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Landlords

Landlord Insurance: Key Things You Need to Know

 A man intently looking at his laptop
Photo by Bruce Mars

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 lost 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:

Photo from Pinterest

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.

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Landlords

How Landlords Should Handle Emergency Repairs For Your Tenants

Woman’s eyes opened wide expressing shock while on a phone call
Photo by Yan Krukow on Pexels

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.

Non-emergency examples:

  • Sewer backup
  • No hot water
  • Minor water leaks
  • No electricity (unless it affects heat during winter)
  • List

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:

  1. 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.

  1. 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.

  1. Determine if an Actual Emergency
  2. 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. 

Set Expectations

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.

  1. 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.

  1. 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.

  1. 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!

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Landlords

Real Estate Magic: 4 Secrets of Successful Landlords

A landlord handing over house keys to their new tenant
Photo by Alena Darmel

Being a landlord isn’t all sunshine and rainbows. If you try to go in blind, inexperienced, and without proper knowledge—you’ll likely make dire mistakes that will ruin your bottom line.

Plus, doing some research online can only get you so far. You’ll get some bits of good information, but none will necessarily guarantee your success. No, you need to know how the pros do it so you can put yourself in the right direction towards becoming a successful landlord.

Not to worry, we’ve already compiled their “secrets” for you. No need to look elsewhere, here are the 5 things you should perfect to be as successful as the giants out there.

1. Successful Landlords Conduct Thorough Tenant Screening

Screening is an important process for every landlord, so it’s of utmost importance that you have a firm grasp of how to properly screen potential tenants. Add to that, you need to abide by tenant screening laws to avoid potential lawsuits.

Generally, you need to keep these factors in mind when screening applicants: 

  • Abide by the Fair Credit Reporting Act (FCRA), which limits your access to applicant information without their consent. 
  • Follow the Fair Housing Act, where it’s illegal for you to reject applicants due to race, sex, disabilities, and other discriminatory factors.
  • Perform rigorous background checks on their credit history and criminal records.

Once you make sure to abide by these laws, you should make a checklist for your ideal tenants. If your screening process is rigorous, you’ll end up with much better tenants. They’ll pay rent on time, take care of your property, and abide by everything in the lease agreement.  

2. Successful Landlords Have a Well-Written Lease Agreement

You need to be specific when writing the lease agreement, otherwise, you might run into confusion later on. List down all the things the tenant can do, all the things they can’t, from having pets to subletting. That way, there aren’t any misunderstandings down the road.

A good contract will make sure to include terms like:

  • Names of all the tenants
  • The maximum occupancy
  • The terms of the lease
  • The monthly rent
  • Deposits and fees

Other terms you might include in a lease agreement are: 

  • Pet policies
  • Parking arrangements
  • Allowed renovations
  • Subletting conditions
  • Property maintenance
  • Pest control schedule

With a thorough lease agreement, you can protect yourself, maintain your assets well, and be confident that your tenants will support you in your rental business.

3. Successful Landlords Manage Their Property Professionally

How else do you keep good tenants? Well, you do so by being professional at all times. Trust us, this goes a long way in keeping your tenants happy and satisfied enough to stay longer.

Here are a few pointers to keep in mind when managing your tenants:

  • Make it easy for your tenants to reach you. Ensure that they have your contact details and are fully aware of what situations call for immediate action.
  • Keep on top of tenant emergencies like repair requests, so the property remains habitable and you solve issues before it turns into an expensive repair.
  • Don’t be afraid to evict those who defy the lease agreement, such as:
    • Not paying rent on time or in full
    • Does major property renovations without your permission
    • Conducts an illegal business in your rental property
    • Causes excessive property damage (e.g., broken structures, flooded bathrooms, pest infestations due to hoarding or garbage)

Instead, your goal is to establish and nurture a healthy landlord-tenant relationship where both parties are respectful. That way, tenants will stay longer and effectively stabilize your monthly cash flow and overall investment.

4. Successful Landlords Prioritize Keeping Good Tenants

Landlords don’t just find good tenants—they keep them. In fact, successful landlords are experts at keeping quality tenants around for a long time. For example, they’ll offer to upgrade selected amenities in exchange for renewing the lease. 

Those incentives can include things like:

  • An internet connection upgrade
  • New flooring or furnishings
  • Improved HVAC system
  • New kitchen appliances
  • New in-suite laundry

While these do cost a pretty penny, doing so will reduce vacancies, turnovers, and maintenance. In other words, they look at the big picture and treat their tenants as they would want to be treated. By doing that, they’re less likely to look elsewhere leaving your rental vacant and not profitable. 

