Rental properties- a beginner’s guide – Dc Fawcett Real Estate
When it comes to real estate, the main objective of almost all realtors, investors is to put money to work today and see it grow in the future without much effort.
The ROI must be an adequate amount and it should be enough to cover:
- Risks that you take
- Taxes that you pay and
- The cost of owning the investment property together with additional expenses like utilities, regular maintenance, and insurance.
Abstractly,Dc Fawcett Real Estate investing really can be as simple as a walk in the park, if you are making some efforts to understand the most underlying factors of the investment, economics, and risk. With that said, you should know that it is simple but not easy. If you are lethargic, then based on the mistakes that you commit, the penalties may show a discrepancy from negligible hassles to major disasters. But at the same time, you should know that could noteworthy mistakes will make you bankrupt or worse.
Buying rental properties may not be everyone’s dream, but definitely, a whole lot of people out there like to invest on them. For it, you should know which type of real estate investment is suitable for you and which one you should be making. When you are done with the thought process and all set to initiate the progression of real estate investing, it is vital to settle on which type of real estate investment is appropriate for you.
In order to help you be aware of the available options, I’ll be sharing another article which will help you understand which type of real estate investment is suitable for you whether industrial properties, residential investments, etc. Alright, now gets into the beginner guide for rental properties.
Pros and Cons in owning a rental property – DC Fawcett:
There are certain advantages and disadvantages in owning a rental property. Now let’s look at both of them.
The advantages in owning a rental property:
Compared to other forms of income the advantages of owning a rental property is less. However, everything goes on in the appropriate manner, you can earn a huge sum from this stream of income.
You will be having the benefit of a direct income flow through a rental property. The monthly paychecks will give you an income that you get when you don’t mostly carry out any work. In cases the mortgage is lower than your sum got for rent there will be the advantage of a surplus.
All the form of investments comes with a risk and so does owning a rental property. But once you go with this, you may get some reward out of it. The property will see appreciation in due course and your equity investment is balanced. There is also the chance of getting considerable tax break. At the case of selling off your property these two aspects will boost your income. This may also happen when you refinance the property.
You will upgrade and maintain your property. The value of the property will be enhanced during this course action and this is called sweat equity. You may involve in repainting the property etc. to improve the value of the property at a reasonable financial cost. This will be useful when you sell it at a later stage.
When you are owing and having control of your rental property there is the advantage of independence attached to it. But again you will not be able to earn your livelihood through the profit gained from just one rental property. Having said that, many prudent investors own and manage a huge number of properties which in turn requires lot of commitment and hard work. But the key is that they are in a situation to act out independently.
The disadvantages of owing a rental property
Sometimes the tenants will leave the place in such a mess that you need to repaint it. You may be also put in a situation wherein you have spend lots of money to make the property retain its original attraction. Sometimes the tenants will even escape from paying the rents.
Not only do you need to have some cash for buying the property but should also have some money to manage it. If the tenant has put your property in a mess you may require lot of money.
The tenant is on the advantageous side when you don’t carry out the required repairs. This may be owing to your financial woes. But here then the law is favorable to the tenant only. It becomes essential to consult a lawyer who is expert in real estate to go through your lease.
There are risks for a rental property including the vagaries of the market. The property may see a depreciation, a succession of bad tenants etc.
Do clarify the questions regarding tax with your accountant.
Dc Fawcett Gives Some tips on how to purchase your real estate investment properties:
There are quite a few ways that you can contemplate on, if this is your very first attempt, and then you can bring in some debt by taking a mortgage out against a property. In general, it is the use of leverage that creates a center of attraction for many real estate investors for the reason that it lets them get hold of properties they or else could not come up with the money for. On the other hand, employing leverage to purchase real estate can pose several threats in a market that is falling completely or otherwise where the interest expense and other timely payments can drive the real estate investor into bankruptcy if they aren’t cautious.
Dc Fawcett Virtual Real Estate Investing club exists to help you figure out the hindrances in virtual real estate investing. You will get to know about the strategies and by this means, you can start real estate investing part time and start cashing checks for $5,000-$10,000 with Zero Money Invested and without using your credit. Educating real estate investors with his unique strategies, learn more about DC Fawcett real estate programs to unearth success in the field of real estate.
Suggestions when buying your first investment property
Many people who have invested in the real estate have turned affluent. So, real estate investment might seem a viable option. But, you need to contemplate much before you make any move. DC Fawcett says that Purchasing the first investment property is not an easy task. When you carry it out smoothly, investment in property could produce a steady income.
Browse through a number of properties:
Some investors just make a speedy skimming through the property in the vicinity, and they dive head first into the deal. It is to be noted that these people are spending more than the actual value of the property.
You need to thoroughly go through many properties in the vicinity, and also in other areas before you choose a property. You need to come to terms with the worth of the property, and you need to make sure that it helps you attain your monetary ends. Skimming through hundred properties might seem like a lot. But, as the internet plays a major role, it is much easier to browse through a number of properties. There are a number of websites which enable easy search for properties. Do a fair study, and browse through a lot of properties before buying one.
Do not become emotional:
Being emotional plays a major role in the purchase of the property, and it could hinder the process of selecting the right property. You will end up paying more than the actual value of the property. Usually, sane decisions are not taken when the emotion overtakes. The fact being that it is your residence, there will certainly be a role played by the emotions. But, take the investment as a financial transaction, and consider it like purchasing stocks.
