Categories
Landlords

What’s Happening with Rental Amounts in the City of Detroit?

Source: Photo by Andre Taissin on Unsplash

We’ve all seen the headlines—average rent prices are falling for the first time since the latter part of 2020 when COVID was the culprit. For those invested in Detroit rental properties though, the news isn’t as bad as in other parts of the country.

Let’s look at what happened in the Detroit market, for you to stay updated and vigilant in protecting your investments. (TL;DR? Don’t panic! It’s real estate market dynamics.)

Nationwide Rents Decline in Major US Cities

As the graph below shows, the August national average rent price, according to Redfin, was up 11% year-over-year from 2021. If you compare it to past trends, this figure is the smallest recent annual increase we’ve seen—down from a 19% gain in March 2022.

Even if we were to look at the month-on-month growth, the median rent only moved slightly by 0.4%, which is the slowest growth since late 2021 and a drop from the 1.6% increase last year.

Source: Redfin

“Rent growth will likely slow further as the Federal Reserve continues to raise interest rates. Higher interest rates impact the rental market because they put a damper on spending power in the economy as a whole, including renters’ budgets,” Taylor Marr, Redfin’s Deputy Chief Economist, said.

Rent Trends in the Detroit Housing Market

We can’t confirm if the data below only covers the City of Detroit or the entire Metro Detroit area, but we see that the market is included in the top rent price drops nationwide in August 2022:

Source: Apartments.com

Moreover, executive director of Detroit Future City, Anika Goss, shared, “During the pandemic… people living in the bottom quadrant of the income scale were not being supported. If rent softens and people are back to work in 2022, we might see an evening out… in a year or two years.”

Should Detroit investors lower their rent to attract and retain tenants? Fewer people are purchasing homes but they still need a roof over their heads, so they rent. But it seems like Detroiters in the lower demographics are struggling to pay rent, even with the supposed decline in rent average.

Then again, the data above might only reflect rent decline in the City of Detroit—excluding the rest of Metro Detroit which includes far more affluent areas like Oakland County. As we know, these areas aren’t as affected by economic downturns compared to lower income zones.

In fact, based on our observations as a property management company in Metro Detroit, rent averages have flatlined (not declined). The reason why reports show dropping rent averages in the City of Detroit is likely due to an increase in vacant properties instead.

Looking at recent statistics and trends, the city is actually doing pretty well:

  • The city still has exceptionally low home prices with a median sales price of $100,000—a growth of 38% from late 2021 to 2022. In terms of rent, it’s also the fastest-growing city in the metropolitan area, where rent averages are said to have increased by 32% from 2021 to 2022.
  • The average rent for a one-bedroom apartment in the city is $1,000, which is a 4% decrease compared to a year before (February 2022). For a three-bedroom though—which is more popular in the housing market—the median rent is $1,200, which is a positive 9% year-over-year change.
  • Plus, looking at Zillow data, the City of Detroit saw an  increase in average rent, where investors are charging $20 higher rent than last year:
Source: Zillow

The data above is good news for Metro Detroit investors. And if you do have tenants struggling to keep up with rent payments, we suggest that you reevaluate by asking the following questions:

  • Are you charging above neighborhood rent averages?
  • Are your tenants struggling with rent payments?
  • Are they paying on time and in full?

If you screened your tenants well, they might not have financial problems. But if the economy’s downturn caused them to lose their jobs that affected their income, you might need to help them out.

“Gas prices are coming back down, but rents are going up 10, 12, 15%. And rent can end up taking 40% of these households’ income,” Bank of America CEO Brian Moynihan said.

Ultimately, your cash flow depends largely on your tenant’s ability to pay rent. As much as you want to generate top dollar from your rental properties, you won’t get any returns if the renters themselves can’t afford your home in the first place.

Finding the Sweet Spot for Rent Prices in the City of Detroit

The City of Detroit (and certain areas of Metro Detroit) remains to be a landlord’s market, with rent prices increasing despite the economic downturn. It presents an opportunity for investors willing to lower their rents to attract more tenants than ever before, although doing so requires careful financial evaluation.

Screen your tenants carefully and keep an eye on the economy, and your rental properties will remain profitable even with all the market shifts happening. Your goal is to secure capable tenants while generating a healthy return on investment—find that sweet spot for a win-win solution.

Do you want more tips and guidance on navigating the Detroit market?

Sign up as a member, subscribe to our newsletter, and join us in our upcoming meetings. Let’s share information and expert tips to ensure that our investments adjust and adapt to the market.

Categories
Flipping

the Flipping Forecast for Detroit in 2023 and Beyond

A kitchen after a flipper renovation.
Photo by Aaron Huber

During the height of the pandemic, the real estate market took a big hit. Large markets like New York felt a significant decline in pending house sales, with a hefty 58% decrease. And in our case, the City of Detroit took an even more severe hit, losing 74% of pending sales.

However, when stimulus packages started rolling in during the latter half of 2020, housing sales came back with a caveat. For example, list prices spiked 27% due to the revived increase in demand. This is bad news for house flippers, as finding good deals is significantly more challenging.

Still, with the pandemic in the rearview mirror, it’s time to look at how the real estate market is shaping up in 2023. And more importantly, is it a good time to build your home-flipping portfolio this year?

Real Estate Trends for the City of Detroit, MI

To try and curb inflation, the federal reserve is looking to increase interest rates across the board.

