Overview

Real estate investing has become a popular and favorite tool for earning extra income. When purchasing an investment property you have the option of purchasing real estate in your own name or purchasing it under the name of another entity, such as a real estate trust or a limited liability company (LLC).

Each of these options has benefits and drawbacks. In making this choice, you might also wish to consider the type of property you are buying, the number of tenants you will have at that property and your time frame for holding onto the investment property.

Part 1: Reasons to Purchase Property as a Real Estate Trust

A trust is a legal vehicle used to pass assets, in which trustees hold title to the property for the benefit of one or more beneficiaries. This arrangement is widely used as a tool to disguise owner names, to help with estate planning, or to allow a group of people to invest in a property without getting taxed differently.

Here’s why a real estate trust can be a good option for some investors:

• Multiple owners. If there will be several owners of an investment property, a trust is useful for documenting the relationships and ownership interests of all.
• Estate planning. For people looking to ensure that their investment property avoids a death tax, transferring it to family by way of a real estate trust can be an option.

The downside to a trust is that the rules around how much can be put into a realty trust for estate planning purposes change frequently, and partners of a realty trust will also have modifications they need to make in the future. These possibilities will require additional legal fees to manage down the road, on top of the original fees.

 

This blog post is part 1 of a 3 part series. Check back next week for part 2! As always if you have questions about managing your investment property or want to hand over the work and still receive the reward; then give us a call today and see all that we offer to protect and manage your investment. 

Are you ready to invest in your first rental property? Or maybe you are looking to invest in your next one! Are you getting discouraged in this competitive market? You are not alone! The booming DFW market has made it challenging for investors to find deals on homes, especially if that investor does not intend to pay cash. So you may be asking, “How can I successfully purchase an investment property in this booming market?” Follow along below to find out!

1. Use Technology to Find Distressed Sellers

Finding distressed sellers is a real estate investor’s dream. Some of these sellers can include pre-foreclosures, vacant properties, and even divorces. Some websites and tools that can be used to find these properties include Propstream, DealMachine, and Mashvisor. Keep in mind if you’re not using the latest real estate investing tools, watch out because your competition is.

2. Check Craigslist And Marketplace

You can find hidden gems on Craigslist/ marketplace – properties that aren’t listed on the MLS, and that most investors aren’t seeing. Listings include both properties that need renovations and turnkey rental properties. You’ll find a lot of these people listing on Craigslist and Facebook marketplace listing these as for sale by owner.

3. Move Fast On Deals

Good deals come along all the time in every market, but they don’t last longer than 24 hours in most cases. Whether you’re hunting for properties on-market through the MLS and a Realtor or off-market through wholesalers, be ready to put a contract on it instantly. Set up email alerts, sign up for wholesaler mailing lists, and scout local Facebook groups.

4. Network

In your market, you should get to know every serious investor. Go to real estate investing club groups to meet people in person. Network with investors online through Facebook groups for real estate investors. Don’t stop at investors, either. Collect contacts through lenders, insurance providers, realtors, home inspectors, appraisers, etc.

5. Find What’s Working

If you’re investing in duplexes in Dallas, asking another Dallas real estate investor who loves duplexes exactly how they’re finding their deals, they probably won’t share their secrets. But if you ask a duplex investor in Austin, you’re not their competition, not a threat to their business, so they’re far more likely to open up. You can also easily look up what local trends are for the DFW area to see what property types are selling for currently.

Need more guidance or are interested in having help with your investment property? All County Property Management Group is here to help! For more information about our services please visit our services page here.

If you haven’t noticed, we have had some winter like weather enter DFW these past few days. So it may have you as a property owner wondering if it is time to start prepping your place for winter. Not sure where to start? Start with these tips below!

1. Prep Your Yard

Snow and ice have a tendency to weigh down trees and large shrubs causing them to break quite easily. Luckily we don’t have much snow here in Texas but the ice can be brutal. If you have invested time and money into your investment property’s landscaping, it may not be a bad idea to take extra steps in covering those plants and shrubs.

2. Seal the Cracks

Snow and ice can easily pool in your property’s walkways or driveways as it thaws from the afternoon sun. Then, when temperatures drop again in the middle of the night, that water will freeze and expand, causing even more damage to the already-existing cracks. It’s a good idea to fix these cracks before they become a bigger issue. Plus, excess frozen water will make your tenants more susceptible to slip and fall, which is a safety hazard that you could potentially be liable for.

3. Winterize the Sprinkler System

It is important that you winterize your property’s sprinkler system to prevent water build-up in the pipes that leads to freezing and possible bursting. This may require the help of a professional.

