Tips on Getting Approved for a Rental Property Loan
Guidelines on Getting a Rental Property Loan
There has been an increased need for the rental property over the years in the country. National Multifamily Housing Council and National Apartment Association have statistics to back this up. These statistics show that by the year 2030, there will be an annual demand of more than 325,000 rentals. With this in mind, it can be extremely beneficial to invest in rental property in terms of revenue generation. It does not matter what you need to do to acquire finances. You can go as far as obtaining rental property loans for real estate.
Your Financial Position
Financial strength is one of the critical factors to consider investing in rental property. Following the risks accompanying rental properties, owners of these properties like it when the agreement between them and the acquirer are strict.
Therefore, before investing, it is wise to consider your financial position and know how to pay for it. Acquiring an investment property mortgage for investing in real estate is quite hard. It is undoubtedly incomparable with getting a mortgage to acquire a primary residential property.
Below are some tips and guidelines on how to get approved for a rental loan or an investment property mortgage.
A 20% Initial Payment
Property management financiers require a minimum of 20% deposit of the initial payment. However, this initial payment rate is not uniform in all states and firms across the country. Ideally, lenders need to see your interest in acquiring the property. If you are a low-income borrower, there are some considerations put in place to allow you access funds. These considerations, however, require you to have made an initial deposit of as low as 3% of the total pay.
Your Financial Position in Acquiring a Rental Property Loan
Purchasing a rental property requires you to show proof of your current financial situation. Some questions that lenders ask you will help you keep on track about the matter. Can you afford to repay the loan on time? Can you afford to acquire a loan while still having a mortgage on your home? What is your debt to income ratio? How capable is your cash reserve?
These and other questions help link lenders, mostly banks, to your financial position. If these questions are satisfactorily answered to the positive side, then you are good to go on the loan. However, there are two main factors to consider: the debt-to-income ratio and cash reserves.
Debt-to-income Ratio
This is the amount of income you get versus what goes to settling your debts. It answers the question, how much debt do other parties owe you, and how much or how far are you in clearing those debts. Most banks will require this ratio to be at a threshold of 45%. Or even better, much lower.
Some banks are lenient enough to add to your income, the projected revenue for your rental property to be. This gives an advantage to accessing the loan, especially if you are stranded with other debts.
Cash At Hand
Cash reserves statements are another parameter that lenders look into when lending to you. The higher the cash reserve to income ratio, the higher the chances of receiving a loan for rental property.
Brace for High Rates
There are a lot of risks involved in lending mortgages or finances for rental property. These risks are perceived as irreversible if they happen. Lenders for this kind of property management seek compensation for this kind of risk. The interest rates, therefore, are set at higher. Their rates sometimes scale four to five times higher than the mortgage rates charged on a primary residence. Others are as low as a 1% difference between the two.
The higher are set by private lenders who issue private loans for recipients interested in renovating and reselling the private property. The timeline for repayment can be as low as five years to as much as 30 years. Keep this in mind, interest rates for rental property loans are either fixed or variable. It is wise to expect the worst-case scenario.
Choose Your Lenders Wisely
Be open and optimistic for a diverse group of lenders. Do not just eye commercial and community banks. Be ready to embrace the different kinds of lenders out there - private and hard-money lenders. These "other" lenders may tend to offer the same loans on much lenient financial strictness. Their rates might be higher but for an extended paying time or vice versa. Do some research on the best loan providers for investment property financing.
Check on Your Credit Score
Leverage your chances of acquiring the loan by bettering your credit score. This is a score that shows how worthy you are in deserving of a loan. FICO credit score is the most commonly used by lenders to assess borrowers.
A score of 670 and above is considered above average in FICO. However, some conventional banks have more strict measurements on credit scores. Other credit score analyzers include LendingOne, which sets a minimum required score of 640. CoreVest looks into your activity on money transactions and your liquidity rather than a specified minimum score.
Parting Short
With all these tips and guidelines in place, there is one thing that you have to keep in mind. Rental properties are considered to be a risky investment area. This is because their management is low, their vacancies are uncertain, and costly repairs van eat up funds meant to clear the loans acquired in purchasing it.
But one thing is, however, inevitable. The revenue generation in rental real estate will be reasonable enough to outweigh the cost of purchase and maintenance.
How to Earn a Lease Renewal from Tenants
Finding great tenants can be daunting. Therefore, finding tenants who take good care of your rental property, pay rent on time, and strictly adhering to the lease agreement is a dream come true for most tenant management companies or landlords.
However, as a landlord, what are you supposed to do when the lease agreement comes to an end? If you kept the tenants happy, they would happily oblige if you ask them to renew their lease. On the other hand, if you weren't a great landlord yourself, it will be challenging to convince them to stay longer. Fortunately, you can always look for other tenants.
Advantages of Renewing a Lease
There are several benefits you can enjoy after a successful lease renewal. Here are the most common.
More Predictability
Renewing a lease will help you with the trouble of looking and adjusting to new tenants. Your current tenants are aware of what the lease entails and what the Salinas property management expects of them.
Saves Time
When you retain a tenant, you save a lot of time that you would have spent looking for new tenants, posting advertisements, going over lease clauses, and showing the property to potential clients.
