Ask the Expert: How can I best utilize my rental income for better, long term investing?

Answer: 

This month I told you about the 3 Simple Rules for a Profitable Purchase. {Click Here to View}. To supplement these simple steps, for a long and profitable investment, you should plan on setting aside a portion of your gross rental income for a “rainy day”. 

Every situation is different, seek advice on what number might be best for you. This includes regular maintenance, repairs and the downtime of vacancies. 

Have a question?  Let us help!  Click here to submit your question.

Educating for REAL Greatness,

Red Team Real Estate and Property Management

Red Team Real Estate and Property Management was started in 2012 to focus on being the provider of quality service that has never been seen before in property management. Our approach is to serve our owners by providing professional, knowledgeable service with maximum value.

3 Simple Rules for a Profitable Purchase

Avoiding the “Money Pit” when Buying Rental Properties

In the 1986 hit movie, The Money Pit, Tom Hanks and Shelley Long buy a country estate outside the city at a bargain price. It soon becomes apparent why...as the doors fall off their hinges, staircases come tumbling down and a bathtub falls through the floor. While the film is full of humor, I know many investors who can relate all-too-well with the comedic couple, but it’s no laughing matter.  

Save yourself the horrors of a money pit by following these 3 Simple Rules before investing in rental properties

Put Your Business Goggles On

After all, these homes aren’t for you so don’t judge them based on your personal preferences. Any property you buy has to make sense from a business perspective. Look for sensible, reasonably priced homes that would be appealing to your “dream” tenant.

Know Your Numbers

An error in analysis, whether it’s paying too much for a home or not budgeting for the ongoing costs of the property has caused many investors to see their asset become a liability. Know what you can afford and educate yourself on the costs associated with this type of investment. Just covering your loan isn’t going to cut it. It is not uncommon for a property to be vacant for several days before it is leased. Meanwhile the investor has to pay the mortgage, the taxes, the insurance, the cost of advertising and homeowner or condo association dues.

Always Over Budget

There is more to consider than your loan, property taxes and insurance. Make sure to budget for routine maintenance and other unforeseen expenses. After you’ve done your research, plan to add a little more money and time you think it will take. If you can still make money after these considerations, you probably have a great investment at hand.

Before I close, I’d like to share the GOLDEN RULE of real estate investing – education. Educate yourself before you put your family's financial security on the line. Read books, sign up for information centered newsletters and look for local resources, where you’ll find speakers who cover everything from buying foreclosures to screening tenants. 

Educating for REAL Greatness,

Red Team Real Estate and Property Management

Red Team Real Estate and Property Management was started in 2012 to focus on being the provider of quality service that has never been seen before in property management. Our approach is to serve our owners by providing professional, knowledgeable service with maximum value.

URGENT: 2015 Real Estate Investments

Information All Investors Need to Know NOW 

Lawrence Yun, chief economist with the National Association of Realtors commented on our rise from the great recession, “More jobs means more demand for office space, more demand for warehouse space, and more demand for rental housing.” he said. “States with the biggest employment increases are seeing the best commercial real estate activity. Some states are doing much better than others...Texas is consistently in the top five.”

This is fantastic news for anyone in the rental property business, and we’re all looking for ways to take advantage of this economic primetime, including new property purchases. But the question remains – do we jump now, or do we wait to see if it’s going to get better? Although most analysts are expecting a steady increase in both the economy and housing market, there is something more to consider.

In 2008, the Federal Reserve introduced the Quantitative Easing program which was meant to boost the economy. It’s thanks to this program that mortgage rates have been at a historic low, however the QE is now set to taper off by October of this year. Along with our economic growth and a dwindling unemployment rate, you can be sure that we’ll begin to see interest rate numbers rise by this fall, if not sooner.

DFW is such a hot market right now, and there’s no sign of that changing anytime soon. It is expected that Texas is going to see a 3.5% growth in its economy this year. Realtor.com even predicted that with our local area’s increasing inventory, high employment growth and relative affordability makes it the No. 1 market for forecasted household growth over the next five years.

Whether you’re thinking about jumping into the rental real estate pool for the first time or you’re a seasoned investor, we invite you to connect with our team. We’re passionate about what we do, and we love sharing our experienced advice with you, the investor. 

Educating for REAL Greatness,

Red Team Property Management

Red Team Real Estate was started in 2012 to focus on being the provider of quality service that has never been seen before in property management. Our approach is to serve our owners by providing professional knowledgeable service with maximum value.

