Are you new or considering property rentals? If that’s the case, chances are you haven’t even heard of landlord insurance. You might be thinking that it’s just another excuse for insurance companies to take your money or that you have another type of insurance that can cover rent-related issues.
But it’s about protecting your investment and financial gains.
Skipping on landlord insurance is a rookie mistake you don’t want to make. With financial gains as your main objective, it may be tempting to cut costs. But if doing so compromises your investment’s security, you might end up spending more than you save.
To help you make wise investment decisions for your rental properties, we’re going to cover what landlord insurance is and why it’s a necessity.
What is Landlord Insurance?
Landlord insurance protects your rental property from damages and financial loss. When your property gets damaged during the occupancy of a renter, landlord insurance can cover these expenses in the condition that the damages that occurred are covered under the terms.
External and uncontrollable factors such as natural disasters, accidents, or other kinds of destructive events can damage your property. Landlord insurance can cover expenses resulting from these events, saving you from financial losses.
Landlord vs. Homeowner Insurance
Landlord and homeowner insurance cover similar kinds of damages brought upon by external and uncontrollable factors, but they can’t stand in place of each other.
Homeowners insurance can only be used if the owner of the property is the current occupant. In other words, you’ll have to be living on your property. That said, homeowners insurance can’t cover damages under rental occupancy. Insurance companies can only cover these damages if the property is under landlord insurance.
To put it simply, the kind of insurance required for the property is determined by who will stay in it.
Another notable difference between the two is their prices. There are higher risks of accidents in rental properties resulting in higher landlord insurance prices. Compared to homeowners insurance, landlord insurance can be 15% to 100% more expensive.
What your Landlord Insurance Should Cover
External factors that pose a threat to your property investment will depend on your location. For instance, the state of Michigan’s most common natural disasters are storms, floods, wildfires, and tornadoes. Considering what natural disasters occur in Michigan, you want to get an insurance plan that specifically covers these types of possible, unfortunate situations.
Here’s a list of guide questions to help you find a landlord insurance plans that suits your property:
What does the plan cover and what are the limitations? (Pro tip: Clarify any vague statements)
Will insurance claims be settled with cash value or replacement costs?
Can the insurance cover lose rent, water damages, and other highly possible incidents?
Can landlord insurance protect me from liabilities of house structure-related accidents?
To help you further assess if the landlord insurance plan you’re considering provides comprehensive coverage, take a look at this infographic:
The point is to avoid being hasty in choosing your landlord insurance plan. Your plan must provide protection against property damages, liabilities, and rental income loss, among many other things that may happen on your property.
Keep It Safe, Keep On Earning
Taking care of your property investment enables you to keep earning so you can use your money for future investments. By taking care of your investments, you also keep your financial well-being secure.
Getting your property investment insured is a surefire way to keep it safe and profitable, so take the time to study what accidents are most likely to occur on your property investment. Getting a comprehensive insurance plan that meets your needs will save not just money, but save you from unnecessary stress too.
Aside from landlord insurance, consider requiring your tenants to get their own insurance as well. Read more about it in our article on renter’s insurance, and get in touch with us if you need more clarification.
Find a motivated seller, acquire the contract, then find a buyer to close the deal. That’s the wholesale process in a nutshell. Seems simple enough, right? But there’s more to it than that, as knowing the process is just the beginning.
If you want to close deals, you need to learn how these steps are done. That’s what will determine if you’ll succeed in the real estate investment strategy or not.
In this wholesaling syllabus, we’re going to break down the process into 7 steps. This will be a lot of information to absorb in one go, so be sure to bookmark this article for your future reference. Think of this as your handy reviewer whenever you need to brush up on your real estate wholesaling knowledge.
The Real Estate Wholesale Syllabus
We will provide videos as a learning aid as we go through each step. Just like when we were in school, all you need to do is read and listen attentively. This time, however, you’re not working for high grades, but high gains. Are you ready for wholesaling class to begin? Let’s get to it.
Some places provide more wholesale opportunities than others. When choosing where you want to conduct your wholesaling business, these 3 factors will help you determine if the market in a given area is profitable:
It’s a Metropolitan Statistical Area: Large areas like Metro Detroit have a crazy amount of people, which will likely translate to higher real estate activity. So aim for areas with at least a million people to ensure that you have enough buyers and sellers to look for.