Saves You Money
It becomes easier to increase the rent.
In most states, tenant management companies cannot increase the rent unless the tenant's lease is due for renewal. In the new agreement, you will highlight the new changes, and if the tenants agree, they will renew the lease. They will vacate the premises if they disagree with them.
How to Earn a Lease Renewal from Tenants
The primary purpose of a lease is to protect both the tenant and the landlord. Each gets to understand their responsibilities. It also states the amount of rent to be paid and the collection procedures.
Below are tips on how to earn a lease renewal from tenants.
Tenant Management
Dealing with tenants can be demanding. However, to effectively manage your tenants, you need to keep them happy and satisfied. Practical tenant management help foster strong relationships between you and your tenants. As a result, the tenant turnover rate drastically reduces. Below are some management tips that you should try.
Screen Your Tenants
The most common and important questions you need to ask a tenant include:
• How much is your monthly income?
• How many people will you be living with?
• Do you have pets?
• What is your source of income?
• Did your previous landlord evict you, and why?
• Are you willing to sign a lease agreement?
• Have you been convicted of a crime before?
Ensure that you verify the responses by doing a criminal background check, contacting previous landlords, and current employer.
Ensure That the Lease Agreement Is Detailed
When it comes to full service property management, a lease agreement is essential. To serve its purpose, it needs to use a simple language that both parties can understand. It should cover lawn maintenance, pest control, pet clause, parking, property use, and subletting.
Most importantly, a lease agreement must mention the consequences a tenant is likely to face if they don't pay rent or adhere to set guidelines and rules.
Be Professional
Additionally, you need to put a proper procedure for collecting rent in place. Tenants need to know when rent is due and which method they can use to pay.
Offer Incentives
A good gesture, despite how small, can boost your tenant retention rate. For instance, you can do the following to ensure that your tenants renew their lease.
• Offer a discount on rent if they sign a two-year lease.
• Replace doors.
• Re-paint the property.
• Pay for landscaping.
• Pay for some minor repairs.
• Install new flooring, etc.
It is advisable not to promise upgrades that are far within your reach.
Allow a Grace Period for Rent Collection
Address Any Complaints Quickly
Ensure that you resolve all complaints the same day or within a week. The happier the tenants are, the more they are likely to renew the lease. Also, make sure that you give your contact information to tenants when they move. It will be easier for them to contact you when they have a complaint or an emergency.
Ensure Regular Maintenance of the Rental Property
Frequent maintenance eases the frustration of tenants, making it difficult to vacate.
Inform Them of All Rules and Regulations Before They Move In
Letting potential tenants understand your set rules and regulation before they rent avoids confusion in the future. If they disagree with your rules, they will look for other options.
To earn a lease renewal from your tenants, you can ask them. Most Salinas property management companies wait for renters to show interest in renewing their lease agreement. However, the truth is that most tenants wait for property managers to remind them.
From the above, it is evident that renewing a lease can save a lot of your time and money. Following the above tips will help convince your tenants to renew their lease and, as a result, increase your occupancy rate.
Five Reasons to Invest in an Income Property
Real estate is the ideal approach to make a secure revenue, put something aside for retirement, and develop a broad investment portfolio.
Do you want to be successful in the real estate industry? It would be best if you had a deep understanding of income property and the advantages you will achieve in the long term.
The housing market may fluctuate at times, going up and down. However, since people continuously look for houses to live in, rental properties will always be a wise investment. Investing in real estate provides various advantages to those hoping to broaden their portfolio.
Five Reasons to Invest in an Income Property
1. Offers Tax Benefits for Investors
It is easy for an investor to enjoy tax benefits when investing in real estate. An entrepreneur can deduct almost every cost related to the land.
It is simple for somebody to increase or decrease the different tax benefits provided by the IRS. Financial specialists managing real estate receive the highest tax benefits in the name of deductions.
Deductions that are represented might be devaluation, property tax, fixes, or other expenses. Here are examples of tax benefits usually enjoyed.
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Depreciation
One of the best tax deductions property investors appreciate is devaluation. Like some other resources, real estate is likewise an asset that devalues after some time. Depreciation is a deduction brought about materials that wear out.
It looks like an allowance provided for the wears and tear of the property. Devaluation is billed in different years for private and commercial property. Even though anything which wears out on the property should be discounted, you should realize that property worth usually rises after some time.
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Lower Capital Gains Tax
Capital gains are the benefits entrepreneurs make after selling their investment property. Fortunately, there are reduced taxation rates on capital gains.
Short-Term Gains: These are profits that are achieved from venture properties that are kept for a period that is less than a year. There is no specific tax reduction for properties that fall under this category.
Long-term gains: Profits that are attained from investment properties that are retained for over one year. Entrepreneurs prefer long term capital gains because tax reduction is considered here.
2. Steady Returns
Most people invest in real estate due to the steady flow of money they receive as rental payments. This revenue is an enormous motivating force to make you purchase an investment property.
Investing in real estate starts with buying a property to bring in cash in two potential ways.
- Renting the property to tenants and collecting rent from them.