Educating for REAL Greatness

Educating for REAL Greatness

Co-founder of Red Team Property Management and Educational Entrepreneur Michael Mayes is impassioned about raising the bar of greatness by cultivating your understanding in all areas of property and real estate.

Real estate investing has created more millionaires than any other form of investing because of

its many advantages. Whether you’re investing for cash flow or capital gains, your success is dependent on your education. - Robert Kiyosaki

With an extensive background in business development and account management, Mayes is truly a realtor who understands investors. Whether you’re new to the market or a seasoned investor ready to take your portfolio to the next level, reach out and connect with Michael today!

For more information about coaching and live training, email michael@redteamdfw.com.

Good "Cents" Property Investments

Your Guide to Avoiding the Pitfalls, Having More Freedom and Making the Most of Your Investment

So you think investing in residential rental property might be for you but want to avoid the many pitfalls that other investors have made. Or, perhaps, you already own a rental property (or two..or six..) but you’re not sure you're receiving the highest value for your money. Just like any other

investment vehicle, rental property is about getting a return on your dollar. Whether you invest in stocks, bonds, mutual funds or property, the objective is the same – you want that initial investment number to quantify on its return.

A similar comparison can be made when it comes to the knowledge of your investments. Just as you would require the specialized know-how and experience of global market trends to succeed in stock and bond investments, high returns are dependant on your level of understanding residential rental property. To guarantee you’re on the right path, for both your investment and your family, you’ll have to take a look at the fundamental basics of owning your rental property.

Marketing your property

If you don’t have a tenant, you’re not getting a return on your investment. This isn’t the Field of Dreams so you’ll have to get the word out. Marketing your property includes taking and uploading pictures to rental sites along with detailed descriptions of the home, location highlights, school districts, etc.

Fielding calls from prospective renters

If you know where they’re at, or lucky enough to have stumbled across the “hot” rental ads and sites, your listing will generate quite a few calls. Block out some time in your schedule, every couple of hours to do call backs if you’re unable to answer your phone throughout the day.  

Screening potential tenants

This somewhat correlates with the above. While you may not consider every caller to be a desirable tenant, those who are should have an extensive background search performed. It doesn’t matter if the person reminds you of your sweet old Nana, skipping this step is one of the biggest mistakes an investor can make!  

Lease agreements

We’ve all paid the price of not reading the fine print, but what can prove to be more costly is being on the other end of a too short agreement. Each State has different laws and it’s of the utmost importance that you are aware of your and your renters rights. Equally important is that your lease agreement does its best to cover all unforeseen scenarios.

 

Maintenance

There are many repairs that aren’t going to be urgent and they can easily wait until the next day. However, there are some problems that may arise that require 24 hour “on call” maintenance. Busted air conditioning units and backed up sewer lines don’t care about a weekday only, 9-5 schedule.

Collecting rent

If you’re depending on your renter’s check to make the mortgage, timely payment is of vital importance. Dates and late fees should be clearly defined in the lease, but you may find yourself delivering late notices in the event that payment is late.

 

Renewing leases

Lease renewal is your opportunity to guarantee always making top dollar on your investment. Keep current with the rental rates and trends in your area.

Evictions

In the perfect world, every tenant would be a good tenant, but of course, this isn’t the case. Even the best tenant can lose their job and you may find yourself in the position to evict.  

Keep it professional

Along the road you’ll have renters who happen to be really good people. While it’s only human to form attachments and relationships with people, one of the biggest mistakes an investor can make is to do this with the tenant. Think about the eviction scenario above, would you be able to evict someone you cared about after they had fallen on hard times?

Investing in rental properties may seem a bit overwhelming and time consuming. If you’re still reading, it’s probably because you understand that this particular kind of investment has unparalleled advantages. Whether it’s for tax benefits or simply the appeal of having a tenant literally pay your investment for you, rental property is a great way of creating a continuous and abundant stream of income.

The best part is, as the title implies, there is a way to make the most of your investment, avoid costly mistakes and enjoy more freedom in your investment. Professional property management services, such as Red Team Property Management, cover every aspect of running your rentals so you can increase profits and go out and live your life. Whether you’re thinking about jumping into the rental pool for the first time or you’re tired of being tied down by your current properties, we invite you to connect with our team. We’re passionate about what we do, so we love hearing your stories and sharing our experienced advice.

Give us a call! (817) 921-3545

Red Team Real Estate was started in 2012 to focus on being the provider of quality service that has never been seen before in property management. Our approach is to serve our owners by providing professional knowledgeable service with maximum value. For our tenants, we want them to always look to us to help them get home. This focus on service makes us the team to beat!