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Landlord Video Tip – What Should I Look For When Buying A Rental Property?

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Choosing Profitable Rental Properties

Choosing effective rental propertiesIn my last article, I talked about what types of properties I don’t personally like as rental properties.

If you haven’t seen it yet, you can check it out here, Do Condos Make Good Rental Properties.

In today’s article/video, I’ll be talking about my preferred types of rental properties.

Now, before you get in a huff and tell me you’ve made a ton off of condos and think they rock and that the properties I suggest don’t work in your area, remember, this is based off my experience.

For some people you may have had other experiences, and if you are only looking at one or two properties, maybe that works perfectly for you. I applaud that you are successfully running a landlord business and your property works.

In the long run though, if you’re looking at expanding your landlord business, want to increase your monthly cash flow and create your own little mini Real Estate empire, you might want to watch this next video.

In it I will explain why I think the properties I like make the best rental properties for people looking to either get into the business or to expand their portfolio.

I look forward to your feedback, so leave me a comment and tell me your thoughts!

Landlord Video Tips – Set Your Rents Higher to Avoid Headaches

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Tired of getting stuck with problem tenants? Want to make sure you have more quality applicants for your vacant rental rather than trying to weed through quantity?

In today’s video tip I explain a tip that has helped us get better quality tenants who not only take better care of our properties for us, but also tend to stay longer. Two qualities than can definitely make your life as a landlord easier.

 

As always, i love to hear any feedback ou may have, so leave a comment and don’t forget to share these tips with other landlords you may know. And if you have questions, send them in and I’ll see if I can answer them in a video for you!

Landlord Video Tips – Common Landlord Mistakes I Made!

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Learn From My Landlord Mistakes!

We can’t start off knowing everything about being a landlord and sometimes what you don’t know can hurt you. I know I suffered through many landlord mistakes. It’s part of learning.

When you’re growing up and first start to walk you get bumps and bruises from falling down, but soon enough you master it and your parents can barely keep up to you. Then when you’re older, you get that first bike and soon enough you’re zipping up and down the streets, flying over bumps and jumps and showing off to your friends.

Well, it’s a similar situation when you become a landlord. When you start off, there are opportunities for you to fall down, there are times you can injure your pride and your pocketbook and as an experienced landlord, I’ve done both.

Whether it’s being duped by a tenant for a couple month’s rent or its being deceived by partners who walked away with all the profits, I’ve been there. I’ve even had the economy rough me up, but during every incident, I’ve tried to take something away from it. I’ve tried to learn a lesson that I can apply to make my business stronger, to make my portfolio of properties more secure and to make sure I’m smarter for the experience.

My hope is that you too can learn from your lessons, and also from my lessons. That’s where the following video comes into play. It’s much longer than my normal short tips and I go a bit further into depth with examples of problems and mistakes I have run into during my tenure as a landlord.

As you can tell by my attire it’s even more casual than normal, so I hope you enjoy it and find it helpful. As always, I appreciate any feedback you have for me. I have several other videos recorded, I just need to make some time to edit them and get them uploaded, so watch for more coming in the near future.

As I mentioned previously, I want to get to around 20 videos and see how the overall response is, so if you like them and find them helpful, let me know. With that, hope you enjoy the video!

One more thing! If you know any other landlords, could you please let them know about this site? Hopefully it can help them too!

Do You Really Understand Cashflow?

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Determining Actual Rental Cashflow

rental cashflowT to succeed and really profit as a landlord, one of the basic areas you need to understand is the cashflow your property generates and how to then budget it for future expenses or issues.

Without planning ahead like this, rookie landlords often get caught in rough situations where there simply isn’t enough money to deal with a big problem.

Here’s how a new landlord typically sees it:

Basic Monthly Cashflow

Monthly Income
Rent Upper Unit: $1,100
Rent Lower Unit: $800
Total Rent: $1,900

Monthly Expenses
Mortgage: $1,200
Taxes: $175
Insurance: $50
Total Expenses: $1,425

Total Cashflow (Income – Expenses)
$475

This is pretty typical and the $475 then goes directly into the landlords hands as profit. However, this doesn’t help you long term. Especially if you plan to expand or avoid future expenses.

To avoid falling into a trap, I’d suggest you should change your projections a bit and make it look like this (of course use your own numbers!):

Monthly Expenses
Mortgage: $1,200
Taxes: $175
Insurance: $50
Vacancy Reserve (current vacancy rate % x 2, so 10% of monthly income) $190
Repair Reserve (approximately 5-7% of monthly income) $95 (I used 5%)
Revised Total Expenses: $1,710

Actual Cashflow: $190
But Why?

So you don’t end up like the US government and have to borrow money to pay your expenses! Lack of long term planning and understanding future costs and expenses is wreaking havocs on governments and individuals throughout the world. You can do better than that.

Plan Now For The Future of  Your Property

If you plan in advance and understand you will have vacancies and also understand you will need to do repairs and that you can create reserves so money doesn’t have to come out of your pocket later, you will learn to sleep much better at night. That’s what the second example shows.

The real trick is to take those reserves you are budgeting for and move them into a separate reserve account so you don’t accidentally spend them. Once you start thinking like this you will no longer feel like you are blindsided or trapped when vacancies or repairs start coming up and it will change how you look at your properties.

Remember, Properties are not short term ATM’s, but rather long term investments.

Advanced Landlord Tip

If you have steady tenants for an extended period, this reserve can build up, so we like to put a cap of around $5,000 on a property. Once the reserves break that dollar amount, it all becomes pure cash flow again like the first example. Or……

If you are buying a new rental property, we start with a $5,000 reserve fund that we use as our cushion. That provides us with the higher cash flow right from the start. Then if we do have vacancies or repairs, we draw money out of the reserve and then revert back to the lower cash flow amount until the reserve is topped up again.

Can you see how this takes the stress out of owning property? Once you start implementing a system like this and get used to it, the pressure of having to take the first available tenant just to fill the property evaporates. It affords you more time to choose the proper tenants and doesn’t affect you directly where it hurts, in your bank account!

Is this something you are already doing? If it is great I would love to hear how it’s working for you, if it’s not, when will you be starting?