Just this February, interest rates are up and are expected to keep rising in 2023. That being said, inflation is still going strong. We’re looking at incremental interest rate increases throughout the year.

This results in a more challenging time for house flippers to get financing for their flipping project. To give you an idea of how the real estate market looks in the city, here are some trends we’ve observed:

  • Days on the Market: On average, properties stayed on the market for 36 days as of November 2022. It’s an improvement from the earlier half of last year’s average of 44 days on the market. Flippers might have an easier time selling their flips because buyers are more willing to buy.
  • Average Home Price: Compared to June 2021, home prices increased by 38.3%, from $72,500 to $100,205. The increase means house flippers like you might see lower returns on investment because buying a house requires more capital.
  • Average Sale Price: The average sale price of a Detroit property is identical to its average home price and set a new record by surpassing the $100,000 at $100,250—an increase of 38.3%. This isn’t necessarily bad news, as you might earn a bigger profit when you sell your flip.
  • Number of Listings: The number of listings increased from 2021 to 2022 by 38.9%, going from $1,983 to $1,428. This figure means that you’re off to a good start, as there are more houses on the market that you can list as options.
  • Total Sales (Unit): The total sales took a hit in 2022, by -10.1%, from $424 to $383. Your flipping projects might fall through because fewer people are buying, so you need to prepare a good exit strategy , just in case.
  • List Price: In January of this year, the year-over-year home prices were at an increase of 6.7%, and the average listing home price was $80,000.

Despite the climbing interest rates, the Detroit real estate market continues to climb in price, and the economic outlook in the City of Detroit is shaping up to be moderately positive this 2023.

Of course, we’ll have to wait and see if the interest rate hike will affect the situation, but it seems like 2023 is still a great year for you to potentially expand and earn from your flipping projects—as long as they make sense for your budget and risk appetite.

Flippers should Approach the City of Detroit Market with Cautious Optimism in 2023

Despite society moving on from the issues we faced during the pandemic, real estate prices continue to skyrocket. Sure, there’s pressure for the federal reserve to implement schemes to ease inflation, but various other factors also affect the housing market.

Regardless of what happens, the City of Detroit is still one of the most affordable areas, with its median sale price of $100,205, which is around 4x lower than the US median sale price of $405,900.

You’ll continue to find hidden gems in the famed Detroit real estate market to continue building your portfolio. Just be careful and get into projects that are guaranteed success, which you can do by joining as a REIA member, signing up for our newsletter, and meeting other investors in our upcoming meeting.

Leave a comment below if you have any other thoughts about the forecast for 2023!

Categories
Wholesale Wholesaling

Real Estate Wholesaling Contracts: What Should You Include to Guarantee Success?

Source: Photo by Romain Dancre from Unsplash.

The Wholesaling Contract is the bread and butter of real estate investment, and key clauses can make or break the deal.

Some key clauses in the contract serve as pillars that ensure the document is airtight and that you’re protected against sale issues—without these key phrases, the whole sales cycle could be ruined, and famed returns could be lost.

Whether it’s your first time handling a real estate deal or you’re looking to improve your current system, this article is for you. Here are the key elements real estate investors should include in their wholesale contracts for a successful real estate deal.

What You Should Include in a Wholesaling Real Estate Contract

A Wholesaling Real Estate Contract is a legally binding agreement that sets the terms of the sale between the wholesaler (that’s you, a sort of middle person) and the seller. Having a written understanding between parties helps avoid any disputes and misunderstandings.

There are two critical parts to a wholesaling contract: the assignment contract and the purchase agreement. Here are the roles they play and what you, the wholesaler, should include in each section:

Part 1: Wholesale Real Estate Assignment Contract

The Wholesale Real Estate Assignment Contract is the first part of the Wholesaling Real Estate Contract. It transfers your right to purchase a property to potential buyers. Once you and the seller enter an equitable conversion, you’ll draft an Assignment of Real Estate Purchase and Sale Agreement.

The Assignment of Real Estate Purchase and Sale Agreement is an assignment of ownership from the seller to the home buyer and outlines that the new buyer assumes ownership of the home and absorbs all responsibilities. The agreement should contain a copy of the original purchase and sale agreement you had with the seller and outline all the terms, conditions, contingencies, prices, payment terms, and stipulations involved in the transaction.

When this first part of the agreement is signed, the wholesaler typically gets a portion of the wholesaling profit as a deposit. So, only after closing the deal will you receive the remaining balance.

Part 2: Wholesale Real Estate Purchase Agreement

Now, the second part is the Wholesale Real Estate Purchase Agreement. The document is built of several moving parts, but don’t let that scare you—the Wholesale Real Estate Purchase Agreement’s purpose is housed in the basic information. Here are the crucial clauses you should focus on:

  • Who’s involved? List your name and the seller’s and buyer’s names.
  • What’s the asset? Give a description and address of the real estate being sold and purchased.
  • What’s the deed type? Specify the type of deed that comes with the real estate sale.
  • What’s the condition of the property? List the condition of the premises, including the physical state of the structure, existing damages, and areas that need repairs.
  • What’s the purchase price and financing? Record the agreed-upon price and financing terms, including where the deposits will be held.
  • When’s the closing date? Write the date when the real estate transaction is finalized.
  • What happens when the buyer can’t purchase? Include a financing contingency for the buyer to back out if they aren’t buying in cash and can’t obtain the required financing.
  • What happens when the buyer doesn’t like the property? Include an inspection contingency for the buyer to cancel if they’re not satisfied with the results of a property inspection.
  • What happens when the buyer can’t get title insurance? Include a marketable title option so the deal can be called off if the buyer cannot obtain title insurance.
  • What happens if someone breaches an agreement? Include buyer and seller default clauses that detail what happens if one of them defaults on the sales contract.
  • What happens if the real estate gets damaged before closing? Include a clause for risk of loss and damage to protect the buyer if the property is damaged while under contract.
  • What are the additional charges? Include accounts for utilities, property taxes, and other additional charges required by the state.
  • What property details should be disclosed? Disclose any information that challenges state and local laws or that you otherwise feel could be misunderstood. For example, if the property has lead-based paint, you can make a statement about it in the contract.
  • What are the legalities? Include the standard addenda or legal language at the end of the contract, and mention any additional agreements made after the initial signing.

