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Single-family Vacancy Rate Drops to 1.4% | Property Managment
When foreclosures are high and sales are slow the demand for rental housing increases. Performance Property Management is helping homeowners. Continue reading
Performance Property Management Company | Property Management Denver
Property Management in Denver. If you want high return on your real estate investments don’
It was once quoted, “Live where you like to live and invest in real estate where it makes the most sense.”
Enjoy my animated video spoof on real estate investing by Trump – Kiyosaki
Video tips for real estate investing for profits
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Net Operating Income
Net Operating Income
One very informative way to evaluate one investment property from another is using the capitalization rate method. First you will need to calculate the net operating income.
Definition – Net Operating Income is income after deducting for operating expenses but before deducting for income taxes and interest.
Find out where the income is going
First gather all your expenses by calling utility companies for average usage of gas (or heating fuel), electricity and water and sewage fees for the past 12 month period. Check public records for tax information and call local governments for any required license fees. Estimate maintenance of the property (maintenance does not include capital improvements). This is less for newer properties and higher for older properties. For a brand new home I use 3 to 5% of gross rents and for a 50 year old property that has not been updated and has old fixtures I would use 20% to 25% of gross rents. This percentage will largely depend on your labor costs. Also, factor a vacancy rate depending on your area which can range between 5% to 20%. Don’t forget this vacancy factor should also include loss of rents due to non-collectible rents. The more accurate you are on your expenses the more accurate your net operating income will be.
Call Performance Property Management for all your property management needs at 303-351-8005.
Remember www.PPMrentsDenver.com
Author: Jerry Minney, Business Development Manager
Performance Property Management
303-351-8005
We will help you figure out your net operating income!
Posted in Real Estate Investing Tips
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Good Value vs. Undervalued
Good Value vs. Undervalued
Good value vs. undervalued, is there a difference?
Real estate investing is no different than buying stocks or commodities or any investment. The goal is to buy low and sell high. No big secret. So, how to you know that a real estate investment is a “Good value” or “Undervalued”?
Here’s the difference…
Let’s say you think a stock for a company is ripe to expand within the next few years. You are speculating that the value of the company will increase, so you buy at market price and hope you are right. You can also buy a property at market price and hope demand will increase and thus its value will go up. You can buy gold at today’s price and hope it will go up in price. However, in all cases you are speculating that the asset will increase in value and that it is currently undervalued for whatever reason.
What determines a “good value”?
Compare this thinking to buying a property at a good value that is below its current market value. If a house is worth $250,000 based on similar houses that have sold recently, the market value is $250,000. It may be an “up and coming” neighborhood with a good school district that most people have not yet discovered, so you can buy it for $250,000 based on the idea that the future value will be more, so it’s currently ”undervalued.”
Or, you can buy a property with a current market value of $250,000 and pay $150,000, in which case you are buying below market value, or with built-in value. Why is there built in value? Simple – you can sell it tomorrow for up to $250,000! If you buy real estate undervalued, you have to wait until everyone else realizes what you suspect to be true, that the property should be worth more.
Look for the “value”
Certainly, buying property that is undervalued can make you money in that you are speculating future demand will be higher and prices will increase for that asset. But, a safer, smarter approach is to buy under value because a particular seller has some motivation, such as a foreclosure, estate sale, or the property needs repairs or it is a multifamily property that is mis-managed. Instead of looking for “value plays”, look for value built-in which can always be found when a particular seller has extreme motivation and needs to sell quickly.
Jerry Minney, Performance Property Management
www.PPMrentsDenver.com
12/11/20010
We can find the “good value” for you!
Posted in Real Estate Investing Tips
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Putting forth your best effort… | success
Fear Leads to Inaction, which will not get you to success
Many people who are not producing results in their real estate careers and are reading this are prone to inaction because of fear of doing it incorrectly. Remember, it’s not a matter of doing things perfectly, but putting forth your best effort and having faith in yourself that you are putting your best foot forward. Be prepared because everyone falls every now and then. We have to surround ourselves with a good team for support and have faith that if we keep ourselves educated and continue taking actions in a positive manner that we will achieve positive results. As I discussed in other articles, a lot of action taken at the “C” level of accuracy beats taking fewer actions at the “A” level. Continued perseverance leads to success.
Staying on the right track can help you reach success
Lack of knowledge certainly makes it difficult to invest in a slow market, and in fact is probably the single biggest drawback for the average person. Most people only have the opportunity to sell a few houses in their lifetime and often rely on professionals to do the work. Thus, the average home seller does not have enough practice to get really good at the job. In fact, most real estate agents who sell houses for a living are hardly good at it. The top 5% of agents in any market do the vast majority of successful business. Until you are in that top 5% you need a good team that has that experience to keep you on the right track.
Success by numbers
Taking the time to learn what to do is a very important part of the success in real estate investing. In the classic book “Think & Grow Rich”, Napoleon Hill writes about the importance of learning the right things. He distinguishes between general knowledge and specialized knowledge. Certainly, there’s a lot of general real estate knowledge in bookstores and floating around the Internet, but you need to be in a group to learn and continue learning because as soon as you get it figured out things will change. Our experience in real estate investing and property management will reveal the very specialized knowledge you’ll need to achieve the results you want.
Jerry Minney, New Business Development Manager/Consultant
Performance Property Management, Inc
12/10/2010
Let us help you reach that success story.