- To wait for the property to gain an appreciation for you to sell.
The income depends on your location. Certain places can receive huge pay to cover costs and give you major profits.
Towns with schools and colleges will generally collect more income because the demand is high in such regions.
Furthermore, you are not restricted to investing in a single property. You may have different investment properties at a similar time to develop your income and broaden your investment portfolio.
Remember to select a strategic place to receive better pay for real estate investments.
3. Investing in Real Estate Provides Better Returns Compared to the Stock Market with a Small Risk.
Real estate offers you more command over your investment since your property is a substantial resource that you can utilize to exploit various income streams while benefiting from capital appreciation.
In real estate, the margin of profit increases by the time you hang onto your property. When the market booms, the estimation of your wealth grows, and subsequently, you build equity. However, in the stock market, the risk never changes, and there are various variables outside your ability to control that can adversely affect your venture.
In the course of your retirement, property investments are self-sufficient assets, whereas stocks are self-exchanging resources. Real estate Properties will consistently have value. Different businesses can leave you with practically no substantial support; for instance, stocks can plunge to zero or another vehicle, diminishing value after some time.
4. You Make Your Own Decisions
You make major decisions on which property to put resources into, which occupant you'll lease to, the amount you'll charge every month in the lease, and who will be in charge of the property in general.
Although putting resources into stock may appear that you have control over your money, you are as yet permitting another person to oversee and control your cash.
5. Provides Financial Security in the Long Term
The advantages of real estate investments give entrepreneurs monetary security in the long run. When you have a consistent cash flow, the prizes of this venture offer financial benefits for quite a while.
Possessing a rental property can provide entrepreneurs with a feeling that all is well since the property value will appreciate it with time.
That implies that your property's value is undoubtedly going to rise since land and structures are appreciating resources.
However, it is not always sure that the value will increase. Hence, it is regularly recommended to research thoroughly the area prior to purchasing a property. Real estate investments in your profile help counterbalance the instability of other high-risk resources, hence lessening your portfolio's general risk. For more insights, consult our experts at Salinas property management.
Bottom Line
Indeed, the housing market is a profitable business for many entrepreneurs. Many acknowledge the benefits of putting resources in real estate properties to earn money and financial security. Despite all the advantages of real estate investing, there are disadvantages.
The main drawback is the absence of liquidity or the trouble an individual goes through turning an asset into money and vice versa. Contrary to a stock or bond exchange, which can be converted in a few minutes, a real estate deal can take a long time.
However, real estate is a definite resource that is easy to comprehend and can improve the risk and return profile of a financial specialist's portfolio. Real estate offers income, tax reductions, value building, and risk-balanced severe returns. Our well-trained professionals are highly experienced in providing you the best full service property management you deserve.
Experience the Benefits of Working with a Full-Service Property Management Company
Rental property management services can help you protect your real estate investment by ensuring that your property is always in order. This can help make managing your property much easier and can eliminate much of the burden that some property owners face when they do not have outside help. Here are some of the main benefits that come along with working with a full-service property management company.
Greater Security
Ample security is important for any property, and having your rental property looked over by an experienced property manager can help ensure that your premises always stay safe. This can be especially good for when you are away from your premises and want someone to look after your property until you return. Having someone else to help you look after your property can decrease the chances of burglars, vandals and other dangerous individuals from wreaking havoc on your property.
Maintenance Issues Addressed
It is often difficult for property owners to stay on top of all the maintenance issues. A full-service property management company can help by taking care of all the essential repairs and upgrades to keep your property in excellent shape. Having these maintenance issues addressed quickly by an experienced property manager can make your entire premises safer and more efficient for your tenants.
Rental Property Management Tenant Screening
Approving new renters to move onto your rental property can be an arduous task, and a property management company can eliminate much of the hassle by handling the work for you. Each prospective tenant’s rental history can be reviewed to determine if they will be a good fit for your property. The property manager is also able to take care of screening each person’s credit history and possible criminal record. As Justia.com explains, a prospective tenant’s income and job history will additionally be reviewed during the screening process to determine whether they will likely have enough money to be able to afford to pay their rent.
Rent Collection
The payments that each tenant submits for rent can be collected and processed by the property manager. If anyone is late on their rent payment, the property manager will take the necessary measures to collect the payment that is owed to save you the trouble of having to do it on your own. The property management company that you choose may even be able to help you set up an online payment system to make paying and collecting rent easier.
Advertise the Property for Rent
Some property managers even offer assistance with advertising rental properties to make finding suitable tenants easier. A qualified property manager can market your property on paid and free listing websites and print publications, signs and fliers to distribute around the area where the property is located. The property management company that you choose to do business with may even be able to work with real estate agents and other leasing agents in the area to find the right tenants.
Evicting Problematic Tenants
Tenants who fail to pay rent or cause major damages or disturbances to the property can be evicted lawfully, but going through the process of evicting a tenant can be a long and tedious ordeal. With the support of a property management company, the entire eviction process can be made easier and possibly faster so that you will be able to rent out the unit to more suitable tenants. A property manager can assist with filing all the necessary paperwork to start the eviction process and even coordinate with law enforcement to remove any problematic tenants who refuse to leave the property after being ordered to do so.