Clauses and protections help to shield you from liability. Moreover, understanding what each clause means before signing off prepares you for any contingencies that may arise in the deal down the line, helps establish trust among parties, and improves your wholesaling reputation.

Of course, there are plenty of contracts that you can download online. But they aren’t foolproof—not until you’ve got a trusted real estate attorney to double-check them for you. Your contract must guarantee you’ll get what you expect from the deal without stepping on anybody’s toes.

Wholesale Contract: The Key Elements Unlock Success

By understanding the role of the Wholesale Contract and its key elements, you can protect yourself and ensure a smooth transaction for all parties involved. And, if you’re not sure where to start, we can help.

Join as a member today , and we’ll ensure you receive an invitation to our next meeting to learn more about wholesaling from us directly. And in the meantime, sign up for our newsletter to stay updated on everything happening in the world of real estate investing. See you soon!

Categories
Short Term Rentals

Top 3 Tools to Price Your Short-Term Rental Perfectly, Maximizing Attraction and Profits

 A small home made out of dollar bills
Source: Kostiantyn Li on Unsplash

Pricing your rental property perfectly is a complicated dance.

Price it too high, and you’ll reduce the number of bookings dramatically; price it too low, and you’ll leave money on the table and not make enough profits to cover the inevitable expenses.

So what do you do?

The task defeats most humans, but it’s nothing too tricky for technologies to figure out. So read ahead to learn the top three tools to price your short-term rental perfectly, finding that sweet spot price that attracts enough renters without undercutting your profits.

Criteria for Finding the Perfect Tool for Pricing Short-Term Rentals

There are different ways to price your rental, depending on the type of rental property it is. For example, a vacation rental will be priced differently than an urban apartment rental. And within each category, some subcategories will also change the price (i.e., a luxury condo in New York City will go for more than a standard one-bedroom in Tucson).

The perfect tool for pricing your rental should consider all of these factors and give you a competitive estimate based on comparable properties in your area. It should also allow you to adjust the price according to your goals and objectives, whether you’re looking to maximize profit or occupancy.

So, here are four key things to look for in a rental pricing tool:

  • Ease of Use: The best pricing tools are easy to use and don’t require a lot of data input.
  • Accuracy: The tool should be based on real-time data and accurate market trends.
  • Flexibility: You should be able to adjust the price according to your own goals and objectives.
  • Integration Ability: The ideal tool can integrate with other vacation rental software (e.g., channel managers, property management systems, and property listing sites).

We’ve used these criteria to provide you with five of the best pricing tools in the market today.

Top 3 Short Term Rental Pricing Tools

As a property management company, we’ve used nearly all the tools you’ve heard about. Based on our experience, these are the top five pricing tools we’ve found to be easy to use, accurate, flexible, and integrate with other software easily.

1. Airbtics: Get Ahead of the Pricing Competition

Source: Airbtics

Airbtics is a dynamic vacation rental pricing tool that allows users to filter daily prices of similar rentals based on trends. The tool will recommend pricing based on its machine learning algorithm that uses real-time booking data, so all its suggestions are accurate and considers spikes in supply and demand. You can also integrate it with any property management system or tech solutions you’re currently using.

Source: Airbtics

Moreover, Airbtics charges a fixed rate—unusual for pricing tools that usually takes a 1-2% commission from the user. There’s also a 15-day trial period for property managers with at least 5 properties.

2. Beyond Pricing: Optimize Your Pricing Opportunities

Source: Beyond Pricing

Beyond Pricing is an advanced short term rental pricing software that considers changes in demand on a daily basis, all to help you maximize your short-term rental occupancy and revenue. It even rates your properties with a Health Score to ensure that you’re aware of your opportunities for optimization.

Moreover, you’ll see detailed insights with every price recommendation, so you understand the reason for every suggested price. And it’s not just for the current landscape, as Beyond Pricing will provide forecasts and recommendations for pricing your rental next year.

Source: Beyond Pricing

Beyond Pricing comes with a free insights package, but you can take it a bit further with their paid plans. It also offers custom plans for unique portfolios, and can connect to popular property management systems and channel managers.

3. PriceLabs: Customize According to Market Movements

Source: PriceLabs

PriceLabs is a customizable, data-driven pricing tool to boost your revenue. Its price recommendations are based on the market’s supply and demand, seasonalities, short-term rental trends, special events and holidays, and lead time. It’ll pinpoint the dates where demand is high by checking the data of nearby listings, analyze historical data, and evaluate your listing’s performance to give the best pricing possible.

PriceLabs’ customization features include setting dynamic minimum stays, enabling occupancy-based pricing adjustments, and more. Plus, the tool can easily connect to more than 30 property management systems and channel managers.