Learn How to be a Successful Landlord from the Start

Successful landlords don’t waste their time and money on situations that they can avoid. Instead, they are proactive in figuring out ways to find quality tenants, keep them around for a long time, and list all obligations and expectations down from the get-go.

To give you a running start to becoming a great landlord, follow our tips! By running your rental property like a pro, you won’t have to spend unnecessary time, money, and effort to earn back your investment returns—and more.

Do you have any landlord tips for those starting out? Feel free to share them in the comments below!

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Landlords

Tips and Tricks for Managing the Property Maintenance of Your Home

 poorly maintained rental property
Photo by Payam Moghtader

Nobody wants to live in a dilapidated home. We all want a place where we can come home to an environment of relaxation and comfortable living—certainly not a messy, broken-down house that’s far from being stress-free.

This means that, as a landlord or homeowner, you need to treat your property with care to ensure it lasts for decades to comes. Tenants won’t want to occupy your rental property if it’s falling apart and neither will you. You need to perform frequent maintenance on your rental property, and do everything you can to protect your hard-earned assets in the long term.

In this article, we will discuss some tips and tricks to keep your property in tip-top shape.

5 Tips for Maintaining Your Rental Property 

First thing’s first, maintaining your property is mandated by law. If you are located in Michigan, you are liable under the warranty of habitability law to keep your rental property liveable

The law states that a landlord must abide by 3 factors:

  1. The property and all common areas must be fit for use.
  2. The property must be kept in reasonable repair while under a lease. 
  3. The property must comply with health and safety regulations. 

If you don’t follow the warranty of habitability law, tenants can either withhold rent until you make the repairs (no income for you!) or resort to repair and deduct—where they’ll make the repairs themselves and deduct the costs from rent payments. It may deceivingly sound convenient, but experienced landlords know that leaving repairs to tenants likely means cheap fixes and short-term solutions.

By following the law, you can avoid consequences and protect your properties.

To help keep in line with the warranty of habitability law, here are best practices to maintain your rental property.

1. Establish Easy Communication with Your Tenants

The first step to keeping your rental property maintained is to communicate with your tenants if you aren’t living there. Your tenants will be the ones living in your rental, which means they are the first to find any need for repairs. Plus, you don’t want to leave a problem unattended for too long, or it becomes permanent damage.

Having regular communication with tenants is important for catching necessary repairs immediately

Always provide a way for your tenants to get in touch with you easily. Your goal should be to make it easy for you to get ahead of important repairs before they cause major damage.

2. Perform Regular On-Site Inspections

Schedule a yearly inspection with your tenants or for yourself so you can have a frequent, in-person idea of the status of your rental. Getting an expert to help is also not a bad idea. You should look out for tell-tale signs of property damage, like the following:

  • Broken windows and screens 
  • Leaky plumbing 
  • Discoloration on walls and ceiling 
  • Burn marks around sockets 
  • Malfunctioning smoke detectors and fire extinguishers

Your goal in performing regular on-site inspections is to catch any signs of water damage or gas leaks that can lead to costly repairs down the road.

3. Schedule Periodic Pest Control Visits

Pests are one of the most damaging factors to a property. For instance, do you know that the US spends over $5 billion yearly for termite repairs? That’s a lot of money spent on dealing with termites that can certainly be avoided.

So, take a preventive approach by scheduling pest control maintenance once every 3 to 6 months. Have an exterminator visit the property and extinguish any possibilities of pest infestations, so you don’t have to worry about little damaging critters occupying your rental property.

We understand that regular pest control visits can be costly to your business. But, it’s a cost worth taking, especially when you consider the more-expensive alternative of dealing with existing creatures.

4. Opt for a Professional Landscaper 

Not only does great landscaping help entice new tenants if you’re renting it out, but it also keeps your existing renters happy and helps you avoid many problems down the line. You can always maintain the lawn yourself, but hiring professional landscapers will give you benefits such as:

  1. Preventing pests from making a home in the lawn and trees
  2. Avoiding debris accumulation that can harm your plumbing system
  3. Protecting the structure of the home from nature-related issues (e.g., falling trees or overhanging branches that pose harm)

Plus, professionals will have the skill, experience, and equipment to keep all lawns, gardens, and other green areas of the rental property beautiful and functional. Many other benefits come with maintaining the landscape, but the biggest benefit is that you’ll beautify your home.

5. Hire Heating, Air-conditioning, and Ventilation (HVAC) Specialists

One of the main systems that keep a property habitable is the HVAC system. If the system fails, it becomes very difficult to live on the property. Just imagine going through winter without any heating or sweating in the summer with air-conditioning, and you’ll know what we mean!

