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Guide to Owning a Rental Property

Where do I begin!? The short guide to investing in rental properties!

Investing in a rental property has been a very lucrative business for many investors that can provide you with a steady and consistent cash flow. The Key to being successful in this business is becoming familiar with the process of buying an investment property.


How do Investment properties make money?


Landlords who rent out their properties make money when their tenants pay rent and whenever the property’s value appreciates. There is also tax advantages for rental property investors!


Positive cash flow


This is the main goal of any rental property investor! This will require you to calculate the net operating income. This means reviewing the total rent coming in minus all expenses. The result of this calculation should be a positive number. Some expenses to consider are-mortgage and interest payments
-taxes
-licensing
-repairs
-potential vacancies
-potential delinquencies
-property management fees

Tax Benefit
You will benefit from certain tax advantages when investing in a rental property. One is through depreciation. This allows owners to offset maintenance and expenses as well as mortgage interest.

Appreciation

Some investors plan to hold on to their property for a certain amount of time, in hopes it will appreciate so they can sell at a profit. However this is not guaranteed. Something that may effect this include, population growth, fixed supply and equity.

Amortization

Every month that you collect rent those funds contribute to the paying down of principle mortgage. So over time more equity is built up as the tenants rent payments, pay down the principle.

What to do before investing in rental property

1. Evaluate your personal finances
2. Start at the bank
3. Research potential areas


Personal finances: though this can be a very lucrative investment, it can be recommended to have at least 6 month in bills in case of emergency.

Start at the bank: Often times banks will have a difference process when it comes to getting a mortgage for rental or investment properties. It is smart to start with talking to your local banker to see what that process entails.

Research you’re area: when researching your desired area some factors to consider include average rental rates, how many competitors are on the market. Which neighborhoods will be the most lucrative, the schools, crime rate, and job opportunities?

Investing in a property management company
Very successful property managers rely on a property management companies to handle the day to day dealings of owning a rental property. This will ultimately save you time and money. Some benefits that are provided by property management companies include tenant screening, market properties, rent collection and property maintenance. So if you own multiple properties it may be hard to juggle all your properties on your own. That’s where we come in.

All County Property Management offers comprehensive rental management services for our property owners. Call us today to see how we can best help you in owning a successful rental property.

Is Real Estate Better Than Stock?

Investing is a big decision! Traditionally when people hear the word investing, they think of the stock market. However, in recent years all the rage is now becoming real estate investing! You may be wondering, is this a better option? So here are the pros and cons to real estate investments and investing in stock.

 

Pros of real estate investing:

1.Straight forward process: although real estate investing requires more time and learning the process is easily understood. Typically, investors find undervalued properties, make repairs and rent them at a profit.

2. Tax advantages: owning a rental property means the owners are able to write off things like interest, depreciation, travel expenses and insurance.

3. Unlike the stock market you can more often than not rely on return on your investment monthly.

4. Protection from inflation: generally, rent goes up as inflation increases so investing in real estate is viewed as a hedge against inflation

 

Cons of real estate investing:

1.Hard to diversify: Unlike the stock market where you can choose multiple investment, the only way to do that in real estate is buying different properties types in different areas.

2. Cost of liquidity: After the initial investment required to buy real estate, it is also an illiquid venture. Therefore, if the neighborhood goes downhill, interest rates skyrocket, getting rid of the property could become difficult.

3. Unless you choose to hire a property management company you would be looking at a lot of time spent managing you property. You know have responsibilities such as application screening and approval, rent collection, maintenance issues and so on. Or you can hire an amazing property management company to do the work for you!

 

Pros of investing in stock:

1. Easily Diversified: Using stocks, investors can quickly assemble a diverse portfolio across many industries on any budget.

2. Liquidity:  Investors enjoy that with stocks; they can see the true value of their investment at any given time. Also, if they wish to change aspects of their investment, it is easily done through trades or selling.

3. Low fees: The benefit of stock investments is there is little to no fees for simple trades.

4. Tax advantages: Many employers now sponsor retirement accounts like a 401k where people can grow their contributions.

 

Cons of investing in stock: 

1. Unstable: If you are at all familiar with the stock market you know that prices can change rapidly. Therefore, navigating without a professional can be a challenge. Which can also be hard if you don’t intend on participating long term.

2. Emotional charge: You have to have a cool head and can’t be emotionally driven in your decisions. for example, if an investment starts to take a turn many investors will run the other way, however this is part of the process and you need to be able to see the bigger picture.

3. Capital Gains: In some instances, selling stocks could cause the investor to pay capital gains tax. Furthermore, investors must pay tax on the dividends they earn throughout the year.

 

As you can see there are a lot of factors when determining which rout is the best one for your investment goals. If earning a passive income through rental properties sounds like the best choice for you, please call our team of experts so we can help you with the process!