Source: PriceLabs

Its pricing structure works as you scale your business, which is perfect for growing portfolios. There’s also a 30-day free trial before a contract that you can cancel anytime, and it charges a flat monthly fee.

Price Your Short-Term Rental for Maximum Occupancy and Revenue

All three of the dynamic pricing solutions above are excellent choices for optimizing your short-term rental prices. They use different methods for price recommendations, but they’re all accurate to your market. And, most importantly, they integrate well with other software solutions you’re currently using.

Of course, the alternative to using technology is to hire an expert property management company that knows the local market inside out. If you’re investing in the Metro Detroit area, give us a call! We have the experience and knowledge to manage your rentals for maximum occupancy and revenue.

Sign up as a REIA member, subscribe to our newsletter, and join our upcoming meeting to get insider knowledge on real estate investing. This is your opportunity to network and become a better short-term rental landlord and investor as fast as possible.

Categories
Landlords

Go Beyond Airbnb: Where Should You List Your Short-Term Rental?

A magnificent cabin nested in the forest
Source: Photo by Madhur Shrimal on Unsplash

Landlords of short-term rentals shouldn’t stop listing on Airbnb. While the platform is the most popular website for finding hotel alternatives, you should also consider other platforms that can increase exposure, generate more bookings, and gain consistent rent income.

So, here’s a list of Airbnb alternatives you should consider listing your short-term rental on.

1. VRBO: The Reach Multiplier

Listing your short-term rental on VRBO (Vacation Rentals by Owner) means that your property is listed on the platform’s affiliated sites: Expedia, Trivago, and KAYAK for increased reach.

Moreover, VRBO isn’t limited to one property type. Feel free to list your cottages, cabins, bungalows, townhouses, lodges, farmhouses, villas—even yachts, castles, and mills on VRBO. The exposure and possibilities you’ll get on VRBO are endless.

2. Booking.com: The One-Stop Shop

Booking.com is another platform that serves more than 1.5 million guests per day in over 43 languages. There are already millions of homes and apartments listed on this platform. Plus, landlords have complete control over their house rules, adding booking prerequisites, and reporting guest misconduct.

It says it’s “serious about your success” and has the safety features to prove its commitment. In addition, Booking.com is a one-stop shop where guests can also book flights and car rentals—so you wouldn’t want to miss the chance to leverage convenience.

3. Plum Guide: The Luxury Platform

Is your property a charming home for bougie guests? Then list it in Plum Guide, where only the most remarkable homes are shown. They are the benchmark for quality rental stays, focusing on providing guests with the finest luxury properties in the market.

Guests have even said that they prefer this platform over Airbnb because Plum Guide’s property photos match the actual accommodation, the reviews are accurate and not glorified, and there was excellent customer service and communication with the host.

However, note that Plum Guide vets and grades properties before allowing them to be listed. This is how it ensures quality over quantity and means that you’ll have less competition on the platform.

4. Agoda Homes: The Asian Market

List your property on Agoda Homes where you can earn extra income by having access to millions of quality travelers daily. There’s also zero commission and plenty of hosting tools to manage your property via desktop and mobile—so you can manage your homes on the road. Plus, Agoda Homes focuses on the Asian market, which means you can expand your reach to other countries.

Agoda Homes’ dashboard for short-term rental hosts is also uniquely designed for easy decision-making and task prioritization, so you’ll have everything you need to increase your bookings.

Expanded Reach + Increased Bookings = Multiplied Profits

Of course, there are other platforms, like Homestay, Sonder, and Blueground, that we didn’t mention in the list. But the point is to make you realize that you shouldn’t stop by only listening on Airbnb when there are many alternatives out there that can give you additional benefits.

Remember that the more you expand your reach, the more bookings you’ll generate—resulting in higher, more consistent profits from your real estate investments.

Do you need more help? Get in touch with me today. You can start by joining REIA as a member, so you can attend our upcoming meetings and receive helpful information via our newsletter.

Categories
Wholesale Wholesaling

How and Why You Should Set Up Recurring Rent Payments for Your Tenants

Source: Photo by Mika Baumeister on Unsplash.

Collecting rent can be one of the biggest hassles of owning rental property. Not only do you have to keep track of when rent is due, but you also have to chase down tenants who are late on their payments.

Wouldn’t it be nice if there was an easier way to collect rent? Well, there is.

You can set up recurring rent payments so that your tenants’ rent is automatically deducted from their bank account each month. Not only does this make things more convenient for both you and your tenant, but it can also help ensure that you always get paid on time.

In this blog post, we’ll explain how to set up recurring rent payments and the benefits of doing so. By the end, we hope you’ll see just how easy and helpful an automatic rent payment system can be.

Why Set Up Recurring Rent Payments

As a landlord, having a reliable, predictable source of income is essential. That’s why automating recurring rent payments can be so beneficial. Here are a couple of benefits:

  • On-time payments: Your tenants will have their rent deducted from their bank account automatically each month. This means that you won’t have to worry about chasing them down for late payments or collecting checks in person.
  • Electronic processing: All payments are made electronically and on the same day each month, saving you the hassle of manually entering tenant information into your accounting software. Most systems can handle automatic payments for you with just a few clicks.
  • Incentivize recurring payments to encourage sign-up: Some payment processing providers include a discount function so you can offer incentives to your tenants for signing up for recurring payments. This can be a great way to encourage more people to use the system, making rent collection easier for you.