Moreover, if an HVAC system fails, the entire cost of replacing everything can range from $5,000 to $10,000. In other words, shouldering the costs of regular maintenance is definitely better than having to replace an HVAC system eventually.

Consider hiring professionals to perform annual maintenance and constantly remind your tenants to clean and replace AC filters whenever necessary. Your goal is to avoid having an HVAC system breakage while keeping your tenants living comfortably.

Take Preventative Care of Your Property 

Living in a rundown home is one of the worst things to experience. A home with no heating, full of pests, and faulty toilets is a nightmare no one wants to experience. Not only will your tenants leave right after the lease if you’re a landlord, but failing to maintain your property also means violating Michigan laws that will cause to recipe some financial penalties.

Instead, be more proactive. Keep your rental property well-maintained, stay on top of arising problems, and do everything you can to ensure that your property lasts a long time. The more you maintain your assets, the farther they’ll take you in terms of investment.

Do you have any other property maintenance tips that you’ve found useful? We’ll love to hear about it in the comments section below!

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Landlords

Key Tenant Screening Laws in Michigan

A landlord signing paperwork with a tenant
Photo by Alex Green

There is one thing that will have every landlord quaking in their boots: Professional Tenants. 

If you ever had rude renters you might know what this feels like. They throw parties frequently, leave trash all-around your property, and sometimes even damage the home. So, how can you tell if a renter will be a handful?

Tenant screening is the answer. 

Asking the right questions helps you know if the person you’re interviewing will be respectful, reliable, and take care of the property. But you can’t do it in any way you please. There are some important Michigan screening laws you need to know. To make sure you’re acting fairly, keep these in mind.

That way you won’t step on any toes or face any serious consequences.

In this article, we discuss what Michigan law permits during the tenant screening process, as well as some tips for screening potential tenants. 

Your Rights and Responsibilities as a Michigan Landlord 

The first thing you need to keep in mind as a Michigan landlord is that you are subject to the Fair Credit Reporting Act (FCRA). The law was put in place to protect people’s privacy. This affects a landlord’s access to an applicant’s information. You need to know the following—to abide by the Fair Credit Reporting Act—when screening potential tenant applicants: 

  • Access to an applicant’s credit history is limited – Credit bureaus will not give access to a person’s credit history without having a written consent form from the applicant. 
  • Provide where you got the credit history when rejecting an applicant – If you reject an applicant due to their credit history, you need to provide accurate information about how you accessed their history. You need to elaborate these details the agency that provided their information: 
    • Name of the agency
    • Address of the agency
    • Phone number of the agency
  • You cannot share an applicant’s credit information – you are responsible for securing any information you collect and could be penalized or sued for any potential FCRA violations and identity theft issues. So, you should be very careful with the information you collect. Credit bureaus also do not allow you to share their reports – this means property managers can’t share this information with the property owner.
  • You will be liable for damages if you violate the act – An applicant can seek legal action against you if you don’t adhere to the FCRA, such as in the case of not getting their consent before performing a credit check. 

Additionally, when screening for applicants, you can charge an application fee to cover the costs of background checks and your time & effort. Michigan Law doesn’t have a cap for the amount a landlord can charge for an application fee. You can find more details on tenant screening laws by visiting the Michigan Legislature website.

You should also be aware that the Fair Housing Act doesn’t just fall under Michigan law. It is a nationwide law that prohibits landlords from discriminating against tenant applicants. 

In particular, the law stipulates that landlords cannot deny an application against a “protected class.” Specifically, a protected class refers to a person being treated differently for the following characteristics or attributes:

  • Race
  • Color
  • Religion 
  • Sex
  • Physical or mental disabilities 
  • Familial status 

Now that you know some of the basic laws and acts that apply to you as a landlord, let’s go over the actual process of screening a tenant.

Follow Michigan Screening Laws Right

Michigan tenant screening laws are quite straightforward once you’re familiar with it. Especially since the laws in the state are the same regardless of which city you are in at the time of this article. At the end of the day, these laws exist to make the world fair to both landlords and tenants. If you do it right, it won’t interfere with your business. 

Remember: Following the law is the best way you can protect your real estate business.

And if you’re unsure about your local laws, you can reach out to a property management company for help. We’ve been helping our clients manage their properties in Metro Detroit for decades, so you can be confident that your properties are handled properly and efficiently. 

What else do you want to know about tenant screening? Leave a comment below and our team is happy to answer!