Bill Paying
Having help from a reputable property management company can make paying your monthly bills for your rental property easier. You can receive assistance with paying the mortgage, utilities and insurance payments for your property in an orderly fashion so that the correct amounts will be paid on time. A property manager can even help with paying any property taxes or HOA fees that you owe.
Property Inspections
To ensure that your property adheres to local and federal regulations regarding the safety and livability of your rental property, a property management company can schedule annual inspections. Each inspection will include a detailed analysis of your property to identify any maintenance or other safety issues that should be addressed. A property inspection can be performed each year to give you and your tenants greater peace of mind.
With all of the advantages that come along with hiring a qualified property manager, you’ll likely be pleased to make such an investment for your rental property. A Soledad property management company can help rental property owners like you maintain the longevity of each unit by taking care of many of the important details that sometimes go unnoticed. Contact us today to find out how Coast and Valley can ensure that you have the highest level of service for your property!
Why Landlords Should "Go Digital"
If you are reading this post, you are well on the way to becoming a landlord who understands and appreciates digital property management. You have already built a good foundation for doing business on the internet. You’ve searched for locations of restaurants or shops that interest you. You have undoubtedly ordered at least one gift online. You’ve probably made some hotel reservations or purchased some airline tickets through a travel website. So, consider yourself ready to take the next step. Read on to learn a few tips about property management online.
Who wants to go digital with managing their rental properties?
Maybe that would be you. Are you someone who needs accurate records of all your communication and business transactions? Do you want to protect your investment from careless errors? Would you like to justify a higher rental fee by providing an extra layer of security for your tenants? Did you know that online promotion of rental properties works more effectively than “For Rent” signs and newspaper ads?
Perhaps you are indeed a landlord who could appreciate the benefits of digital property management. Please continue reading to uncover ways to take advantage of these and other property management tips.
Can software make quick work of communication and record-keeping?
The short answer is, “Yes.” You will be able to streamline the process of reaching potential renters, screening them, completing documents, and collecting rent. Whether you choose a suite of software applications or select a property management service, you can simplify your work using technology. You will create a set of document templates that make communication with prospective tenants almost effortless. Each letter and document can be personalized according to the facts about the property and needs of the tenant. Applications, leases, reminders of rent due dates, even requests from tenants for repairs can all fit into the online scenario.
Some documents will require official signatures, but there’s an app for that, too. DocuSign and Adobe are two popular e-sign applications that produce legally binding signatures.
You will also find a variety of software products that collect all the income and expense data you will need. Online rent payments and payments to vendors generate entries in the accounting software, and those entries feed into end-of-year reports. Or, you can also develop month-to-month status reports.
Do smartphones and smart technology give landlords a competitive edge?
The combination deals a winning hand to the landlord with a digital property management plan. Security cameras, electronic locks, smart lights, digital thermostats, smart smoke detectors, and smart burglar alarms give tenants a sense of security. These devices can help your tenant save on utility costs while giving them that added safe and secure feeling. Parents of college students appreciate the extra layer of security. They rest more comfortably knowing that their offspring has a fallback plan for forgetting their keys and protecting against intruders.
From the landlord’s point of view, these features provide more than smart technology with benefits for the tenant. They give you the comfort of knowing that if something goes terribly wrong, the system will alert someone to respond quickly. Best of all, they add a dollar value to your rental rate.
Is hi-tech the only game in town?
Not exactly. Well, not yet anyway. Still, you should consider the lifestyle of your potential tenants. If you are targeting a senior citizen market, you will likely find that they are not only content with mailing a rent check and calling on the phone to request service, they actually look forward to doing those things. They have checkbooks, envelopes, stamps, and a leisurely routine.
On the other hand, if you want to attract younger adults, expect them to be very tech-savvy. They will surely hope for a landlord who takes a digital approach to the whole rental relationship. They will undoubtedly hope to do business the simplest way possible; and for them, that’s online. They will probably take a dim view of mailing checks, faxing documents, or having phone conversations.
The trend, even among the seasoned citizens, definitely points to more technology-driven transactions. Since products and services improve continually to meet rising demand, you will find that property management products and services are also improving. You may even find that going digital is a strategy that saves time and even reduces stress.
Is your schedule packed to the hilt already?
Does being a landlord in this digital age crowd your planner leaving precious little time for family, community projects, and recreation? Perhaps you could benefit from having a conversation with one of the members of our property management service team. If so, we would enjoy visiting with you about the various services we offer landlords like yourself. We hope you will take a minute to look through the many helpful ideas that our website offers for landlords and potential renters. Here’s a link to one of our blog posts that might interest you.
Is it Illegal to Live in a Garage in California?
Is it Illegal to Live in a Garage in California?
Please Note: If you have questions or would like to report someone living in a garage, please contact your local authorities.
Is it illegal to live in a garage in the state of California? Due to its booming real estate market, more and more Californian residents are looking for alternative living spaces. In areas like Salinas, a primarily working-class population is finding themselves priced out of housing by spillover from the Bay Area. When you are short on space, all the square footage of a former garage can start to look pretty tempting. However, laws about housing can be very strict, especially if you are renting out space. Here’s what you need to know about living in a garage in the state of California.