Protect your cash flow, and you’ll protect your investments—isn’t that the only thing that matters?

How to Set Up Recurring Rent Payments

Setting up recurring rent payments is relatively easy, and it’s worth taking the time to do so. Here are the steps you’ll need to follow:

  1. Choose a payment processing provider: Decide which payment processor you’d like to use. Some popular options include PayPal, Stripe, Square, and Apple Pay. Each company has its own set of fees and features, so take some time to compare them before making your decision.
  2. Set up an account: Create an account and link it to your bank. This will allow payments to be transferred directly into your account on the rent due date.
  3. Collect tenant information: Collect some basic information from your tenants, such as their name, address, bank details, and rent payment amount. Ensure that all information is accurate and updated before proceeding with the setup process.
  4. Set up automatic payments: Set up the automatic payments for each tenant in your system. This typically involves entering their bank details and setting the payment amount and frequency (e.g., monthly).

Once you’ve completed these four steps, you’re good to go. Sit back and wait for the payments to come flowing in. Your well-deserved cash flow is on its way.

Best Tools for Recurring Rent Payments

We recommend the following payment processing providers for their ease of use and excellent security:

  • Avail: This landlord software is owned by Realtor.com and helps you streamline rent collection (even if you don’t work with a property manager). Avail allows upcoming payment scheduling by automatically reminding tenants before the due date. Tenants who split the rent with their roommates can also divide the bill accordingly.
  • Apartments.com: Previously known as Cozy, this tool automates rent collection and monitors all rental payments from one dashboard. You’ll see everything in one glance. The platform also sends reminders to tenants, just like Avail.
  • Buildium: If you have 50 or more properties in your rental portfolio, Buildium is your best bet. The software can set up recurring and one-time payments for tenants to pay online or offline, where the funds are transferred in a few minutes instead of a few days.

There are others, too, like Zillow Rental Manager, Rentec Direct, TurboTenant, PayRent, and ClearNow. Whichever platform you choose, you can rest assured that rent collection will take care of itself.

Automatic Payments, Automatic Cash Flow

Setting up recurring rent payments is an easy way to make collecting rent more convenient for both the landlord and the tenant. Not only does it help ensure that your rental income is always on time, but it can also save you time and money in the long run.

We hope this blog gives you a better understanding of how to set up recurring rent payments and why it’s a good idea to do so.

If you have any questions or need help getting started, join us as a REIA member today[1]  and attend our upcoming meeting[2] ! We also have a newsletter[3] , so you’re never out of the loop.

Categories
Short Term Rentals

Modern Management: 6 Best Tools for Short-Term Rentals (And How They Can Boost Your Profits)

Source: Photo by National Cancer Institute on Unsplash

There are more than 2 million vacation rental properties up for grabs—and that’s just in the United States alone! You already know that the competition is strong. Plus, you have to constantly deal with:

  • Responding to inquiries from potential guests
  • Updating your property’s availability on multiple platforms
  • Managing the schedules of your cleaning staff
  • Handling check-ins and guest demands

With all these tasks to consider, it’s easy to get overwhelmed—even if you only have one short-term rental property. Luckily, there are a ton of great apps and digital tools to help you automate your most tedious tasks. Not sure where to begin? Read on!

How Will My Short-Term Rental Property Benefit From Apps and Digital Tools?

Generally, people embrace automation when they want to quickly and easily complete tasks. It’s no different in the short-term rental industry, where landlords like you must deal with repetitive chores.

Not only do apps and digital tools clear up your to-do list, but they also allow you to boost your occupancy rates and dominate the competition. Here’s a list of how tools help you manage your short-term rental:

  • Save time: You can automate tasks that are repetitive and time-consuming yet critical to the success of your rental. Apps and digital tools can save you time on listing properties, answering guest inquiries, and managing booking requests.
  • Improve communication with guests: Your guests’ experience in your short-term rental unit is enhanced by messages and reminders that they automatically receive to their phone. Using digital tools to communicate with your guests also helps in avoiding misunderstandings.
  • Increase efficiency: You’re enabled to manage multiple short-term rental units from one central location. Some apps and digital tools even track and analyze data, which allows you to make informed decisions about your business. 
  • Increase revenue: Potential guests receive quicker responses to their general inquiries and booking requests when you automate your messages to them. This can help increase your occupancy rate, which, in turn, boosts your overall revenue.

Clearly, automation allows you to enjoy the benefits of being a short-term rental landlord without having to deal with its associated burdens. But there are so many apps and digital tools out there, that it can be hard to figure out which one is right for your business.

No worries—we have you covered! Here are several tools that we believe will increase your occupancy rates and make your business a huge success. 

6 Best Tools for Short-Term Rentals

From automated reminders to tracking data, there are apps available for every aspect of managing a short-term rental unit. These are our top recommendations:

For Scheduling Cleaners: Breezeway

Managing a cleaning schedule isn’t as easy as you think. To ensure that your guests will always be greeted by a spick-and-span vacation rental, you must have a system in place that allows you to seamlessly coordinate with your turnover service providers.

Enter Breezeway—a platform that features innovative scheduling and quality assurance tools for both cleaning and maintenance staff. It even analyzes how productive staff members are, which allows you to assign the right task to the right person at the right time.