4. Wrap the Outside Pipes

On top of winterizing your sprinkler system, it is recommended that you or your tenants wrap any non-insulated pipes that may be vulnerable to the cold. Frozen pipes easily burst and can create a major water damage crisis.

5. Care for the A/C and Heating Systems

Ice or snow can potentially cover an outdoor A/C system which could be dangerous to your pocketbook. Safeguard your A/C unit by clearing away any debris and properly covering it. This way, when the warmer months come, you can start the unit easily.
Also, prepping your property’s heating system before the middle of winter is a good idea since maintenance calls regarding heating systems not working properly increase significantly during the winter. Getting a professional to service them before that happens, may be beneficial.

6. Clear out the Ducts

It is suggested that all property owners have their investment property’s ductwork cleared out every few years. Since debris can build up over time and strain both the heating and A/C systems, you may consider professionally cleaning the duct system to extend the longevity of the HVAC system.

7. Inspect the Chimney

If your property has a chimney, it is likely that it hasn’t been used since last winter. Have a professional inspect and clean your property’s chimney before your tenants use it for the first time. This will prevent potential fire hazards.

8. Conduct a Window and Door Inspection

In order for your rental property to stay warm for your tenants, you must check to see that heat is staying in the home and not seeping through any loose caulking, torn weather stripping, or gaps in both windows and doors.

As you can see there is a lot that goes into preparing your investment property for winter. With a little time and guidance you can minimize stressful and costly damages caused by the cold. And as always All County Property Management is here to help!

DFW’s rent index has increased 2.44% in just one year. So you as a property owner may be asking, “Is it time for me to increase my rent rate?” Ask yourself why you are in this business. Are you in it only because you enjoy the industry or are you in it to make money?

Either way, maintaining your investment property’s annual profits (or increasing them), without experiencing any significant tenant loss is a delicate thing to balance. There is a process to changing your rent rate and you cannot just give your tenants notice and increase it right away. So what is the process you ask? Read below to find out!

Assess The Current Rental Market
It is still important to check out your local area. There may have been more or less of an increase than the national average which is about equivalent to DFWs rent index. The last thing you want to do is lose money by not charging enough or not being able to find tenants at all because you are charging too much.

Consider the following:

• How do current rates compare to similar properties?
• Do your amenities justify an already high rent amount?
• What is the demand for rentals in your area?
• What are current vacancy rates?

Check Out Your Current Tenants
Increasing your rental rates will bring in more profit than anything else with your rental. However, sometimes the assurance of having a quality tenant that pays on time, causes zero trouble, and cares for your property as though it was their own, is enough of a reason not to raise the rent every chance you get.

Consider things such as:

• The last time you raised the rent on each property and which tenants felt the increase?
• How valuable your tenant is to your rental property business?
• Whether you would be willing to lose such a tenant in the case they refuse to renew due to a rent increase?
• Whether you would be willing to negotiate if your tenant contacts you about the increase?
• What the legitimate reasons are for raising the rent that you can explain to the tenant?

Check Out The Law
If the lease agreement expiration for a rental is approaching, and you are planning on raising the rent upon lease renewal, make sure to follow these important steps.

• Ensure the rent increase complies with Texas laws and you provide your current tenant with proper notice.
• Make the notice official and in writing so that both you and your tenant understand that a rent increase will be in effect come lease renewal.
• Consider a courtesy reminder via email, letter, or phone to remind your tenant the lease renewal deadline is approaching.

Surrounding Area Growth
Is your rental property in a location that is experiencing growth? Are there new shopping markets, entertainment venues, schools, and parks popping up? Are employment opportunities booming?

If so, this is a good sign that you will be successful in raising your rental rates. Though you may lose your current tenant in the process, with such growth in the surrounding area, someone else is sure to want to rent your investment property.

What is Your Overall Rate of Return?
Higher rent means more money and more positive cash flow. However, sometimes increasing your rent rates brings unforeseen problems that you may not be prepared to deal with.

For example, there is always the risk that you raise the rent on a tenant that has been loyal to you for some time and decides that the increase is too much. While this opens your property up to new tenants that may be willing to pay the increased rent amount, there is no guarantee this will happen right away, even if the market, location, and economy state differently.

In the end, the decision can be difficult. Finding the balance between having a profitable rental property business and increasing your cash flow can be hard, especially if you do not think things through all the way.

If you are unsure as to whether you should increase your rental rates, talk to the most knowledgeable property management company in town – All County Property Management Group. With expertise in all things property-related, including the current market trends, the legalities behind rent increases, and the likelihood of a successful rent increase.

So, contact All County Property Management Group today and see how we can help you with your rental property needs!