Pay Attention to the State of the Garage
Before going further into the legality of living in a garage, it is important to figure out what category your garage fits into. California law technically defines a garage that has been converted into a living unit as just an accessory dwelling unit. If a garage has been renovated to become an extra room in a house or a secondary dwelling unit similar to a guest house, it is a legal living unit.
However, your typical garage is just legally seen as an unfinished space similar to a shed. This type of unfinished garage space is not typically a legal unit for living in. Particularly, if it still has a car parked in it. Most laws prohibit people from living in an unfinished space due to safety concerns. You or the owner of the unfinished space may face fines. Additionally, eviction for using this type of garage as a living area is a possibility.
Discover What Statewide Legislation Has to Say About Garage Living
Due to the housing crisis, California now allows homeowners to convert their garages to a living space. Living in a garage in California is only legal if the garage has been converted to a habitable space through the proper channels. Letting guests sleep in an unconverted space for a night can be a big enough violation to result in fines. Renovating the garage without the proper permits may not count as a legal residence either. There are very specific requirements for any garage to be a legally appropriate living space.
Individual municipalities may have even more specific laws. Garages in the state need to meet these basic requirements to count as habitable space.
- Natural ventilation that is at least 1/20 the size of the floor space or 5 square feet at a minimum.
- Sleeping areas need a window that is no more than 44 inches off the ground. Also, has an opening of at least 5.7 square feet.
- Ceilings need to be at least 7 feet and 6 inches in height.
- Heating that keeps rooms at a temperature at 70 degrees for at least 3 feet above the floor.
- Rooms must have natural light that is at least 10 percent the size of the square footage.
- A room used for sleeping cannot have a garage open into the room.
- All rooms need a smoke detection device installed.
- The room requires at least one wall controlled light switch.
- Electrical wall outlets need spacing to ensure that no part of the floor is more than 6 feet away from an outlet.
- The room cannot have a gas water heater in it if it is a sleeping space.
See Whether Garage Conversions Are Permitted in Your City
California may have eased up their requirements on living spaces. However, they still give individual cities the opportunity to create their own laws. Some municipalities might not let you rent out or live in any space that was once a garage, regardless of how many changes have been made to the garage. Because some cities are so strict about converting garages, you will need to check with your local housing, permits, and building departments to see whether or not you can turn a garage into a living space.
The first step after learning you can turn a garage into a living space will be getting plans drawn up that are entirely up to code. Some towns may require you to build another garage or set up other off-street parking opportunities. You typically need to get renovation plans approved by the city, get a building permit to carry out the renovation, and potentially register the new unit with your town’s housing authorities.
Learn How to Create a Garage Living Space That Meets Rental Regulations
Keep in mind that the laws guiding whether or not a person can live in a garage are also subject to general laws about renting spaces to tenants. In addition to meeting all the state and city codes for building, safety, and housing standards, landlords must ensure that any unit they rent out has:
- Heating
- Hot and cold water with working plumbing
- Electricity
- No pests or mold
- Intact doors, windows, and roofs that resist weather
- A sewage disposal system
- Standard safety features like locks
- A lack of obvious hazards
Because California laws about landlord and rental responsibilities are so complex, it is a good idea to get professional help. You may want to speak to a lawyer or a property management company to get advice about renting out a garage to tenants. Making sure everything is legal and up to code before you start renting the property will help to avoid serious hassles later on.
Coast & Valley Properties is a full-service property management company serving the entire Monterey County providing unparalleled service of diverse rental properties, as well as homeowner association management.
If you have questions or would like to report someone living in a garage, please contact your local authorities.
How Landlords Can Save on Utility Costs
Go Through your Rental Property and Change the Lightbulbs
One of the quickest and easiest ways to lower your operating costs is going through the entire rental property and replacing all of the current light bulbs with new, energy-efficient bulbs.
Instead of the traditional 40 or 60 watt lightbulb, one of the property management tips you should stick to is stocking your rental property with light-emitting diodes (LEDs) lightbulbs or compact fluorescent lamps (CFLs) lightbulbs. Yes, the lightbulbs cost a little more when you purchase them, but since you can expect to save about $37 each year per lightbulb, you’ll enjoy a quick return on your investment. There’s nothing like a little instant gratification to get you excited about embarking on even more money-saving projects.
Don’t stop once you’ve replaced the lightbulbs in the rental property. Once the interior lightbulbs are changed, it’s time to go to work changing the exterior lightbulbs.
Invest in a Programmable Thermostat for your Rental Property
Now that you’ve updated all of the lightbulbs in the property you manage, it’s time to make another trip to your favorite DIY store and pick up a programmable thermostat. The great thing about a programmable thermostat is that not only does it keep your tenants happy and comfortable, but it also reduces your monthly heating and cooling bills.
Once you’ve installed the programmable thermostat, you want to feed it the information needed so that it keeps the rental property comfortable while people are home, and reduces the amount of energy used to heat/cool the space when no one is there. The times will be different for each property, so plan on spending a little time talking to each tenant so you know their schedule well enough to properly program the thermostat.