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DIY Landlords

Investing in Real Estate from a Property Manager’s Perspective

Executive Summary

Many real estate investors self-manage their properties and I did too learning from my experience as I went. However, professional property managers have a lot of experience to help both new and seasoned real estate investors make the best investment and property management decisions. I asked my property manager, Jill Powell, of 1st Choice Real Estate, PLLC to share some of her insights into what investors should be considering.

Property Management Considerations Before Purchasing

Interestingly, all of the suggestions from my property manager come before purchasing the property. Thus, education and preparation are key to success in real estate investing. However, from my own experience, there are things that you just cannot anticipate and only experience teaches you.

15 Things to Consider Before Making that Next Purchase (in no particular order)

  1. New property investors should not buy older homes that have been turned into multi-units with all utilities included. These properties are often efficiencies or one bedroom units with transient tenants. You will have sky high turnover and sky high utility bills. Plus, you can’t hold anyone responsible for leaving the junk sofa on the curb that you now have to pay to have disposed.
  1. If you buy in a college town, have the parents co-sign.
  1. Always run prospective tenants’ credit and have a good way to score the rest of the application findings. Make sure the application is complete and all steps followed—no cutting corners or exceptions.
  1. If you don’t have a lot of spare time or don’t enjoy tenant calls at 3 a.m., when their heat goes out in Michigan in the winter, think about hiring a property manager. After self managing at first, I now buy my properties with the intent of having a professional property manager help me run my rental business.
  1. Use a cashflow or deal analysis spreadsheet prior to writing your offer. My property manager has seen many out of area investors pay for inspections only to walk on the deal once they find out what the local taxes will be after buying, local cost of the rental licensing and the true cost of rehabbing the property. It pays to have a professional on your side. I always have my property manager weigh in and be involved prior to making any offers. They are a valuable part of my team.
  1. Use a local Realtor who specializes in rental properties. They can tell you not only what is happening with property values and market rents in the area but also things like is there a moratorium prohibiting rentals in that subdivision, a limit on the number of unrelated persons in a property or a limit on the number of pets a tenant/owner can have in a property in that area. 
  1. Get the details from your lender before making the offer so you have the exact downpayment number as this will affect your rate of return.
  1. Start slow and learn from each property.
  1. Investing in real estate is not a way to earn “passive income.” It is a very time consuming business unless you use a property manager.
  1. Be cautious purchasing rental properties with tenants in place. Ask for a tenant ledger. Ask for current photos or, better yet, inspect all units personally. Look up rental/tenant violations for the property historically. Drive by the property at multiple times of the day to see how the tenants maintain the property.
  1. Research rental rates for the area. Just because the listing says they can get a certain rent doesn’t mean they actually are—verify it against market rents.
  1. Know the local laws regarding “discrimination based on income source” for things like section 8 vouchers.
  1. Decide if student housing is right for you. You will have high turnover, higher costs to get the property ready to re-rent and potential issues locally if the tenants like to party.
  1. Have a good CPA. They can help save you a lot of money and understand the tax implications of the investment.
  1.  Make sure you understand the local rental laws where you purchase property.

Conclusion

A professional property manager is a valuable part of any real estate investor’s team. Even if you self-manage your properties, you can learn from their experience to make the best investment and property management decisions before you buy your next property.

About the Author

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Landlords

5 High-Volume Influential Real Estate Investors to Learn From

There is no better way to become an investor than by learning from those who came before you.

When you are seeing an investment for the first time, it’s easy to get overwhelmed. But if you can learn from a mentor who has been around for a while—one who knows everything there is to handle the trickiest situations—you can be more confident with even the most complex of investment ventures.

So, here are five of the most popular rental investors that you can follow and learn from. We’re incredibly lucky that these experts are generous and open to share their experiences with us—and on a constant basis, too!


Brandon Turner
Brandon Turner is one of the most well-established rental property investors in the United States. As a host of the BiggerPockets Podcast, he shares tons of valuable insights regularly for first time real estate investors. You can also grab a copy of his book, The Book on Rental Property Investing, where he breaks down the basics of how to buy and hold real estate. If you’re just getting started in real estate, this is a great place to start since he covers everything like:

  • Repairing your rental properties
  • Choose quality rental properties
  • Calculating your return on investments
  • And the basic how-tos that are not easy to find

“Remember the story of the tortoise and the hare? While many investors have ‘sprinted’ toward their investment goals, success is most often found by consistent action, not big action.” —Brandon Turner


Follow him on his social media profiles to get more useful tips:
-LinkedIn – Brandon Turner
Twitter – @BrandonAtBP
Instagram – @beardybrandon

Image via Twitter


Gary Keller

Gary Keller is the author of the several best-selling books, most notably, The Millionaire Real Estate Investor. In his book, he talks about the basics of real estate investing, the common myths on real estate investments, and all the things that you should not do. The last bit is especially important if you’re only starting out in the real estate investment industry.