For Synchronizing Your Listings: iGMS

If you want to list your properties across multiple websites, invest in a good channel manager. Aside from increasing your short-term rental unit’s exposure, list synchronization eliminates the risk of accidentally double-booking dates.

iGMS is a challenge manager that allows you to seamlessly list properties on some of the industry’s most popular websites, including Airbnb, Booking.com, and VRBO. It features a world-class dashboard, too, which allows you to easily keep an eye on everything.

For Managing Your Property: Tokeet

Want a fairly hands-off approach to managing your short-term rental properties? Tokeet is your best bet. Its core features include a direct booking website builder, which allows you to easily create your own page for direct reservation management. No more paying hefty commission fees to Airbnb or Booking.com!

Tokeet also offers a dynamic pricing tool called Rate Genie, which automatically updates your rates across multiple channels. It’s powered by data-driven algorithms that determine the best prices for your properties, allowing you to increase your rental revenue by as much as 30%.

For Messaging Guests: Duve

Communicating with guests is a labor-intensive task that takes up a lot of your time. From patiently answering their inquiries to confirming their bookings, you might just find yourself spending hours on your booking platform’s chat function.

Duve allows you to genuinely and smartly manage every single aspect of your guest communications. Send automated messages, provide contactless check-ins, and collect important information before your guests arrive. The single smart platform even offers a customizable welcome app that will enhance their experience and ultimately increase your revenue.

For Turning Your Property Into a Smart Home: Operto

In the short-term rental industry, going above and beyond to provide guests with an excellent stay is key to keeping bookings full. Nowadays, most guests are tech-savvy and work remotely, so giving them a positive experience can be as easy as investing in smart technology.

Operto offers exactly that. It’s an integrated suite of smart home solutions that allows you to streamline your operations and create a contactless guest experience. For instance, Operto implements smart locks and sensors. It can even regulate the property’s thermostat, which saves you big time on energy costs.

For Welcoming Guests: HelloHere

Most—if not all—travelers want to experience new places like true locals. So, if you want to avoid being bombarded with messages about which restaurants to eat at, consider investing in HelloHere, a “digital guestbook” that caters to their every need.

HelloHere offers a destination guide containing every answer to your guest’s inquiries, from fantastic local restaurants to sights that shouldn’t be missed. It also features a live chat function, so you’ll no longer have to worry about guests calling you in the middle of the night!

Automation: A Foolproof Way to Boost Your Business

With countless apps and digital tools available, embracing automation for your short-term rental business is no longer an insurmountable challenge. By investing in these nifty software solutions, you’ll reduce your workload without sacrificing your occupancy rates and revenue!

If you’re a short-term landlord in Oakland, streamline your daily rental tasks and boost your guest interaction today with these top-recommended technologies. We’d love to have you in our community!

Join as a REIA member today to attend our meetings and sign up for our newsletter.

Categories
Flipping

5 Tips to Flip a Really Old House (Challenging but Possible!)

The interior of an old home with aged wooden frames and dry leaves
Source: Mahdi Dastmard on Unsplash

Countless shows have entertained us with the possibility of flipping an old house (over 50 years old) for profit. It used to be simple, too: find a run-down house, fix it up, and sell it for easy money.

However, in today’s market, flipping a house has become much more challenging. Properties are increasingly more expensive to buy and fix up, and more and more wholesalers vie for the same investors.

And everything is exponentially more complicated if you flip an old house—the lower the starting point, the rougher the road is to flipping success.

So how can you flip an ancient house? Here are five critical tips for house flippers to remember.

1. Pick a Home in an Excellent Location

You can change everything about a house except for its location. So pick a home in a good neighborhood, often categorized by its amenities (e.g., near schools, public transportation, etc.).

No matter the potential you see in an old home, never choose one close to the freeway, with a high crime rate, or anything unappealing like that. Nobody wants a pretty property that’s in a terrible location. Instead, purchase a home in a prime location, and you’ll appeal to many potential buyers.

2. Check Your Numbers, and then Check Them Again, & Maybe Again!

How much is the house worth? How can you get it under the market value so you’re making money right off the start? Moreover, how much will it cost to bring it up to a sellable standard?

Knowing your numbers is vital in all real estate investments, but it’s especially crucial to flip an old home.

If you’re not experienced in answering any of the questions we’ve mentioned above, you’ll need to hire these professionals:

  1. Real estate experts to know the estimated property value
  2. Contractors or inspectors to determine the estimated renovation costs (ERC)
  3. Real estate agent or broker to determine the after-repair value (ARV)

These professionals will help you flip an old home, especially given how tricky it is to renovate and know the value of a subpar property; doing things yourself might lead to underestimating or overestimating the cost and value, which could put your entire investment at risk.

3. Understand What Needs to be Done—and What Really Doesn’t

A home inspector can help you understand what needs to be fixed in a house before you sell it. Oftentimes, old houses need work in these areas:

  • Outdated outlets and electrical systems
  • Outdated heating systems (HVAC units)
  • Obsolete plumbing systems
  • Foundation issues
  • Deteriorating roof
  • Hazardous building materials
  • Old windows and door frames

These structural issues are called the “bones” of a house because they’re essential parts that make up the structure and safety of the property. You can get away with ignoring other cosmetic details like paint colors or flooring when flipping an old house, but you absolutely cannot ignore the bones. If any of these areas are not up to code or need significant repairs, it will be especially difficult (and expensive) to fix before selling. Contract a professional inspector to confirm the condition of an old home before you buy to stay in the clear.

4. Find Reliable and Honest Contractors for Repairs

Once you’ve bought the house and know what needs to be fixed, it’s time to find a contractor.