There are Many Older Properties: These properties sell for a cheaper price, since expensive maintenance and repairs aren’t factored in. But it also opens great opportunities for you to seek out properties that only need minor repairs and touch-ups before wholesaling to buyers.
There’s High Supply and Demand: High supply means there’s a lot of seller activity while high demand means there’s a lot of buyer activity. High real estate activity suggests an abundance of leads, providing more opportunities to close deals.
Take your time to carefully analyze the different areas you plan on wholesaling, as choosing the right market is paramount to your success. With all 3 factors present, you can bet there are deals out there waiting for you to close them.
Flipping Mastery TV’s Jerry Norton looks for two capabilities in wholesale buyers: They can pay in full and preferably in cash, and they are willing to close deals “site unseen.” These are ideal qualities any wholesaler would look for in a buyer, but where can you find them?
Rather than going to different places to find these buyers, Jerry makes it easier by narrowing his search to the spots where you can easily find them. With Jerry’s auction and property foreclosure hack, you’ll be throwing your rods in an ocean full of fish.
Here’s how it works: For buyers to participate in an auction and property foreclosure, they need to have the qualities Jerry Norton stated—they’re willing to close deals site unseen and can pay in full. In these property auctions, buyers don’t have a chance to view the property. And as soon as a bid’s accepted, the buyer has to immediately pay for the property being auctioned.
You can find these auctions online, at your county courthouse, or through third-party sales agents called trustees. Attend these auctions early for a chance to mingle with the buyers before the bidding starts. Some buyers stay after the auction, which can be another opportunity for you to get more contacts. Your goal here is to gather as much contact information as you can.
You can use this method for reverse wholesaling, too. Opposite of the traditional wholesaling process, you first find a buyer and then the seller. Attending these auctions also provides insight into what kind of properties ideal buyers look for. A surefire way to close more deals is by focusing on hot properties in the market and networking with capable buyers.
Although Jerry gives an effective hack to find and grow your buyers list, it’s always better to have multiple methods to choose from. Other strategies to grow your wholesale buyers list that you can try are cold-calling or partnering up with a real estate agent.
In wholesale real estate, time is of the essence. Therefore, it’s important to have methods in place that allow you to quickly connect with motivated sellers. How can you connect with more leads in a shorter time? Jerry Norton suggests a combination of inbound and outbound marketing so you can find and attract motivated sellers simultaneously:
Actively seeking out motivated sellers with wholesale real estate lead generation strategies like cold-calling or driving for dollars are classified as outbound marketing methods. With outbound marketing, wholesalers generate leads by finding them.
On the other hand, inbound marketing methods aim to bring these motivated sellers to you by means of attracting them. Leveraging networking and online marketing tools such as Facebook or Google ads is a great way to be visible, providing motivated sellers opportunities to approach you.
There are also motivated sellers who aren’t so active online, so you can catch them with traditional inbound marketing methods like bandit signs.
Getting the property under contract signifies half the job is done. Once you get the property under contract and have control over the property, you just need to find the buyer and finalize the deal. Here’s how David Dodge gets properties under contract:
Send the Sample to the Seller: Sellers can better assess whether they’re making a good deal if they have a copy of the contract they can review.
Get the Contract Under Escrow: Assuming you and the seller have finalized terms, clauses, and signing, you then have to get the contract approved by a title company and pay a fee.
Send the Receipt back to the Seller: Once your contract is processed and recognized, you send the receipt back to the seller to show that you are legally bound.
Remember to carefully set the terms of your contract. For the deal to go smoothly, all parties must be in full agreement of all clauses and conditions.
Lili Thompson is a 25-year-old YouTuber that shares internet-based wholesaling techniques. For finding cash buyers online, she uses websites like ProStream and Zillow. However, access to these websites comes at a cost, but Lili suggests it’s worth it to close deals.
Her process starts by using ProStream, an online software that helps you find distressed properties. The software lets you highlight an area on a map and shows you properties for sale, auction, foreclosure, vacant, and other real estate classifications. More importantly, ProStream also provides a tab that shows all the cash buyers in the selected area.
Lili specifies her search by choosing the filter “flippers” on the Quick List Choices options of the filters. She says she looks for flippers since they need wholesale properties to flip. To find matches with the current properties she needs buyers for, she also puts a filter for the property type and price range.
After her specified searches provide what she’s looking for, she saves the results using the listing tool of PropStream. She ends the PropStream portion of her process by using the Skip Tracing feature to extract all the contact information from her saved list.