With decades of experience in the business, Keller is a highly respected real estate expert and motivational speaker. As a founder of one of the largest real estate companies in the world, Keller Williams, he’s won several awards over the years. If you want to learn from the best—Gary Keller is one of them.

Follow him on social media to get in touch:
LinkedIn – Gary Keller
Twitter – @kwri
Instagram – @kellerwilliamsrealty

Image courtesy of Wikipedia


David Greene

Another top real estate investor is David Greene who’s been featured in the media on Forbes, CNN, and, of course—HGTV. Since he started out in sales years ago, he’s now gone on to own several properties across the country and is also a host on the BiggerPockets Podcast.

Beyond all that, David Greene has authored several books: Long Distance Real Estate Investing, Buy, Rehab, Rent, Refinance, Repeat, and Sell Your Home For Top Dollar. As his clients often say, Greene has seemingly infinite real estate knowledge. And he’s sharing that knowledge with any and everyone. His popular real estate website, Greene Income, teaches you all about the basics of real estate investing.


Find him on social media to learn more:
LinkedIn – David Greene
Twitter – @davidgreene24
Instagram – @davidgreene24

David Greene Real Estate Expert
Image Courtesy of Forbes

Desiree Patno
Also the CEO of Desiree Patno Enterprises, but Patno was also a founder of the National Association of Women in Real Estate Businesses (NAWRB). She’s got over two decades of experience in the business and has even been featured in magazines, like Entrepreneur. Now, she’s sharing her knowledge to encourage more women to become leaders.

Patno also hosts the podcast, Know the Rules of the Game, where she invites guests to talk about life, equality of course, entrepreneurship. As one of the most influential women in real estate—her advice is worth listening to.
Check out her social media to learn more:
LinkedIn – Desiree Patno
Twitter – @DesireePatno
Instagram – @desireepatno

Desiree Patno Real Estate Investor
Image via Twitter

Barbara Corcoran
If you haven’t heard of Barbara Corcoran, you’ve got some catching up to do. While many know her as one of the sharks on the TV show, Shark Tank—she’s done a lot more than just that. Nicknamed the “NYC Real Estate Queen,” Cocoran started out with just $1000 to start her small business in the Big Apple. Just 25 years later, she turned that small loan ino an over $5 billion real estate business.


If you’re looking for someone whose footsteps you want to follow in, then look no further. She also hosts the podcast, Business Unusual, where she shares her “utterly candid and totally unfiltered” advice with listeners.


Follow her social media accounts to learn more:
LinkedIn – Barbara Corcoran
Twitter – @BarbaraCorcoran
Instagram – @BarbaraCorcoran

Barbara Corcoran Real Estate Investor
Image via Getty Images
So, Are You Going to be Next?


Real estate is a business that can be tough to break into—but following the advice of these experts is a good place to start. Reading their books, podcasts, and blogs will give you an edge and help boost your confidence if you’re a beginner.
With the right mindset and a little effort, maybe we’ll be writing about you next!

Still not enough? We also have another list of Influential Real Estate Investors where you can find more experts to follow and learn from.
Who inspires you the most? Leave us a comment below!

A—but following the advice of these experts is a good place to start. Reading their books, podcasts, and blogs will give you an edge and help boost your confidence if you’re a beginner.
With the right mindset and a little effort, maybe we’ll be writing about you next!

Still not enough? We also have another list of Influential Real Estate Investors where you can find more experts to follow and learn from.
Who inspires you the most? Leave us a comment below!

Categories
Landlords

Why Cheap Houses Aren’t Always Profitable and How to Buy Ones That Are

If you’ve been participating in real estate forums and websites for a while now, you’ve likely noticed that new investors are often interested in buying the cheapest house they can find. In addition to getting a better Rent-to-Price rate, they believe that buying cheap will save them money on closing costs and property taxes. But there’s much more to investing than the purchase price of a home.

Cheaper houses may seem appealing on paper (or laptop screens), but it’s important to consider all the implications that come with them. And if you still decide to buy one, you need to understand what you’re getting yourself into.

Otherwise, you risk buying an asset that actually loses you money instead of bringing in a profit. 

Why Cheap Houses Are Rarely the Best Idea

The term “cheap” is relative to your perspective and can vary from market to market. Even so, whether it’s buying a home for $40,000 that rents for $700 or anything similar, buying cheap homes goes against these four pillars of conservative investment.

