Being a good property manager requires a variety of often disparate skills and some unique personality traits that will get you through the sticky situations that arise in managing people and assets. Property managers have to fulfill a variety of duties like searching for tenants, screening the best ones, negotiating and collecting the rent, managing relationships with vendors and repair services and supervising move-outs.
But for investment property manager/owners your role is even more critical because your eye is on the bottom line so you need to do everything as cost-efficiently and quickly as possible. Success in property ownership and management depends on your ability to acquire and/or master the following 6 traits. Read through the list and see how you match up!
1. Multi-tasking – For most people this skill is as elusive as winning a million dollars on a scratch-off ticket. It’s tough to multi-task and more importantly it’s tough to do multiple tasks well at the same time. But great property managers have to keep their eye on many moving balls at once. But if you’re already a pro fix/flip property investor- you’re probably already ahead of the curve.
2. Cool under pressure – As difficult as tenants can be sometimes you have to remain cool under pressure and still give them quality support for whatever their issue is. As an owner and property manager you’re on-call 24/7 for repairs and issues and it’s your legal obligation to keep your tenant’s living conditions up to par.
3. Handy around the house – Most fix/flip investors are already do-it-yourselfers but if you’re also going into investment property management you really need to be able to fix a lot of small issues yourself. It will save you a ton of time, energy and money if you can just fix it and forget it.
4. Good at reading people – If you’re a person that just ‘knows’ if someone is up to something then you are already a shoe-in for being great at screening sneaky potential tenants who are hiding something. Being good at reading people and looking under and beyond what they’re telling you will go far in helping you only select the best tenants who will treat your property with care.
5. Budgeting Pro – Maintaining the books and tax documents on a rental investment can be challenging- but if you’re already managing your Ps & Qs as a fix/flip real estate investor you’re likely already prepared for this piece of the property management puzzle as well. Keeping great records and receipts will again save you a lot of time, energy and money come tax time.
6. Attention to Detail – Top property managers have key responsibilities including signing leases and posting important legal notices so keen attention to detail could mean the difference between smooth sailing and legal woes.
Property management is one of the most versatile careers out there – requiring discipline in a plethora of arenas. Having these 6 traits will go far in helping you manage your rental real estate portfolio with ease and precision.
While the house flipping market is hot and investors like you are on the hunt for the next killer fix and flip deal, the economic climate in the traditional mortgage/conventional loan industry is shifting from post-recession which means mortgage interest rates are on the rise and forecasted to keep climbing. According to Forbes.com in the week ending June 6, 2013 the 30-year fixed rate mortgage clocked 3.91% in its fifth consecutive weekly gain, according to Freddie Mac, after hitting its highest level in a year the week before. That’s 18% higher than the 3.31% record low set in November of 2012 and almost 17% higher than the 3.35% rate logged in the beginning of May. The 15-year fixed rate broke above 3% as well, to 3.03%.
Flash forward to April 2014 and rising conventional interest rates are the talk of Wall Street and Main Street once again. Long-term rates, like fixed conventional bank mortgages, are driven by the market and until recently the Fed’s purchases of Treasuries and mortgage bonds have successfully held down long-term rates. According to financial expert Nellie Huang from Kiplinger.com’s personal finance team, as the economy improves and those purchases continue to shrink, long-term rates will inevitably rise. This may also have an impact on non-traditional lending, although somewhat less dramatic, since the fix/flip hard money loans we handle here at Center Street are not based on market rates.
“Mortgage rates—even initial rates on adjustable-rate loans—will grind higher in 2014, says McBride. Kiplinger’s expects the 30-year fixed-rate mortgage, recently just over 4.4%, to rise to 5% or 5.5% by year-end. That won’t halt the real estate recovery. A one percentage point rise from current rates means an extra $61 in monthly payments on a $100,000, 30-year loan. Still, consider locking in your rate once you have set your closing date. For credit cards and home-equity loans, 2014 could be the last hurrah for low rates, says McBride. Pay down your variable-rate debt before rates rise.” Read more at Kiplinger.com.
With conventional interest rates rising a better solution may be to look toward private funding through hard money, equity-backed loans(our specialty!). Qualification for this type of loan is typically easier and funding can happen within 24-48 hours instead of a traditional 30-day close. This gives you the bidding advantage in hot real estate markets flush with cash investors. While there are some differences when looking at hard money loans vs. conventional, hard money loans do not base the interest rates on market rates, there are a lot ofadvantages for the fix/flip investor.