In reference to the video, she got 17 contacts priced at $.25 per contact!
With the property and contact information she extracted, she begins the next part of her process using Zillow, an online real estate market software. She inputs property information from her PropStream list and assesses these on Zillow. If she finds the types of deals she’s looking for, she makes contact using the contact information of the corresponding property.
There are two ways wholesale deals can happen: First, you buy the property from a motivated seller and then sell it for a higher price to a buyer. Second, you work as a middleman by acquiring the contract from the motivated seller and then assigning it to a buyer for a fee.
Of the two options, the second one doesn’t require money out of your own pocket, making it preferable for wholesalers. Although margins are small, if done properly as a business model, this can provide a constant stream of income given you put in the time and effort.
In addition to the contract made with the seller, you’re going to add your part. The additional page states your transference of the contract to the buyer with a fee. For instance, the contract with the seller states the sale of the property for $100,000.00. Your part of the contract states a total of $115,000.00, making your fee $15,000.
Wholesalers in Oakland County often use contract assignments, but different states have different regulations for this method. REtipster warns that in other states, contract assignments are allowed only by licensed real estate agents. If you’re in one of these states and you’re caught assigning contracts, you can be imprisoned for practicing without a license.
REtipster gives a reminder to carefully check the terms, clauses, and liabilities stated in the contract (like this one from Quora). Creating a contract that protects your well-being is a security step you cannot miss in real estate wholesaling. You can use these contracts as leverage in case other parties aren’t fulfilling their obligations or withhold necessary information.
When everything is clearly communicated and all parties are in agreement, it’s a win-win for everyone.
Once all the wholesale real estate contracts are finalized and signed, the last step to closing the wholesale is to get it approved by the title company. Take note that the state of Michigan uses title companies, but other states may use escrow agents or closing attorneys. Regardless of the different names, these entities all serve the same function.
Assuming all goes well and your contracts are recognized and processed, the title company will either wire or send your fee to you. They will also be the ones to transfer the money from the buyer to the seller. After you receive your fee, consider your wholesale real estate deal closed.
Congrats! You’ve Graduated in Real Estate Wholesaling
You’ve reached the end of our free online real estate class on wholesaling. Whenever you feel like you need a refresher, you can always come back and review the 7 steps to successfully closing wholesale real estate deals.
Now that you have a deeper understanding of the wholesale process and some methods you can use, you’re ready to build a successful wholesaling career.
Is there anything else about wholesaling you want us to take a deeper dive into? Leave a comment down below and we’ll catch you next time!
It’s no secret: wholesaling can be a lucrative real estate investment method to earn a profit with minimal capital. On average, you can make around 5-10% of a property’s market value if you wholesale an undervalued home—that means you’re looking at a profit of $10,000 to $20,000 with a $200,000 home if you can get it under market value!
However, getting a slice of this pie does not come easy. Contrary to popular belief, real estate wholesaling takes a whole lot of skill, patience, and elbow grease.
For example, you need to find a property with a motivated seller, then find a buyer for it, coordinate all the paperwork required, complete the deal as soon as possible, and repeat everything again. You also have to simultaneously grow and maintain your buyer’s list so your business doesn’t come to a halt.
In other words, there’s a lot to keep track of when dealing in wholesaling.
But there is a solution to it: Make a list! Just like most projects in life, it’s easier to streamline the wholesale process if you have a checklist to guide you. That’s why we’ve written this ultimate checklist for wholesaling real estate—perfectly designed to help wholesale investors like you.
The Wholesale Checklist
Having a guide to the step-by-step requirements of a wholesaler can make the entire procedure easy as pie. But we do understand that not all of the things we’ll mention below will apply to you, so we advise that you focus only on the things that are most relevant to you.
Let’s get to the checklist!
A. Select a Market
Have you selected a market? Have you checked the trends of the current market?
Selecting a prime market can land you a hot deal. You want to find a market where there isn’t too much competition but is still highly coveted. In other words, try to find a balance—buyer markets that are on an upward trend without much competition to deal with.
Take for example Burlington, N.C. There’s a total of around 57 thousand brokers in North Carolina—far smaller than states like Florida with 212 thousand. But, the real estate market in Burlington, N.C. is booming right now. In fact, it is the 2nd most lucrative market in the US with listings only lasting an average of 35 days on the market.