The 4 Pillars of Real Estate Investing

These are the crucial pillars you need to be aware of when purchasing a property:

  1. Capital Preservation: As a conservative investor, you want to protect your money and avoid loss within your portfolio. In exchange for large returns, you prioritize investment security and stability.
  2. Stable Cash Flow: You want to have the assurance of positive cash coming into your investment business. This way, you’ll increase your assets and have the funds for daily operations.
  3. Appreciation or Equity Gains: Aside from cash flow, you also want to gain equity as your property increases in value over time. This allows you to make a profit once you decide to sell.
  4. Tax Benefits: The biggest tax benefit of purchasing real estate is in the form of deductions. These come from property tax, mortgage interest, repairs, operations, and depreciation.

Why are cheap properties against these pillars? Well, it’s because they tend to come with a host of problems, some that you might not have considered. Here are a few problems and limitations you’ll face when going with a cheap property:

  • They’re located in areas leaning towards economic decline.
  • They have poorer tenant payment performance, leading to higher eviction costs.
  • They have higher tenant turnovers and RentReady costs.
  • They often come with underlying deferred maintenance issues.
  • They are harder to insure, since the cost of replacing the property often exceeds its insurable value.
  • They are difficult to secure lending for.
  • They come with limited exit strategies.

These reasons show why buying cheap isn’t always the smartest strategy. Going for a slightly more expensive property (like a Class C instead of a Class D) might take a bigger chunk out of your savings upfront, but it’s often a smarter choice in the long run.

Of course, if you’re still planning on purchasing a cheaper property, here are some factors you need to prioritize.

How to Approach Buying Cheap Properties

Not all cheap homes are traps, but you’ll need to know how to spot the good ones. You don’t want to end up with a decrepit building that eats up your savings. So, when buying cheap properties, make sure to do the following:

  • Invest in Up-and-Coming Areas: Cheap properties are often on the outskirts of town, so ensure that it’s an up-and-coming neighborhood with a growing population and economy. This way, the property will retain its value and increase over time.
  • Anticipate Necessary Repairs: Since cheap homes often come with underlying problems, you should work with a professional inspector and licensed contractor. That way you can easily manage the complications and accurately estimate necessary repairs.
  • Check the Neighborhood and Tenant Pool Class: Ensure that the area attracts quality renters who will follow lease agreements and take care of your property. Cheap properties are often in lower-class neighborhoods, which means lower-class tenant pools, as well.
  • Run the Numbers: Conduct proper real estate analysis to ensure that the numbers make sense. Here are a few calculations to get started:
    • Net Operating Income (NOI): This number should show a favorable balance of income and expenses. Compare the NOI to similar properties in the area to see if you’ll also have high revenues and small expenses. 
    • Cash Flow: How much money will you pocket? The monthly rent you can charge should be 1% or higher than the purchase price to indicate strong cash flow generation. Buying a cheap property that can only demand so much rent defeats the purpose of investing in one, as you won’t have the rent-to-price ratio you expected to enjoy.
    • Cash-on-Cash (COC) Return: The higher the COC, the more the property can pay for itself. A good rule of thumb is to have a COC that’s higher than 10%.
  • Have a Great Management Strategy or PMC: It’s relatively easy to manage Class A & B properties because the tenant pool is higher demographic. Class C & D properties on the other hand, require a LOT more attention to be successful. You’ll need a solid plan to handle the inevitable tenant issues or hire a great (not just good) property management company. 

There are many other calculations to run, but these three should get you started on the right foot.

Conclusion

Cheap properties can create significant profits and become excellent investments when done properly. But if it only sinks you into debt, you might look back and wish that you spent your money on a safer investment opportunity instead.

As always, we suggest you do ample research and consult with other investors. When you do go with cheap property, make sure your purchase gives you results that are worth the risk.

What’s your experience with buying cheap properties? Share your tips below.

Categories
Landlords

Do You Have to Allow Emotional Support Animals in Your Rental?

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Many landlords don’t allow any pets in their rentals.

Usually, it’s because the pets might destroy the home and jack up property maintenance costs with broken lamps, scratches on the wall, and leaving their smell in the carpets and furniture… These make renovations a hassle for landlords and also eat into the tenant’s security deposit—and nobody wants either of those.

But what about emotional support animals (ESAs) and service animals? Should you allow them in your rental properties? Conversely, is it legal to ban them from your rental properties, if you want to?

The answer is complicated because ESAs and service animals are technically not pets in the eyes of the law.

This doesn’t mean that you need to accept tenants with ESAs and service animals. However, it still prohibits you from denying applications due to animal assistance or implementing pet policies on the tenants.

With many regulations surrounding the topic, this article summarizes the important laws landlords need to know from the three following authorities:

We’ll show you the landlord obligations these governing authorities have and guide you on how to approach tenants with ESAs or service animals.