Making the change to a programmable thermostat can help you reduce your annual heating/cooling costs by as much as 10% per rental unit.
Replace Old Water Heaters and Appliances
The next step you need to take as a property manager who wants to reduce utility bills is replacing older water heaters and appliances. While replacing water heaters and appliances does lower the amount of money it takes to keep your rental properties comfortable, you don’t want to run out and purchase brand new units right away.
When it comes to water heaters, most energy experts recommend holding off on purchasing a new one until the current water heater is between 10 and 13 years old. At this point, there will likely be a considerably more energy-efficient model on the market that can reduce your yearly utility bill by as much as 10%, but you’ll also save yourself additional money that you would have spent trying to keep the old water heater operational.
A desire to lower your utility bills isn’t enough to prompt you to rush out and purchase new appliances. Like your water heater, the age and condition of the appliance dictates whether you need to replace each appliance.
The best time to replace the different appliances varies from one type of appliance to the next.
- Refrigerators should be replaced every 13 years
- Washing machines should be replaced every 10 years
- Dryers should be replaced every 13 years
- Air conditioners should be replaced every 15 years
- Furnaces should be replaced every 15 years
- Dish washers should be replaced every 9 years
The amount your utility bill decreases after you replace the appliances depends on how much power the old appliances use and the type of appliance you replace it with. Make sure you choose the most energy efficient appliances you can find.
Why Landlords Reduce Costs and Work Hard to Keep Monthly Utilities Low
If you're the property manager of rental properties who is responsible for paying the monthly utility bills, the reason for being proactive about saving as much money on utilities is obvious. However, even if the tenants are responsible for the cost of utilities it's still in your best interest to do all you can to save on utility costs.
The average renter is hyper-aware of the cost of living and will usually request information about the average cost of the various utilities for the rental unit they are considering. Showing them a reasonable monthly bill and also explaining what you do to keep the costs low is often the difference between them signing a contract with you instead of looking for additional landlords who reduce costs by striving to lower utility bills.
The sooner you take the steps need to lower your rental property's utility bills, the sooner you can use these changes to attract your ideal tenant.
Coast & Valley Property Management: Proudly Serving Property Owners in Soledad, CA
Surrounded by Silicon Valley tech giants and miles of stunning Monterey Bay coastlines, Soledad offers an ideal place for peaceful living, business pursuits, and outdoor adventure. The city, which is known as the country’s “Salad Bowl,” features fertile land that attracts large-scale produce growers as well as backyard gardeners. If you’re blessed enough to own property in this temperate agricultural center, you’ll want to get the most out of your real estate investment with a professional Soledad property management service. When comparing the costs and advantages of hiring property management services in Soledad, consider these solid benefits for your home or business.
#1 Professional Tenant Screening
One of the most important aspects of being a successful landlord is securing the right tenants. Placing the wrong tenant into your home or business property could result in thousands of dollars of property damage and lost rent. Many Soledad residential property management professionals will tell you that it’s best to leave a property vacant until it’s matched to a quality tenant. Don’t sign a contract with a tenant who’ll damage your place.
Property management companies conduct thorough background checks on rental applicants. These checks uncover relevant information about the person’s rental history, source of income, and financial stability. Professional property managers also ask tenants targeted, yet lawful, questions to make sure that you get renters who’ll take care of your investment.
#2 Shorter Vacancy Periods
Matching your property to the right tenant takes time. When you use a professional property management company, you’ll get quicker results. Property management companies such as Coast & Valley Properties are well-known sources of rental units in the region. When you partner with Coast & Valley, you gain the advantage of its established name and marketing resources to get your property rented quickly.
While there are some people who choose to rent properties in Soledad during their retirement years, many newcomers to the area come to the region to work. Corporations that offer relocation packages often trust property management companies to handle housing for their valued employees. A professional property management company would have more access to these high-quality tenants than a landlord who is marketing his or her property solo.
#3 Efficient Rent Collection
Gone are the days of mailing rent checks to an office and waiting to deposit them into a trust account for disbursement. Today’s tenants want the convenience of paying rent online from their desktop or mobile devices. Landlords want timely payments without having to send out notices manually. Modern property management companies such as Coast & Valley Properties meet the demands of both tenants and landlords with enterprise property management software.
Property managers who use rental management software such as Apffolio allow tenants to pay rental fees online on a 24-hour basis. Tenants can opt for automatic rent payments to be deducted from their accounts each month. They can also set up email notifications to remind themselves of their monthly rental bill. With this type of enterprise property management software, landlords get rental proceeds deposited directly into their bank accounts.
#4 Fewer Legal Hurdles
Renting property in California is rife with legal checks and balances. If you’re not familiar with the processes, you leave yourself exposed to lawsuits, lost rental fees, and property damage. Most landlords aren’t prepared to craft rental contracts that protect their real estate against uncompensated damage, late rental payments, and early lease terminations. However, professional property managers have extensive experience drafting lease agreements that offer the maximum protection for their clients.