You can only identify potential markets like these if you’re familiar with real estate market trends, so here is a quick jump-off point to get started:
Reference the MLS listings to get an idea of current trends in real estate prices.
Look for how long listings stay on the market. The less time on the market, the faster the turnaround for properties, and the better the situation for you.
Additionally, it’s important to know the median price of properties sold, so you know what you’ll be working with. For instance, in Burlington, it’s $295,000.
Once you’ve chosen your ideal market, you can move on to the next step in the checklist.
B. Build a Buyers List
Have you built your buyer’s list? Have you found any willing buyers in the area?
You’ll need a robust buyers list for a steady stream of good deals. Your goal is to continuously generate and follow up with the leads in that list so your wholesale investment becomes a growing business.
Create an online marketing campaign. Use social media and other platforms to get the word out on your name to build a potential buyers list.
Use customer relationship management platforms (CRM). Creating accounts on CRM platforms like Hubspot or Zillow can increase your reach to interested buyers.
Take note of buyer contact information and criteria. Make a note of the budget of your potential buyers and their contact info. When you find an appealing property, you can reference your list to see if the property coincides with the budget of one of your contacts.
By having an established and growing buyers list, you can increase the reach of your wholesale business which can lead to more deals and profits.
C. Look for Motivated Sellers
Once you’ve accomplished the first 2 steps, you can now enter the meat of the wholesale process: Finding a motivated seller with a property that coincides with the criteria of your interested buyers.
Now, in the industry, you’ll notice that distressed properties are popular for real estate wholesaling. There are 2 reasons for this: It’s easier to convince sellers to let go of their unkempt homes, and it’s easier to secure a larger discrepancy versus market price.
Use social media to create a marketing campaign for yourself.
Create a dedicated email address and/or phone number to screen incoming leads.
Once you’ve found a motivated seller. You then must hash out your wholesale contract.
D. Create the Wholesale Contract
Having found a motivated seller, you now need to finalize the wholesale contract. When creating the contract, you need to make it clear to the seller that you’re not buying the property.
You need to establish that you’re only finding an interested buyer for the seller.
Given that, be sure to establish the terms of what will happen if you fail to find a buyer. For example, you can set up an earnest money clause that will act as a guarantee. This clause will protect you and the seller in the event of failing to find a buyer. You will hand over an earnest money deposit that will act as a contingency that will be returned to you once the wholesale is complete.
Then, you need to find a buyer for the property.
D. Look for an Interested Buyer
Once the details of the wholesale contract have been decided, you then need to find a willing buyer. Be sure to thoroughly scope out the property to make it easier to find buyers.
For example, take photos of the property that shows potential buyers exactly what it looks like without having them visit the home. Additionally, take note of important details such as the number of rooms, the size of the property, and the overall condition of the property.
Once you’ve gathered all the necessary information, you should then do the following:
Send the property report to targeted buyers on your buyers’ list. Ensure that you send the property only to the buyers with the perfect criteria—or you lose their trust in the long run.
Like insurance, you can get in touch with local wholesalers to market to their own buyers. This expands your coverage, helps you grow your network, and makes it easier for you to sell.
Once you find a willing buyer, you can then move on to the contract turn-over.
E. Assign the Contract
With a willing buyer, you can then move on to assigning the contract. Here are the basic steps to remember when assigning a contract to a buyer:
Receive the amount necessary to purchase the property from the buyer.
Collect your earnest money deposit from the seller.
Turnover the buy and sell contract of the property to the buyer.
Enter into a new assignment contract with the buyer and collect your wholesale fee.
Contact an escrow company to complete the deal after the arrangements have been made.
Once the buyer has the contract, you can move on to the final step of the wholesale process.
F. Close the Deal
The escrow company will now oversee the process of transferring the property to the end-buyer. During this phase, you should keep in touch with the escrow company to get updates on the progress of the sale.
Once the sale is completed, the escrow company will turn over your assignment fee, and your wholesale will be completed.
Follow this Checklist to Make Your Wholesale Easy
Getting into wholesaling unprepared can be a recipe for disaster, and we don’t want that—not when real estate wholesalers already tend to have a bad reputation because of newbies making rookie mistakes!
But with the use of a checklist, you can avoid many of the pitfalls of wholesaling, increase your odds of landing a wholesale deal, feel less stressed with conducting your business and reap continuous profits from the many deals you’re scoring.
Take our list and make it your own! Good luck in your venture and feel free to comment on any other concerns you have in the comments section below.