Laws Surrounding Emotional Support Animals & Service Animals

ESAs and service animals are legal assistants for individuals with disabilities and special conditions based on the FHA. Though they seem similar, there is a nuanced difference between the two animals. While ESAs are companion animals prescribed by a mental health professional, service dogs are assistance animals trained to do specific tasks that help a person with disabilities.

As a landlord, you don’t need to concern yourself over differentiating between the two. The bottom line is that both are considered medical devices instead of household pets, with similar laws that protect them.

Since they’re medical devices, these are some of the implications for landlords:

You can’t discriminate against them.

Rejecting an applicant just because they have an ESA is a type of discrimination. Even if the reason is that they did not disclose their ESAs before your approval (which they’re allowed to do), you’ll find yourself in a lawsuit if you try to rescind your approval.

The only time you can refuse is if the animal poses a direct threat to the health and safety of others. Even then, you’d need to show proof that they are indeed a threat, beyond their breed or size. 

You can’t implement pet policies.

When it comes to tenants with ESAs, you can’t implement pet policies against them, because they’re still medical devices, instead of household pets. So even if you are allowing pets in your rental, you can’t charge these medical devices with extra rent, a pet deposit, or fees to cover possible property damages.

Think of it this way: You can’t charge a wheelchair fee to a tenant just because it might scratch your hardwood floors. Likewise, you can’t charge an ESA or service animal fee, either.

You can’t decline reasonable accommodations.

Regardless of your pet policies, you may have to make “reasonable accommodations” for tenants who rely on their ESAs. The situation is similar to how the ADA requires rentals to accommodate wheelchairs. 

There are a lot of reasonable accommodation requests tenants with disabilities can ask for. Still, one of the most significant impacts to landlords is the obligation to waive any no-pets policies for tenants to live with their ESA or service animal.

The process typically goes like this:

  1. A tenant who is blind approaches a landlord with their seeing-eye dog.
  2. The tenant asks for reasonable accommodations on the rental property, such as lower doorknobs and light switches for their service dog to reach with its mouth.
  3. The tenant waits for the landlord’s response. Landlords must act promptly, as an unjustified delay is equal to failure to deliver reasonable accommodation.
  4. Landlords evaluate requests on a case-to-case basis, but always with the criteria that the accommodations should bring tenants closer to an equal opportunity to use and enjoy the rental.
  5. If the accommodations are reasonable, the landlord is then required by law to grant the tenant’s valid requests.

Another point to note is that tenants with disabilities are allowed to make property modifications for full enjoyment of the premises. For example, they can open the closed patio for their emotional support labrador to leave home and look for help in case of an emergency.

As the landlord, you won’t have much control over justified fixes that help a tenant function better with disabilities. While it might seem inconvenient, think about it this way instead—by making your unit more accessible, you’re actually expanding your potential tenant pool in the future. You’re also within your rights to make the tenant revert the unit back to its original condition upon MoveOut (at their own expense).

Conclusion

After scanning through laws and requirements, it seems that the simple answer is yes—you do have to allow emotional support animals into your rental property. And if you don’t, you could face some unpleasant repercussions. 

The main reasons are that:

  • The law prohibits you from discriminating against and denying tenants who have ESAs.
  • ESAs are medical devices that tenants with disabilities need and rely on every day.
  • ESAs are part of “reasonable accommodations” that landlords are mandated by law to grant.

Stay on the right side of the law and be more compassionate towards people with disabilities by welcoming ESAs and service animals as extensions of their owners—your potential renters.

Do you have any other reasons to allow ESAs and service animals in rentals? Drop your thoughts below!

Categories
Landlords

Top 11 Amenities Renters Can’t Resist

Everyone hates going to the laundromat. Lugging a bag of dirty clothes to a laundromat even only 10 minutes away is the kind of hassle people want to avoid. And once you have the luxury of in-unit laundry, it’s hard to go back. 

When you’re trying to make a rental unit more appealing to potential tenants, you need to keep in mind what they’re looking for. For some tenants—it’s in-unit laundry. 

Every renter has a specific thing they want in a home, whether it’s granite countertops or hardwood floors. Whatever it is, highly-requested amenities are often deal-breakers. And these days, search filters on websites are getting increasingly specific.

When tenants search on popular real estate websites like Apartments.com, Zumper, RentCafe, or PadMapper, they have plenty of filters to choose from. As a landlord, you need to know exactly what makes your rental irresistible to potential renters. 