Everyone has seen those local news reports about landlords who refuse to do critical repairs to their buildings. Injured tenants are interviewed, litigation follows, and business reputations are ruined. Experienced property managers understand the legal obligations of landlords to maintain their real estate to state and local building standards. They assess properties and make sure buildings are repaired quickly to avoid safety hazards for tenants and embarrassment for landlords. These activities are especially important for commercial property management in Soledad that impacts both business tenants and their customers.
#5 Helpful Resources for Tenants
You’ll find that most people who are looking for residential or commercial property in Soledad are time strapped. Professional property management services are loved by these tenants and corporate relocation specialists because they make moving easier. Besides offering electronic contracts and digital payment processing, property management companies such as Coast & Valley Properties provide tenants with the needed information to turn on the following services:
Water
Electric
Gas
Internet
Waste management
It’s the little details that your tenants will remember. Coast & Valley Properties cares about landlords and tenants. It offers tenants informational resources about moisture control to stop the overgrowth of harmful mold and mildew. The company’s website also offers landlords downloadable literature about using licensed lead paint abatement contractors to repair and maintain homes that have lead paint. Lead paint is a common element of homes that were built before 1978.
*Bonus* More Time to Do the Things You Love
Weekends are made to be enjoyed. In Soledad, you have options. Drive to the mountains for winter skiing and snowboarding or cruise to Carmel for sightseeing and shopping. Your schedule is free for work and play when you hire a reliable Soledad rental management company to care for your real estate investment. Property management companies such as Coast & Valley Properties handle everything from walk-through tours with tenants to emergency maintenance requests. Coast & Valley pairs state-of-the-art technology with old-fashioned customer care to improve the rental experience for both landlords and tenants in Soledad, CA.
Why Coast & Valley for Soledad Property Management?
Coast & Valley Properties is a full-spectrum property management company for residential and commercial properties in and around Soledad, CA. Its talented team of real estate professionals brings property owners unparalleled industry knowledge, marketing expertise, and negotiation skills. With decades of collective experience, Coast & Valley real estate professionals deliver worry-free management services to Soledad property owners and tenants. You'll find more information about the company's services at the Coast & Valley Properties website. Call today to schedule a consultation for customized property management services.
Top Amenities to Attract Renters
The modern renter's main concern when looking at properties is not typically size anymore. Instead, they want to find a property that offers them the widest range of services available. Property management services are starting to notice this trend, so they are moving to offer all sorts of perks to renters. If you want to remain competitive in the modern real estate market, you need to make sure your rental property includes at least one of these amenities.
Appliances
The biggest amenity most renters request is simply practical items that make their home life easier. Things like air conditioning, in-unit laundry, dishwashers, and central heat are some of the most essential things that property management services should offer. Though they are not offered by law, many renters will think twice about picking a place without any of these amenities. Installing most of these appliances is fairly cheap, and renters are willing to pay a premium to cut back on chores and increase comfort at home. Though technically amenities, many of these are still considered necessities instead of a nice bonus. If possible, aim for matching amenities in a stainless steel or neutral color finish, since these give the place a modern touch.
Outdoor Space
Most renters fear getting stuck with a place where there is absolutely no room to go outside. Even a small balcony greatly boosts the appeal of a property, and an entire yard is a huge bonus for renters. Just having outdoor space is great, but remember that you are more likely to generate interest when you can help potential renters imagine how they would use the space. Installing fire pits, grills, or sports courts encourages people viewing the property to picture themselves relaxing outside. Adding some bright flowers, privacy shrubs, and other landscaping for a rental outdoor space can further enhance an outdoor space.
Secure Rental Property Options
Surprisingly, gated access was the top amenity in Apartment Guide's survey of what renters want. Modern renters are mostly practical, and they want to feel safe in their own home. The biggest way to do this is to ensure your property is in a gated community. Some other common security amenities that people desire are automatic locking doors in resident-only buildings and security cameras in parking areas. Being able to offer high-tech options like apps that control door locks is a bonus, but not always a requirement.
Convenient Mail Retrieval
The big trend of modern shopping has greatly changed how renters feel about their home's mail system. Most renters agree they dislike the idea of having to travel a long distance to get a package or have to wait for business hours to retrieve a package from their rental management office. Having a secure and easily accessible mailbox makes things far more convenient for tenants. Consider adding a package locker nearby to make online purchase receiving even easier.
Pet Friendly Spaces
More and more renters have pets these days. They can be a big hassle for property management, but making spaces friendly for pets is still advisable. Those wanting to cut back on damage may want to consider only allowing animals under a certain weight and charging a hefty pet deposit. Just allowing pets makes a rental property far more appealing to renters, but an even bigger perk is actively making the space pet friendly. Offer a fenced in area where dogs can run around to make dog owners fight over your property. Select floors like tile or wood-look vinyl that is easy to clean, so you and the owners do not have to worry about pets making a mess.
Built In Storage
Most renters are looking for convenience and comfort, and built-in storage space is a big bonus. Things like walk-in closets, adequate kitchen cabinetry, and big bathroom vanities are always a plus. They allow renters to tidily store away belongings without having to purchase bulky wardrobes and credenzas that are a pain to move in and out of areas. If you do not currently have this type of storage, consider adding it. Most renters would prefer slightly smaller bedrooms in exchange for additional storage room. It can easily be added without having to make structural changes, so it is definitely worth considering this alteration.
