Must Know Investing» Property Management

How to Drain the Risk from Your Real Estate Deals

Patrick Riddle — Fri, 18 Sep 2009 14:01:19 +0000

In today’s post, Julie Broad of RevNYou tells us how to drain the risk from our real estate deals … (if you missed it earlier this week, make sure to check out the video review I did of Julie’s Real Estate Millionaire: The Essential Starter Course)

Real estate investing can be risky. We’ve all heard the stories of the losses, the bankruptcies and the stress caused by real estate investing missteps.

As a savvy real estate investor, you should always be looking for ways to drain the risk from your deals. And the real big risks arise when you buy a property that nobody wants to live in.

Empty units can suck the profit from a property in a single month, and consecutive months of vacancies can sink you. And, if you’ve bought a place that nobody wants to rent from you, you’ll probably have a hard time selling it too!

So – how do you drain the risk from your deal and buy a property people are sure to want to live in? Instead of chasing the hottest deals …

Find the Starving Crowd!

If you were going to open a restaurant, where would you want to be? You’d look for an area where people with money to spend on food are starving. Even if there are other food choices in the area, if there is enough demand for food and there’s a hungry crowd waiting for it, your chances of success are much higher.

Of course you have to make sure you’re serving the right food at the right price, but let’s face it, when you’re really hungry you’re a lot less concerned with what you’re eating and how much it costs than if you’re well fed.

The same happens in real estate. If you find an area where people want to live, and you find the property type they want to live in, everything gets much easier. Your prospective tenants are much less price sensitive and there’s a larger pool of people to choose from. And, if you do decide to sell the property, even if the market is slow, you’ll find the sale process quicker and more lucrative than in less desirable areas.

The Secret to Finding the Starving Crowd

It’s starts by knowing where to look. Do a little market research. Find a community that has growing demand being driven by new employment, a college or university, or something significant that is drawing people in. Sometimes the significant thing can be a new transportation hub like a new subway station or a new highway. Other times it might be a new ski resort or some other form of recreation expanding or developing.

Basically, you’re looking for population growth, increasing household incomes and a shortage of places to live.

Once you find an area like that, start visiting open houses. Chat with the realtors. Ask them about the houses that people are buying – and why they’re buying those houses. Ask them about must-have features. Call a few local property managers. Ask them about the people who are renting. Ask both realtors and property managers where people in the neighborhood usually work, and what attracts people to that area. You can even ask about rental rates and popular apartment buildings in the neighborhood.

Then walk around and chat with people in coffee shops and parks. Find out where they work, what they like about the area, and other general information. And pay close attention to apartment buildings with no-vacancy signs. What size units do they have? Where are they located – near a subway or bus stop, across from a park or something else that might be drawing tenants? Do they have any special amenities?

Finally, you can go online and read the ads people are posting. You can even call some of them and ask questions. Find out what features everyone highlights. Be curious.

Pretty soon it will become apparent what it is that tenants in the area are hungry for – maybe 2-bedroom units with dishwashers, or 3-bedroom homes with a fenced yard near George Washington High School, or 1-bedroom condos off Granville Street. Once you know what is hot, and you understand why, then that is the kind of property you want to buy.

And when you do that … when you find the starving crowd and give them what they’re hungry for, you’ll find it’s very easy to find good quality tenants, make tons of money from your property and eventually sell it for a very nice profit.

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Julie Broad and her husband Dave started investing in real estate several years ago and have amassed a mulitmilllion dollar investment portfolio. Julie was able to retire last November to a life of real estate investing and helping others follow in their footsteps.

Julie and Dave have a real estate investing course specifically designed to help beginning investors get started the “right way” … check out the video review I did of their Real Estate Millionaire: The Essential Starter Course … (I give it two thumbs up!)

You Didn’t Get The Rent Because My Mailman Doesn’t Like Me

Patrick Riddle — Fri, 04 Sep 2009 16:19:59 +0000

Can you believe a tenant told my buddy Dustin that???

“You didn’t get the rent because my mailman doesn’t like me.” . . . WHAT! . . . Isn’t that ridiculous . . . lol . . .

Dustin has owned a couple rental properties and has heard some good excuses in his day . . . how about this one . . . Dustin said that another tenant told him that since there was a holiday on a Monday, they didn’t want to mail the rent and have it sit in his box for too long. Soooooo, they waited until he contacted them the next week to find out what he wanted them to do. Three weeks later he finally got the rent from them . . .

Ahhhh the joys of dealing with tenants . . . it’s amazing the stories they tell.

My REI biz partner, Dusty Keefe, has been our property manager ever since we started investing in real estate. He was the lucky one to take on that position for us (well I kinda stuck him on that one) . . . hahaha . . . thanks Dusty!

Anyway, Dusty shot a quick video to share some of the worst (aka funniest) excuses that we’ve gotten from a tenant for not having the rent on time.

Check it out below . . .

Isn’t that hilarious!