How to Prepare Your Rental Property for the Texas Summer

It’s that time of year again property owners! Its time to get your rental properties ready for the HOT Texas summers! Why? Well, we want to protect your investment from unnecessary damage caused by the heat, sun and dry conditions. Our goal is to prevent maintenance problems from arising! Not sure where to start? Here is a helpful guide.

 

Get your AC inspected

• Clean and replace your air filters, such as when they begin to look clogged with dust
• Clean the A/C condenser coils from leaves, yard debris and dirt
• Cut and remove weeds or plants that may obstruct airflow through the condenser unit
• Check the coolant lines
• Repair or replace any damaged pipe insulation
• Replaced areas where the insulation is frayed or missing

Test the A/C unit:
• Let unit dry thoroughly after cleaning
• Turn the thermostat to OFF
• Turn ON the power at the disconnect box
• Turn ON the power at the main panel
• Switch the thermostat to COOL and set temperature


Interior and Exterior

• Replace cracked/ damaged glass in all windows and doors
• Add weather stripping where necessary
• Check seals on doors and windows
• Clean and reseal outdoor concrete and wood
• Look for rot or termites on wood floorboards, replace if necessary
• Fix broken or loose railings
• Have a professional inspect the structural support of porches, patios, decks, etc.
• Inspect siding for any loose or missing panels
• Repair wall joints and any minor cracks
• Replace any missing roof tiles or shingles
• Clean and repair all gutters
• Install gutter guards where necessary


Irrigation


• Inspect sprinkler system and drip feeds for leaks, make repairs where necessary
• Verify drip emitters are firmly in place
• Check and repair sprinkler heads that are not working properly, such as spraying in the wrong area
• Reconnect any hoses that were removed during the winter months
• Adjust watering schedules
• Make sure timers are properly working
• Replace dead plants that did not make it through the winter season

 

 

If you have any questions about protecting your property please give us a call so our team can best assist you with this process!

The 7 Types of Rental Property Investors

There are typically seven types of property investors! Which one are you? Each one has their own set of traits and all have the ability to make money on their investments.

The International Investor:
Are the people that choose to purchase rental property in a different country. These type of investor are getting into the business to make money and potentially to grow their portfolio of properties.
Most of these property owners have multiple rentals or plan to. You often see their properties in urban neighborhoods or cities. 

The Accidental Landlords:
These individuals came to owning a rental property for circumstantial reasons. This could include situations such as inherited properties. These people don’t generally consider themselves investors. They are not as likely to grow their portfolios by purchasing new investment properties. These people may even be planning to move into the property in the future so only intend to lease it short term

The 5 sub types of traditional rental property investors and landlords

The Growth Focused Investor: These investors, similar to the international investors, have a  main goal to acquire new properties and continue to grow their revenue stream.


The Single Unit Owner: Also similar to the accidental landlord, they have a single property that they are focused on and don’t have plans or intend to grow the number of investments that they do have.


The DIY Landlord: These are individuals that feel they can handle managing their property without the assistants of a property manager. They will often do their own maintenance as well.


The Absent Landlord: These are the people that have the help of a property manager so they are able to be very hands off with their property while still making money on their investment.


The Profit Conscious Investor: This group of people want a property managers help in increasing their properties profitability. These people see the benefit of all that property management companies have to offer.

 

If you fall under one of these categories and do not currently have a property management company helping you out and would like more information on our services please reach out to us! 

Are Property Management Companies Worth It?

 By hiring a property management company to look after your property you are saving yourself time, money and sanity in the long run.

Let me explain.


You are renting out your property for one reason. To make money. And it can become expensive to manage your property alone. When you choose not to hire a property management company you may make mistakes that they know not to make. This can include mistakes when approving tenants, wasting time completing tasks that property management companies are trained to do and you will probably end up paying separate people to do jobs that are all already included when you hire a property management company. All of these factors ultimately mean you will be paying more out of pocket in the long run.

Renting out your own property can also take a lot of your personal time. Even more so if you are having to learn the ins and outs of property management at the same time. Not to mention your tenants could call you at any moment with questions and work orders and before you know it your whole weekend is gone. Let a property management company deal with the every day stresses that residents can bring on.

A major part of finding good tenants for your property is to have a good screening process in place. Screening a potential tenant entails more than you may think! You will need to preform credit checks, Look at the rental history, employment history and much more!

Are you saying “ok I can handle all that myself!”? Well, you may want to think again because a property management company will also have many years of experience. Plus, a whole team taking on different tasks to make the property run smoothly. They will know the law and know how to make the most money that will back into your pocket!

So yes, a property management company is SO worth it! Stop managing your own property. Let us help! Contact us today so we can tell you all about what we can do for YOU! All County property management (817)567-2500