You’re eating dinner with your family when your phone suddenly rings. Unfortunately, your tenant is calling to tell you of a serious problem—a burst pipe that has completely flooded the kitchen.
As emergency repairs go, landlords are required to immediately take action. Obviously, this is required for safety reasons and legal reasons. In this article, we’ll discuss how to approach emergency repairs so that you can use these in your landlord practices.
That way, you’ll be able to handle emergency repairs like a pro without ruining your weekend plans. Meet your obligations, keep your tenant happy, and protect your investment.
What is Considered a Landlord Emergency?
Before anything else, let’s review the landlord responsibilities in Michigan regarding emergency repairs:
As the owner of the property, landlords are expected to immediately address any dangerous situation that can lead to occupant injury.
Landlords usually do not have unpermitted access to the property during a tenant’s lease – except when a landlord can reasonably believe there’s an emergency issue.
You’re obligated to take action within 24 hours of the tenant informing you of the emergency. Otherwise, tenants can withhold rent, repair & deduct, file a lawsuit, or report to a public official.
Although the information stated above is from the state of Michigan, other states and cities will have similar rules and responsibilities. Now that we’ve brushed over the legal responsibilities, let’s proceed to what makes an “emergency repair.”
If left up to a tenant, anything that prohibits the tenant from living properly and comfortably on the property is an emergency. Legally, an emergency is anything that is likely to cause injury to a property occupant or visitor.
Here are a few examples:
A gas leak, as could cause an explosion or breathing problems, or poisoning.
Faulty or exposed wiring could electrocute someone or cause a fire that could result in occupant deaths.
A broken water supply line damages occupant possession and/or the property.
No heat during the winter months.
No hot water
Minor water leaks
No electricity (unless it affects heat during winter)
The general rule to keep in mind is if it can wait until tomorrow, without the situation getting worse, then it is not an emergency.
Best Practices as a Landlord for Emergency Repairs
Now that we’ve covered landlord obligations, let’s dive into some of the best practices in handling and preventing emergency repairs, especially during the holidays. No matter what the situation is, here are some tips you need to keep in mind:
Always Be Prompt
The sooner you can fix a problem, the better. As much as possible, don’t let any repair needed last longer than 3 days. Be prompt when dealing with your tenants’ concerns, especially with emergencies. Being prompt will make your tenants happy and protect your property from serious damages.
Keep Up Your Professionalism
Always be respectful and accommodating even during the holidays. Chances are your tenant also doesn’t want to deal with any problems during these times. Remember to always conduct yourself professionally.
Determine if an Actual Emergency
Before taking the next steps, you need to make sure it’s a real emergency. Tenants might not be aware that some issues fall on themselves to fix. For example, some issues like a clogged sink or a broken element on the stove aren’t emergencies that need to be addressed immediately.
Before anything, clarify what you are willing and not willing to do in the lease agreement. If your tenants know the extent of your abilities and obligations from the get-go, they won’t place any unreasonable expectations or call you up for repairs that they should handle themselves.
Have a Prevention Plan
The best way to deal with an emergency repair is by avoiding it completely. So, before the holidays come around, do a maintenance check to make sure everything is in order. Identify and deal with any problems you spot during the inspection to protect your property while saving time and effort.
Maintain Good Communication
Whether you can help or not, always keep an open line of communication with your tenants. Even if you can’t fix the problem right away (or the repair isn’t actually considered an emergency repair), picking up their calls and hearing their concerns shows your professionalism as a landlord, and encourages them to keep you updated with the conditions of your investment property.
Have Contacts for Emergencies
For situations that qualify as an emergency, keep a list of contacts with a description of their services. As mentioned earlier in the article, emergency repairs are typically water-related concerns.
With that being said, one of your emergency contacts should be a plumbing service with a description along the lines of “24/7 service including holidays.” However, if there aren’t any, resort to the next quickest option such as services that can be rendered on the next day.
Regardless if you can do anything or not, you still need to deal with your tenants and their concerns during the holidays. As long as you deal with your landlord’s responsibilities the best that you can, you can get the best possible outcome for emergency repair situations.
Be Prepared for Emergency Repairs
Emergency repairs can be a hassle, every day of the week. But by having good practices that help prepare you for such events, you’ll be well equipped to deal with them any time of the year. After all, you never know when a tenant will call for an emergency repair!
Got any more questions about emergency repairs? Let us know in the comments below!