrase to sell more crap.

But I am dead serious about it.

Here is why I believe it.

I wasn’t born with any silver spoon in my mouth. I hustled working every day since I was 13 years old. From paper routes to Pizza Hut. From construction to college intern to the day I landed my first full-time job. I hustled and continue to hustle. Every day. Period.

I paid my own way through college.

My parents gave me a whopping $3,000 dollars for college. That’s it. That was way more than they could afford. But they did it anyway. And I am grateful for it. Why? Because it got me started. And it provided the momentum I needed to go from high school to undergrad. Right into community college. Some people call community college the 13th grade but I call it the bridge. Community college is the bridge that some people need to get that undergraduate degree. It was for me. I couldn’t afford a “real” college at the time. But community college got me to my associates degree which then got me to Rutgers University (RU!).

And what financial vehicle got me through the rest of community college and through Rutgers? Credit Cards. Because even back then the $3,000 my parents gave me lasted one semester at community college. Yup…good old debt inducing credit cards. But if you know anything about finance and leverage then you know the best debt is debt you can use to pay yourself back multiple times over. Debt that you can use on an appreciating asset. And that is what paying for college with a credit card did for me. I was able to pay the monthly payments to the credit card companies by using the money from my internship. And then after I graduated I went from my internship to being hired full time. PAY DAY! My salary allowed me to pay off my debt.

My salary then allowed me to buy my first house. And then my salary allowed me and my wife to buy the next house and rent out my first house. I didn’t know any other landlords. The numbers in my cash flow worked. I wanted to be a land lord. I wanted a second passive income. I just did it. I told myself that if it sucks then I’ll just sell the house. After a few years I knew land lording didn’t suck. Then our salary from our jobs and the income from the first rental property allowed us to purchase our second rental.

Nothing special. Just hustle. Figuring out what I wanted to do and getting it done with the resources I had. That’s all I did. That’s all I continue to do.

And you can do it too.

YOU CAN DO THIS!

I did it. I know you can do it too.

I hope this was helpful for you.

So what is your next step? I want to hear it. Write a comment below.

Thanks for letting me share. Make it happen this week!

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7 Ways To Find A Tenant

One of the biggest fears a new landlord has is the fear of not being able to find someone good to rent your property. The bigger fear here is that you will be stuck with an empty property and you will have to pay the expenses (mortgage, utilities, etc.).

Here are 7 ways to get potential renters through your door. The more feet through the door the more chance you have of finding someone worthy of renting your property out for the next 12 months.

So to break it down:

1) “For Rent” sign in front of your property
– Friend in South Carolina with row houses that this works perfect for. Not 24 hours go by without a flood of appointments
– Must have the traffic for this to work (busy street, neighborhood, etc.)
– Depends on market but low cost to test

2) Ad in newspaper
– May be less costly than rental websites
– Depends on market
– Usually goes out in print and online
– Depends on readership of newspaper

3) Ad on Craigslist
– Free
– Agents are doing this Pro
– Agents are doing this Con
– May want to use a different number

4) Tell A Friend
– A friend may know someone who is looking for a place
– Post to Facebook if you feel comfortable

5) Post at work
– Company internal website
– You know these people have a job
– I have gotten traffic this way

6) Ad in rental websites
– My most effective method
– Where majority of serious renters go
– Do get no-shows
– Compete with bigger companies

7) All of the above
– Mix may be best especially when starting out
– Test each area and narrow down to what is working best
– May be able to save money if newspaper and rental website is not working

I hope that helps you on your land lording journey!

If you would like more help and you have not yet signed up, please sign up for my free land lording videos here:
CLICK HERE to Sign Up For Free Land Lording Videos

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