Writing an excellent listing and taking high-quality photos can help, sure, but the key to securing long-term tenants is by giving them a place with something no others have. They may even stretch their budget if it means they get to have the rental of their dreams.

So, without further ado, let’s dive into the top amenities renters just can’t resist.

11 Amenities and Features Renters are Searching For

These eleven items come from my experience running a property management company as well as data from industry-standard websites: Zumper and Apartments.com. In other words, you can be confident that these are the kind of features you want to use to attract interested renters.

  1. Air Conditioning: Heat and air conditioning come at the top of the list according to Statista. The law doesn’t require cooling systems, but many tenants want it. Not surprising given that a large part of the US gets hit with sweltering temperatures throughout the summer. After all, nobody wants to be stuck lying awake at night with loud fans blasting beside them.
  2. Central Heating System: On the flip side, many different regions of our country also deal with the coldest of winters. While all states require heating systems, they don’t require central heating—which is what most renters prefer, according to Zumper.
  3. Plenty of Parking Spaces: Another one of the most searched items is parking. Renters want to have a parking space reserved for them and others when they invite over company. Assigned parking is especially popular in urban areas where space is limited, and covered parking is sought-after in places that get rain or snow all year.
  4. Flexible Pet Policies: If there’s one thing we all have in common, it’s that we love our pets. Most of us have one, too, as a survey showed that 96% of Americans had pets before, and 72% of renters still have pets! If you’re not allowing pets into your rental, it may be time to reconsider.
  5. Dishwasher: As they say, the kitchen is the heart of every home. So what do renters look for in a rental? A dishwasher. It’s even the 5th most popular amenity according to the same 2021 survey from Statista. Even Zumper reports “dishwasher” is one of their top 10 most-searched terms.

By buying a mid-range dishwasher for even $500 to $1000, you can up the monthly rent by $50 or even $100 per month and make it back shortly—especially since a good dishwasher should last about 10 years. If your unit is on the smaller side, there are still options like countertop dishwashers that can attract tenants too. 

  1. Outdoor Spaces: Something that was a “nice-to-have” before is now a “must-have” after the pandemic. Zumper saw the search for “outdoor space” catapult by +143% after COVID-19 meant many of us were trapped indoors. Terms like “roof deck” and “balcony” also increased as people realized the importance of having accessible fresh air and open spaces.
  2. In-Unit Laundry Equipment: While others may argue that doing laundry is relaxing, Zumper data indicates that most renters want to turn an afternoon in the laundromat into a press-and-wait task at home. 

Having an in-unit washer and dryer in your unit makes their inevitable chores more convenient. It can even allow you to charge $100 more on rent! Especially when considering they cost anywhere from $300-$2,000 each, it’s logical that the rent will go up to cover the cost.

  1. Hardwood Floors: Nobody wants a carpet that reeks of pets or spilled liquids. They’re a pain to clean, and expensive when they need to be replaced. Instead, renters want beautiful hardwood floors that look better, last longer, and are easier to maintain than shag or wool.

Of course, if you’re going to splurge on flooring, you need to be sure you’re renting to tenants that will take care of it. Otherwise, you risk an even more expensive renovation. For C and D rental properties, this might not be the best choice.

  1. Furnished Homes: People hop from one city to another way more than before, which translates to a higher demand for furnished rentals. Not only is lugging furniture a hassle, but moving can cost up to $2,300—more than two month’s rent in the City of Detroit. 

If you do decide to go the furnished route, be sure to get it insured in case anything goes wrong. It also opens up the opportunity to charge far more if you accept short term renters, but it will still boost the price for long term rentals too. 

  1. Granite Countertops: While this is not a necessity, it’s a luxury that many enjoy. An updated kitchen is especially attractive to younger renters, since 76% of Millenials say that they enjoy cooking. Boosting the value and the appearance of the kitchen will help you stand out in a competitive rental market.
  2. Modern Appliances: If the toaster is old and broken or the microwave is stained or smells, it’s probably time to upgrade. Small changes like this can be a great way to subtly impress a potential tenant and help them justify their monthly payments. 

Of course, sometimes things can go missing or be taken, so this will depend on the type of property and type of tenant. If you’re renting out a high-end apartment to working professionals, then it makes sense. But, if you’re renting a basement suite to university students, then you could skip this.

Conclusion

These eleven amenities mean you have plenty of ways to entice prospects into renting your property—and maybe even increase your profits.

Keep these home features in mind when you’re upgrading the rental, revamping advertising materials, or expanding your portfolio to include more properties. They’ll give you a far more competitive edge in the market and attract serious renters looking for a perfect match.

Any other highly-requested amenities we’ve missed? Comment them below!

Image courtesy of Patrick Perkins

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