Fast Growth Rental Market

The fastest growing rental market in the US, according to Fannie May's website, is single family houses.  They claim that the percentage of rentals in that space has grow from 30.8 percent to 33.5 percent.  While apartments and attached living spaces have long been thought of as a landlord's best friend, especially because of density, single family homes have certainly become in vogue for renters.  The question for real-estate investors and developers, is to figure out whether this will create a new demand for apartment and multi-family living spaces, or perhaps this is more of a function of the pricing curve on the housing market in general.  Only time will tell. 

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Maintenance Costs

If you own multiple properties understand and schedule the maintenance costs out by property.  You would be surprised by the amount of property owners that own 5 to 20 properties and employ a third party to help keep their properties maintained but don't account for the different expenses per property.  Often times they use an accounting software program, i.e. Quick Books, and just have one line for maintenance expenses for their entire portfolio, but those programs have the capability to assign costs by property.  If you can avoid it do not co-mingle expenses between the properties.  Know which, if any, properties cost you more or less to maintain every year.  Most expenses in property management are fixed(at least for a year): insurance, mortgage, taxes, accounting, etc.  However, other than scheduled proactive maintenance problems do and will arise.  When they do they often cost you as a Landlord money.  Make sure to separate those expenses out by property.  The math of the expenses and your per-conceived notions about the separate properties may actually be off.  It is much harder to discover individual problems without the check and balances of detailed individual expense to lead you on the right track to lowering your overall costs.

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Raising Rents

What Landlord is not interested in raising rents?  The idea of a higher percentage of return from your investment is one of the reasons your acquired the property in the first place.  Yet, many landlords fail to properly raise rents, or worse yet use the "feel method" when deciding whether to and push through an increase.  Evaluating the proper market rental rate for your property is a science that includes many factors, and the facts are that some people are better than others at understanding that on the fly.  However, I am here to tell you that "feel" method is not a smart method for landlords (especially individual landlords) to employ regardless of whether you think you fall into the category of someone who is good at evaluating the market quickly.  Use a strategic method for raising rates.  My favorite is simply to employ a spreadsheet and a set of dates that you feel are realistic to increase.  You only have a couple of chances (if that) in the year to actually put through an increase, don't waste those opportunities.  Think about whether you want to raise your rents well in advance of the new lease signing.  Figure out the best time to pass along the rate increase to you new or current tenant.  Always use a transparent method of communicating this increase, and leave yourself some time to negotiate.  The most important factor is keeping your place rented, however don't be afraid to raise your rents, especially when they are under market with a long term tenant they don't want to move!  Keep your places in good shape, use a strategic method, and enjoy the extra cash flow!

Depreciation

 People often talk about the positive benefit of depreciation on taxes.  While there is no doubt that lowering your taxable basis can be smart financial planning, understanding how depreciation works can help utilize it in the best way.  First off most people are capped out on passive loss limitation rules, because the majority of taxpayers do not have passive income to offset the loss past the allowable limitation.  If you fall in this bucket understand that taking depreciation will not help in the near term, therefore don't budget for its benefit when purchasing a property.  Secondly, if you sell the property for a gain you will be subject to depreciation recapture on the depreciation you have offset against your tax bill.  So when calculating you long term gain for your next tax bill make sure to set aside depreciation recapture if/when it comes up.  This note provided by www.landlordstation.com, the best place on the web for Tenant Screening through its partnership with mySmartmove and TransUnion.

Signs, Signs, Signs

Your best marketing and advertisement tool (besides your property itself) is often your sign.  While I can certainly talk at length about all the reasons that you should maintain the look and feel of your property, I wanted to talk directly about the sign.  A famous real estate investor once said "You may work for a 8 to 10 hours per day, but your sign is working 24 hours per day."  Pay attention to the maintenance and placement of your sign.  Make sure you have a sign that tells tenants or buyers that you mean business.  If you don't display your sign year round make sure you are strategic about placing that sign in the yard a couple of months before your tenant's lease is up.  You select the time it goes in the ground, but be very disciplined about that date ahead of time.  Make sure your contact information is easy for people passing by to read and understand it.  Pay attention to your sign, it might be the cheapest marketing you will ever have. 

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Step Number 1 Manage Lease Risk

What do you need to know as a Landlord?  Seems like it should be an innate process right?  You buy a property, you find a tenant, and then you maintain that property.  Well, there are people that do it right and build tremendous wealth.  And then there are the ones that miss all of the important steps and end up buying properties at the wrong time, and forced to sell them at a horrible time.  Through a series of easy to follow steps I will be describing the process over a set of blog postings that will be sure to make you the best Landlord in your area.  Time to jump right in with Step Number 1.

Manage your Leasing risk not your Home Value risk!  What?  The home value should move in concert with the lease market.  I am here to tell you that this is not the truth.  The object of being a Landlord is to own, rent, and manage your property.  Selling it is a matter of preference, leasing it is a matter of survival.  Manage that lease risk!  Look to the important factors in your area.  Jobs and Job growth, schools and students, location to usable retail, and population studies.  Look for areas that should have sustained leasing, because you can weather a bad housing market with an area that has lots of leasing prospects. Posted by www.landlordstation.com