Regular Maintenance and Fast Repairs
Good service from you or a property management provider is the final key amenity that renters want. People want to feel like they are getting a functional, well-maintained home for their rent payment, so be sure to fix everything up before showing it to renters. Being courteous and replying to renters as promptly as possible also helps give the impression that you will be prompt about dealing with repairs. No renter wants to get stuck in a lease for a property where things break down and are never fixed. Having a repair policy in place that ensures repairs are handled in a timely manner will help reassure renters.
By offering these amenities, you can make sure that your rental property stands out and attracts the best possible renters. In addition to helping you find good renters for your property, amenities can also justify a higher rent or explain a rent increase , providing you with a better profit. If you still are not sure of what amenities your property could use, consider consulting with a property management company for more help.
Top 11 Tips for Buying your First Rental Property
Buying your first rental property can seem exciting and nerve racking all at the same time. It’s easy to become overwhelmed as you think about issues such as setting goals, down payments, property management and cash flow. Let’s take a look at 11 important tips that will help you meet your objectives when buying your first rental property.
1. Understand Your Ultimate Goal
It’s important that you have a firm understanding of your end goal. Make sure to set goals based on overall investment strategy, realistic expectations and your financial situation. You should also answer these questions:
- Do you already have sources of retirement in place?
- When is your retirement date and how much income will you need?
- Do you need cash flow immediately?
- How much money do you plan to invest with rental properties?
- Is it necessary to diversify your portfolio in order to reduce taxes or lower your risk?
2. Ask For Advice
Take time to talk to other landlords and get advice from people who have been there before. Remember that each person you talk to will have slightly different goals, experiences and buying strategies than you do. Finding out about any challenges someone else has gone through will help you make better decisions when it comes to overall strategy, selecting from the pool of available property managers or securing your loan.
3. Save Your Down Payment Money
You need to know how much money is needed for the down payment. It’s likely that you’ll need 20-30% of the total investment amount set aside in order to apply for pre-approval and start looking for your first investment property. Here are five quick tips that help when saving for the down payment:
- Reduce your own rent or mortgage
- Pay off all other debt
- Set up an automatic savings deposit
- Cut down on any unnecessary bills
4. Calculate All Rental Property Expenses
Every rental property comes with a certain amount of expenses that need to be covered. These might include property taxes and expected repairs. Certain towns, counties and states charge higher property taxes than other locations. This is an important distinction when making a decision on your first rental property.
Set aside money for repairs because there are always unexpected situations that come up in this area. A good rule of thumb is to have six months of emergency cash set aside to help with repairs or even an unexpected vacancy period.
5. Get Pre-Qualified For a Loan
Taking the time to get pre-qualified allows you to know which rental properties you are able to afford. Here are some basic qualification factors to be aware of:
- The best credit score is 740, but 680 will probably suffice
- You’ll need to prove whether you’re a stable risk if you’re a self-employed person. If you’re an employee, then proving that you’ve worked at your job for two years or more is good enough.
- Prove six months of expenses have been saved
- Show that you have the down payment money available
- Prove a low debt-to-income ratio
6. Do Your Research
Do plenty of research before purchasing any property. Look at important buying factors such as job growth, population growth and city revitalization.
Are there any companies that have moved in and are providing more job opportunities? You might be buying in a good market if your research uncovers that the area is experiencing a large amount of new people moving into it. If the area you’re looking at is experiencing revitalization, then that’s a good sign.
7. Talk to a Local Property Management Company
Investigate local companies that provide property management services and ask them questions. Good questions to ask a property manager include:
- What is the area’s average property rental pricing?
- How often does the firm conduct maintenance checks?
- How they handle tenant screening, rent collection. Do they have an electronic system to handle this?
8. Hire a Home Inspector
You can expect to pay somewhere around $300 or $450 to get a home inspection done. It’s worth every dollar to have this work completed. There are many potential problems that are hard to identify via a walk through of the property. Your home inspector will find any issues that might help you negotiate a lower price, force the current owner to fix items or even back out of a bad deal.
9. Analyze Cash Flow Projections
Take time out to analyze cash flow projections for the property you might buy. This is technically called studying the Pro Forma. These projections help you understand:
- Potential monthly cash flow
- Expenses
- Expected ROI (Return on Investment)
10. Get the Home Appraised
Your lender won’t let you purchase without an appraisal. Your bank wants to see whether the appraisal price comes in close to the negotiated purchase price. For example, you won’t be able to secure a loan of $500,000 if the appraisal comes in at only $400,000.
11. Purchase Homeowners Insurance
Speak with a few local insurance agents and compare their packages, coverages and prices. You don’t want to leave your home unprotected when it comes to accidents. You should also take out an umbrella policy that provides a second layer of insurance protection. It will come in very handy if you’re ever facing a lawsuit from an angry, evicted tenant, for example.
You will become well prepared in purchasing your first rental home if you follow the above tips. It will make buying your first rental property a positive and rewarding experience and set you on the path for success.