A lot of people try to save money by hiring an unlicensed contractor, or by avoiding getting  multiple bids from different contractors. As a result, they often overspend on repairs or end up with a subpar repair job. Cutting corners can cost you thousands of dollars and cause significant delays in selling the property.

Find a good contractor by following referrals from friends, family, or other real estate investors who have flipped homes before. Once you have a few referrals, interview each contractor, get multiple bids, and check their licensing and insurance.

Here are the two categories of contractors you’ll choose between:

  • General contractor: If you choose a general contractor, you’ll only have one point of contact who’s in charge of managing the entire project from start to finish. A general contractor should be someone who is capable of managing every step so you can trust them the entire way.
  • Subcontractors: If you choose to go with subcontractors, you’ll do the overall managing yourself and have a group that includes electrical, plumbing, HVAC, framing, insulation, painting, and flooring professionals. You’ll also need backups to these roles so you’re never left hanging if one subcontractor calls out sick.

A good contractor is honest about the repairs that need to be done, gives you a fair price, and has a good reputation. Don’t be afraid to negotiate with contractors—remember, it’s your money and your investment, so you should feel confident in getting the best value for the repairs.

5. Build More Time than Usual Into Your Timeline

Old homes usually need major modifications and there’s bound to be a surprise or two!

You may need to redo narrow staircases, hallways, and doorways. Moreover, you’ll likely have to take down walls and rearrange the layout to modernize the old home by creating larger living spaces.

You’ll likely touch every part of the house—the electrical, plumbing, framing, and more—and you’ll need to strictly stick to your timeline to cover all the necessary steps. You don’t want to skip, delay, or rush any of those steps, either, (like installing drywall to see immediate improvement) because the structure or “bones” is what truly makes the property valuable.

Essential renovations take time and careful planning; don’t get too excited with the finishing stage.

Instead, plan ahead realistically, stick to your timeline, and schedule when each subcontractor should start their part of the project (if you’re not using a general contractor). You’ll make much better use of your time without sacrificing the quality of the finished property.

House Flips for Huge Profits: Old Homes for New Money

Have cautious optimism when flipping an old home. As long as you understand what you’re getting into before making an offer, lend your due diligence to inspections and contractors, and have a solid plan for repairs, you can make a tidy profit by flipping an old home.

Do you need more help flipping old homes? Sign up as a member, subscribe to our newsletter, and join us in our upcoming meeting! Stay updated with the latest tips and tricks by joining a community of like-minded individuals for your real estate investment journey.

See you in the winner’s circle!

Categories
Landlords

How Should Landlords Handle the Recent Rent Price Decreases?

A woman opening her wallet and realizing there are no bills
Source: Emil Kalibradov on Unsplash

It might have come as a shock to a lot of landlords as market conditions have drastically reversed in the past year, bringing the 20-month streak of increasing rent amounts to a halt. Unfortunately, this drop in rent prices is seen across the nation, affecting many investors’ potential returns.

So, what can you do about it to stay profitable in your real estate investment?

Let’s discuss it below.

How did rent prices decrease significantly?

In recent months, the US real estate market slowed down, where rent decreased by 0.1% across 40 of the most extensive metropolitan areas in August 2022. Renters celebrate financial relief (excellent), but investors clutch desperately to their original investment returns (not ideal).

Here’s a snapshot of the rent price movements across 40 markets, where we see that our home area, the City of Detroit, has dropped 0.5% month-over-month:

Source: Apartments.com

Jay Lybik, CoStar Group’s national director of multifamily analytics, said, “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to new deliveries outpacing lackluster demand.”

Beyond that, places like the City of Detroit are experiencing a labor shortage in the construction and maintenance industry of the City of Detroit. While this news means that it’s harder to build homes (bad news for anybody developing a property), it means that the demand for housing stock is still increasing. And, more importantly, people are competing for a limited number of units (good news for landlords and rental property investors).

If you’re a rental property investor in the City of Detroit, ensure that you stay ahead of the curve and keep your properties in excellent shape to attract and keep tenants. And of course, always keep an eye on the market and prepare to adjust your rents accordingly.

What should landlords do when rent averages decline?

The most important rule in real estate investing is to stay updated with the market’s current status to change your strategy on the fly and avoid significant financial losses. For instance, if you know that there’s an oversupply of rental units in your area and not enough renters to fill those up, opt to lower your rent to attract quality tenants willing to pay for a comfortable space.

But if you think that the rent prices in your area will continue to decline, selling your property might be the best move to make. This tip is especially true if you’re carrying a lot of debt—the last thing you want is to end up upside down on your mortgage.

Of course, there are other strategies that you can do to stay profitable during a rent price decline. Here are 4 tips to maintain financial viability:

#1 – Review your financials and make necessary changes

Go over your finances and see where you can make adjustments. This might mean looking for ways to reduce expenses, like cutting down on maintenance and marketing costs. You should also consider ways to increase your income, such as by finding new tenants or increasing rent for existing ones. If you have vacant units, consider offering discounts or incentives to attract new renters.

#2 – Negotiate with your lenders

This could involve asking for a lower interest rate on your mortgage or a longer repayment period. You might also want to consider refinancing your loan so you can get more favorable terms. This could help you free up some extra cash each month that you can use to cover other expenses.

#3 – Raise rent for existing tenants

If you can, consider raising the current rent amount for your existing tenants. Doing so could help offset any decline in rent prices that you’re experiencing. Of course, you must be careful not to price your tenants out, so raise your rent slowly to keep occupancy up without dragging your returns down.