Well, it’s not when it’s actually happening and you’re listening to their BS . . . but it’s funny to look back on.

** What’s the most ridiculous excuse that you’ve ever been given by a tenant? **

Write it in the comment area below now!

This is going to be interesting . . . can’t wait to hear what kinda ridiculousness tenants have been feeding you . . .

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Profit from Problem Solving: 5 Creative Ways to Make Money in Real Estate

Patrick Riddle — Mon, 17 Nov 2008 12:37:12 +0000

In today’s post, Julie Broad of Rev N You is going to share some creative ways to make money in real estate.

“Most people spend more time and energy going around problems than in trying to solve them.” – Henry Ford

Often, finding or creating great real estate deals is nothing more than figuring out what the problem is and fixing it. Here are five of the most common real estate problems, and some ideas for solving them:

1. Landlord Burn Out

Being a landlord can be stressful and tiring. Picking just one bad tenant can make your life miserable. And, if you don’t have a clear set of goals or an easy to follow strategy, it’s often easier to throw in the towel and run away from your real estate investments.

Find the frazzled and frustrated landlords, and solve their problem. A frazzled and frustrated landlord is done dealing with the troubles of their property. Most of the time this person will think the only way out is to sell. But, in today’s troubled market they may lose money on that sale. Their real problem is dealing with the bad tenants… if it’s otherwise a good property, you could offer to become a partner on the deal. Maybe you get a 20% share of the property for just taking on the role of property manager? No money invested on your part, just some time, sweat and trouble to get rid of the terrible tenants, place some new ones and take the odd call.

2. Increase the Density

Most investors just look at a property for what it is . . . but you can look at what it COULD be. In cities where the vacancy rate is low, the City is often anxious to add more units to the rental pool so approvals for changes should come easier. Find a house with a basement that could easily be turned into a suite. Or, if you’re more ambitious, find a house that could be lifted, extended or torn down and turned into a multi-unit property. This takes work, tenacity and an understanding of city planning (and permits), but the payouts can be big, especially if you’ve got handy friends and family or just a good relationship with a few contractors.

3. Find Properties that Need Love

With the number of foreclosures on the rise, and more and more distressed sellers, now is the time to find properties that need love. Look for properties where the lawn has been overtaken by 2 foot high weeds, newspapers are piling up, and the lights are never on. These properties may be close to foreclosure or just have an absentee landlord that thinks there is no market to sell. Write down the address, stroll on over to the local municipal office and look up the owner’s name and address. You may just someone that is really happy to hear from you. You could be saving them from foreclosure or just taking over a property they don’t have time to deal with. You might even find an older person who has moved into a home that would be willing to give you financing on the property as a stream of income for them to use to fund their retirement expenses. You just have to take that extra step to investigate so you can find out what is the problem that needs solving.

4. Be a Better Property Manager

Lower costs and increase revenues on the properties you own. Energy efficient light bulbs, low flush toilets and ensuring windows and doors seal properly are all things you can do to be kind to the environment while reducing your property expenses at the same time. Or, if your tenant pays the bills, it’s an additional selling point and can help you retain tenants longer at the highest rent possible in your market.

To increase revenues, you can charge for parking, rent out your garage separately, rent out a storage locker separately, and charge for laundry services.

5. Be a Better Marketer

Make sure you’re following the marketing basics . . . the 4 P’s of marketing a property for sale and for rent.

Product: First of all, make sure your product looks its best when you market it to a renter (or to a potential purchaser if you’re selling). Don’t show it with a promise to fix it up, show it in its best condition. You wouldn’t go out on a first date smelly and wearing last nights clothes would you? Don’t let the first impression of your place be a worn and unloved property. Clean it, paint it and make it smell nice.

Price: Know what your competitors are selling for and price yourself just a tiny bit lower. If you are renting your place out, even $10 less per month is slightly more appealing and will get you looked at. Make sure you’ve done your research though. Do not price too low or you will be leaving money on the table.

Place: Sell the benefits of living in your place – sell the place! Make someone want to live there with your property descriptions. “Easy five minute walk to trendy College Street restaurants and shops” sounds much better than “1/2 mile from College Street”. “Warm and bright main floor unit opens up to back yard and front porch” is so much more appealing than “access to backyard and front porch from this main floor unit”.

Person: Pick a person to sell it to. This is very important. Most people will just try and rent or sell a property to anyone. And really, to market anything, you need to know your target market. Is it a student? If it is, you’ll emphasize different aspects of your unit than if it’s a family or a downtown professional. Think about who the ideal or most likely prospect is and sell it to them with phrases and features that will appeal to them!

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When Julie is not looking for new real estate investments, she spends her time writing, talking and learning all about real estate investing. Her and her husband, Dave, have created a Real Estate Investing Starter Tips Guide and publish a newsletter to help rookie real estate investors make money investing in property. You can sign up for their newsletter and get a copy of their Free Starter Tips Guide at their website: Rev N You in Real Estate.