Whether you’re a small fix/flip real estate investor with only one or two projects in the fire or a big player with dozens of projects in motion at a time, be aware that your profit margins may change in the months ahead as these economic projections of interest rate hikes come to fruition. It may be time to look at a non-conventional lender like Center Street to close your investment transactions rather than traversing through the often painful process of conventional bank lending to save a couple of percentage points.
TAKE NOTE: Center Street is now offering a 3-5 year rental investment loan program. Now is a great time to lock in your rate for the next 3 years with our rental program and avoid future interest rate spikes! Call (949) 244-1090 for details! fINA
Stay tuned to Center Street Lending for the hard money loan market rates and loan terms for short-term fix/flip investors and expert advice on hard money loans.
To your success,
The Center Street Lending Team
After you’ve put so much hard work, equity and elbow grease into a rental property to get it just right you want to pick a tenant that’s going to treat it with care. But not all potentially bad tenants walk around with a sign that says “I’m going to destroy your new paint job and carpet.” So here are a few signs to watch for during your thorough application screening process.
They have moved/changed jobs often. A good rule of thumb is more frequently than once a year/every 2 years for a period of five years or longer. You have to give a break to military families or college students as moving is the name of the game for them but if those aren’t their circumstances and they are on the move every 6 months that’s a big red flag.
You get conflicting feedback from previous landlords or references. Maybe you call one reference and it’s stellar but the next is hard pressed to name something ‘likeable’ or ‘reliable’ about this tenant. Often potentially bad tenants will line up friends mixed in with real references to get by in the hopes that you’ll only call the first one or two names on the list. But you’re a pro landlord so you call them all and keep calling until you get the real story.
They are rude/complain before even moving in. If a tenant is rude or complains often before moving into the unit, chances are it will only get worse. Prospective tenants are usually on their best behavior, so if a person exhibits poor manners from the get-go, you will have a very long road ahead of you if you decide to rent to them. This tenant will likely treat everyone including you, fellow tenants, neighbors and repairmen- with the same disregard, making your life and the lives of everyone around them miserable. You risk having other tenants move out, complaints from neighbors and 3 A.M. phone calls just to tell you they blew a light out in their bathroom. Save yourself the hassle and avoid this tenant!
They have bad credit. You want a tenant with a solid history of being financially responsible and paying their bills on time. So once you’ve verified their income, spoken to their employer and pulled their credit check make sure the picture is singing the right tune.
They have too many people in the family or friends/relatives they plan to have living with them. To follow federal fair housing rules you must ensure this tenant will only allow a max of two people per bedroom. If you get a sense that this applicant has more people lurking around for a place to crash than your unit will allow ask them upfront and then make the call on if you believe their answer or not. If your gut says no, go with it.
At the end of the day your instinct will tell you whether this is the right tenant for your property. Remember to do your thorough background check and screening before accepting a rental deposit to hold a unit or offering the unit to the prospective tenant. This gives you the time you need to make the right decision.
Rental investors take note Center Street Lending has just release hot new rental investment loan programs! Check them out NOW.
Real estate investing can be a fly-by-the-seat of your pants business in hot markets which is why having a reliable hard money lender on your side is the lifeblood of successful real estate investors today. Unless you already have deep pockets, most investors will need to access a hard money loan to both acquire a new investment property and to have the capital on hand to make the necessary transformation that will turn your run-down property into real estate treasure.
A popular metric to measure the performance of any real estate investment is called Cash on Cash Return. This metric gives an investor a rate of return on the amount of cash invested in a given property. This may not be a perfect measure of ROI but it’s a good way to compare the potential return between two given investments or properties. Cash flow is the main problem investors run into. What do you do if you start a project and run out of capital to finish it? Or go into a property with good potential upside only to have the market bottom out around you – causing you to flash sell and move on. These situations have happened to almost every house flipper at one point so knowing your market, taking steps to mitigate risks (like working with a pro contractor team and staying within your estimated budget and timeline) will help you take on any project with the confidence that you’ll have a successful outcome.
And remember, your budget and cash flow do not just refer to rents received or mortgage payments made but the amount remaining after expenses are paid. Those expenses may include: utilities paid by the owner during a flip and while it’s up for sale, repairs, insurance, property taxes, home owners association dues, landscaping and material costs which can get up there if you’re competing in higher-end housing markets. It is important to remember that each property is unique and investors would be wise to do their homework to determine not only what the property is likely to rent or sell for but also what expenses will be incurred.