#4 – Diversify your portfolio

Diversifying your portfolio means investing in other types of property, like commercial or vacation rentals. Doing so could help you mitigate some of the risks that you’re facing with your rental properties and generate additional income to cover your expenses.

Rent Drops Doesn’t Always Mean Cash Flow Decrease

The biggest takeaway from all of these is that landlords should always be updated with the latest market trends so they can change their strategy accordingly. This way, they’ll be able to protect their investment and even grow their portfolio despite a rent drop.

No matter what strategy you use, stay proactive and adapt to the changing market conditions. By doing so, you can minimize the financial impact of a rent price decline and keep your business healthy.

One way to stay updated is by signing up as a REIA member. You can also subscribe to our newsletter and join our upcoming meetings, so you’ll be the first to know any tips or advice we have regarding the real estate market. The market is always changing, so you have to as well.

Categories
Wholesale Wholesaling

Pro Tips on How to Wholesale Real Estate in an Uncertain Market

Source: Usman Yousaf on Unsplash

Every real estate investor knows how volatile the market can be. It’s not as crazy as stocks or crypto, but the real estate investment environment isn’t completely protected against shifts.

For example, the International Monetary Fund recently announced that they’ll be more aggressive on funding now. So, combined with the uncertainty we see in the economy, bond yields increased, directly correlating to a rise in mortgage rates for the real estate market.

But even with things like this, you can still invest in real estate and come out victorious.

How? Well, try wholesaling properties.

Real estate wholesaling is finding a deeply discounted property and then selling it to another investor, usually for a quick profit. And since you’re not the one who’ll fix it up or hold on to it for the long term, you don’t need to worry about market conditions as much.

Of course, wholesaling has its challenges in an uncertain market. But knowledgeable wholesale real estate investors deviate them easily—simply as they know how to play the game. Read on to know!

1. Increase Your Lead Conversion Rate

Finding motivated sellers is key to a real estate wholesaling business. You must constantly find people who need to sell their properties fast (usually because they’re facing foreclosure or divorce), as they present an opportunity for you to swoop in and make an offer.

In an uncertain market, looking for motivated sellers should be easy, as more people want to sell their homes quickly to free up cash. You can find them by networking with real estate professionals, driving around neighborhoods with distressed properties, and more.

But it’s not just about finding motivated sellers; it’s also about increasing your conversion rate:

Number of deals closed / Total number of motivated sellers = Conversion rate

The higher your conversion rate, the better you can weather any uncertain market storms. You already spend so much time and money on marketing and generating leads; you’ll do yourself a favor by optimizing your closing process to convert more leads into closed deals.

Continue to find motivated sellers, and improve your chances of closing deals with them.

2. Get Your Financing in Order

If you’re going to wholesale real estate, you need to have your financing in order before you start looking for properties. Getting your ducks in a line is important because, most of the time, the properties you’ll find will require some form of creative financing, like using:

  • Hard money loans: Loans based on property’s value instead of the borrower’s creditworthiness
  • Private money loans: Loans from private investors if you can’t qualify for traditional financing
  • Partner with another investor: Pooling resources together with a partner to finance a property

If you don’t have your financing set up beforehand, it’ll be hard to take advantage of these opportunities when they come up, especially when dealing with uncertain market conditions simultaneously.

For example, if the market crashes and you’re trying to get a loan from a bank, they’ll be much more hesitant to give you the money. Whereas if you have a hard money lender lined up, they’ll be much more willing to finance your deal.

3. Know Your Numbers

In an uncertain market where things can change rapidly, you need to be extra conscious of unnecessary business costs harming your cash flow. Are you spending too much on lead generation? Can you do without the tech subscriptions? Have an honest conversation on how you can keep expenses down to protect your cash flow in an unstable market.

Moreover, know your numbers well enough to make quick and sure deals without costing you dearly. Things like being clear on your maximum offer price, estimated repairs, and expected profit margin all play into the success of your wholesaling investment opportunities.

Say the market crashes and property values drop significantly—you’ll find yourself in a situation where the property is worth less than what you paid, depleting your chances of any profit margin. Only by knowing your numbers well can you adjust accordingly and still come out ahead.

4. Have a Plan B

Having a plan B when wholesaling real estate is always a good idea. And in an uncertain market, that truth is all the more true, where things might change quicker than you expect. There’s always the possibility that something could go wrong, whether it’s the deal falling through, the market taking a turn for the worse, property values dropping significantly, or all of the above.

So, what should your Plan B be? Well, that depends on your situation.

But some things you might want to consider include: having another property lined up to sell, having extra cash on hand in case of emergency, being able to lower your prices to sell, or partnering with another investor to share the risk. The bottom line is to be prepared for the worst, while expecting the best.

Being Certainly Profitable in Wholesale Real Estate Investing

By following the tips we’ve outlined in this article, you can ensure that your business is as resilient as possible to market fluctuations. So whether you’re a seasoned investor or just starting, remember to increase your lead conversion rate, get your finances in order, know your numbers, and have a plan B.

With these strategies, you’ll weather any storm and continue making money by wholesaling.

Do you need more help? Then, get a membership, subscribe to our newsletter, and join our upcoming meeting! We’ll discuss key industry trends and expert tips—you wouldn’t want to miss out.

x  Powerful Protection for WordPress, from Shield Security
This Site Is Protected By
Shield Security