Posted in Real Estate Investing Strategies
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The media and you…
Don’t Believe Everything You Read in the Media
There’s an old expression in the media business, “If it bleeds, it leads.” In other words, the media loves to cover negative news more than positive because negative news sells. When the real estate market is in turmoil, the media loves to run these negative headlines to keep reminding people how bad things are. When people hear the bad news, it affects purchasing demand because the negative news drives fear, which makes buyers worry about whether the time is right to invest in the market.
What affects can the media have on the market?
Is the media simply reporting the news or does the media actually affect the news in this regard? The answer is obviously both. The media reporting negative news alone can’t shape a real estate market. However, since perception is often reality, when the public is spooked, potential buyers may shy away from investing in the market. This affects lenders, builders, real estate agents and other professionals who rely on the real estate transactions for their income. It becomes a self-fulfilling prophecy because things get worse and then the media reminds us how bad things really are.
Do not just accept what you see in the media, do your own research.
Are things really as bad as the media reports? At the time of this article (December 2010) the numbers certainly do reflect falling home prices and rising foreclosures. When you hear that foreclosures have doubled or even tripled in a particular area, this may sound catastrophic at first until you realize that the majority of are NOT in foreclosure. Despite the doom and gloom, there’s always a buyer for a well-kept home offered at the right price and terms. In short, don’t listen to the negative media if you want to keep a positive attitude and certainly don’t make your investment decisions based on media reports only.
Learn to use the media to your advantage.
In a good real estate market, people can sell a house or apartment building fast, so when things slow down, they figure, “Oh well, there’s nothing I can do.” Nothing could be further from the truth. Not only is there something you can do, but there’s a lot you MUST do to get your property sold. However, it’s not just about working hard, it’s about working SMART. You need to plan your actions in the right order and implement them in the right way to get the proper results.
There is wisdom in the council of many. Surround yourselves with a good team and get good council.
Jerry Minney, New Business Development Manager
Performance Property Management
12/10/10
Let us make the media work for you!
Capitalization Rate
Capitalization Rate
One very informative way to evaluate one investment property from another is using the capitalization rate method.
Capitalization rate (or “cap rate”) is the ratio between the net operating income produced by an asset and its capital cost (the original price paid to buy the asset) or alternatively its current market value. The rate is calculated in a simple fashion as follows:
Call Performance Property Management for all your property management needs at 303-351-8005.
Remember www.PPMrentsDenver.com
Author: Jerry Minney, Business Development Manager
Performance Property Management
303-351-8005
Posted in Real Estate Investing Tips
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Buy a House, Get Thrown in Jail? | foreclosure, real estate investing, property management
Foreclosure Concerns by Attorney William Bronchick
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- Go to jail
Over the past two years, a dozen states have passed foreclosure “protection” laws, and many states are following suit. Even in states where there are no specific foreclosure protection laws in place, there’s plenty of power within the state Attorney General or County District Attorney’s office to prosecute a real estate investor.
Here’s some of the things you need to do to stay out of foreclosure trouble:
GET ALL AGREEMENTS IN WRITING
Oral agreements are not good anymore, and they often lead to a dangerous “he said, she said”. If you get a deed from an owner across a kitchen table, it is a legal transfer, but you should document everything first with a contract and/or set of good, clear disclosures. These disclosures include the fact that the owner is losing his property, his equity, and his right to any proceeds from the home. Although giving a deed should make this obvious, some people truly think that they are entitled to something more because they are still living in the house. Also, some investors do offer vague promises to sellers for a right to re-purchase the house at a later time, which can be misconstrued. Always document every agreement you have with the seller in writing.
EXPLAIN THINGS IN PLAIN ENGLISH
Even though you have a good written disclosure, it’s no excuse for pushing papers under the seller’s nose to sign without reading. Explain everything clearly to the seller so he understands the implications of the deal. If you are afraid of telling the truth, don’t do the deal. The seller must go into the transaction with his eyes wide open. Imagine that the local news station was filming your deal and act accordingly.
Call Performance Property Management for all your property management needs at 303-351-8005.
Remember http://www.PPMrentsDenver.com
Avoid the uninvited foreclosure.
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Locating Good Real Estate Investment Properties | real estate investing
Quickly evaluate and locate good investment properties
One simple rule of thumb I have used for quickly evaluating a good rental property is what I call the “100 X multiply rule”. Here is how is works.
When you get your list of properties your considering take the average rents based on number of bedrooms, location, etc.
After you write down the rents either actual or projected, then multiply the rent by 100. This will give you a maximum purchase price that you may want to pay for this home. Then compare your maximum price with the price the seller is asking and narrow your list down by working on the properties that are closest to your maximum purchase price you are willing to pay.
Here is an example:
Duplex, asking price is $170,000
2 bedroom rents for $750/month
3 bedroom rents for $850/month
$750 + $850 = $1600 X 100 = $160,000.
Based on a purchase price of $160,000 with a 25% down payment and a 30 year fixed rate loan of 6% your cash flow would be healthy.
This is not the only method for evaluating rental properties but is a quick easy way to compare one property from another without spending too much time.
Call Performance Property Management for all your Denver area property management needs at 303-351-8005.
Remember PPMrentsDenver.com
Author: Jerry Minney, Business Development Manager
Performance Property Management
303-351-8005