Make way for investment goals:
You have to set a financial target before you go for acquiring a property. Some people cannot actualize on what property would yield them fruitful results.
It is not a sane decision to choose a property which has not been maintained well. This is particularly the case when it comes to earning a passive income. Ending up buying a property in the rural area is not the desirable out come if you want speedy capital growth.
Setting a financial goal helps you self-actualize and understand what your needs are. You can buy properties that adhere to the goal.
Putting investment into property is a sound decision when you want to acquire profitable returns.
Do not hasten:
When purchasing the first investment property, some people tend to be impulsive and they get excited. Also, they desire to purchase property as soon as they can. But, understand that the market is there always, and properties for sales are always accessible. Do not go out and pay an exorbitant sum on a property which is not going to get you the profits. Take sufficient time for the research of the property when you are purchasing property in vicinity that you do not know.
Make a thorough research in the area:
You might be residing in the area for quite a long time. But, that does not imply that you have a full understanding regarding the property. And, you have to understand what the property is going to yield in your desired area.
Make a comparison with other properties in the area and understand what the rental returns are. Go for a property that is desired by everyone in the area
Real estate investing formula for flipping and renting properties: – Dc Fawcett Reviews
Are you planning to flip or rent your property but don’t know how to go about it? If it is so, your search for the guidance ends here. Before you make an offer on a property and approach a lender, you need to be aware of the terms of engagement before getting into the deal else, you may sell the property less than the expected amount.
DC Fawcett gives you the Real estate investing formula for flipping and renting properties.
Real estate investing formula for flipping and renting properties
Although you might have purchased the property earlier, investment in real estate is different from buying a house for yourself. Buying a personal house is a more emotional undertaking as you would have felt proud that you have purchased a property in your name but it is equally painful to part with it in times of emergency wherein you need money. To succeed in this field, you need to understand the basic formula and research on the market which is the most important factor. Once you have got the amount in place, flipping the property becomes easier.
Maximum Allowable Offer (MAO) helps you to determine the exact price to be paid for buying or selling the property. It is generally considered as 70% of the After Repair Value (ARV) and the investor cannot pay more than that of the after keeping an account for the cost of your funding repairs, holding costs and resale commission and costs. Below is the example
You can break 70% rule on the following conditions
- Resale fees s exempted when you get a guaranteed in-built buyer.
- When your cost of money is lower or you can access cheap cost.
The wholesaler uses this formula but adds the wholesale fees. They will set to 65% of the rule including their fees. In this case, it will be 1, 50,000 x .65 which results to $97,600 as a maximum allowable offer when you wholesale.
The other way of 70% Rule
All the investment properties that are fixed and flipped, needs a different amount of time, cash, and considerations. The 70% rule is the basic thing which builds up 30% profit margin and can be a great rule of thumb. However, the investors would look out for the property that can be easily flipped, ignoring the 70% rule.
Net Operating Income
The investors who are looking for the cash flow and the benefits of building wealth through passive rental income use net operating income (NOI) formula to derive the how much leverage is needed. The basic NOI formula is used when you purchase or refinance a rental property. NOI is calculated in the following way.
Marketing Rental Properties In Real Estate – Dc Fawcett Tricks:
What does real estate mean to a layman?
There are lot of things attached to it but they will be thinking about properties that are put for sale. Landlords are given a big task of marketing these houses and with regard to this he has to invest in a substantial effort. Having said that, there are lot of differences between for-sale and for-rent.
Tips for marketing rental properties
There are different methods of advertising and marketing your rental property. When you want to keep up long-term tenants you can seek some options.
Being a landlord, Internet is a direct channel for the communication between the landlord and tenant. Though there are several sites dedicated to posting listings you should be in a position to know which one is best to assist you in the process.
When social media is used in the right sense it can bring great success to the landlord. Facebook and Instagram could also have some influence in certain markets.
Take time to obtain excellent quality listing images. Potential clients will get to know about the property and those who are not interested will not consider it. When the images are interesting they can also be used in social media.
YouTube is also a good option. Both the individuals who are just curious and those who are keen on renting the property will be helped through this. But it is necessary to develop a professional and standard video the shows your rental in its best form.
Though there are different ways available to market your rental property, word of mouth has not lost its effect. You can involve in providing referral incentives to the people who are close to you including your friends, family members etc.
What is that differentiates you from the property at your neighborhood?
You can involve in providing a free gift etc. There are some innovative things also that you can work upon like a hotel gift card.
What is the first thing that people who come to your place see? It’s surely the yard. Seeing the exterior of the house also they will come to a conclusion. So you can engage in doing some nice things like planting the flowers etc.
Research on what your target wants and venture on advertising anything that is corresponding to their wants. They may desire for a neighborhood park. The prospective tenants should see you shining in the crowd.
When you opt for long-term success you should be reputable for providing honest and valuable details. You can interact with others through a blog, monthly newsletter etc. Make people informed about good causes and initiate engaging interactions.
Though this is a digital era physical sign hasn’t lost it value. People will be attracted by flyers too. So you can make use of excellent quality signs. Your presence will easily be strengthened through this.
You can even market your rental property through local bulletin boards. Bus stops, shops etc are some of the places where you can advertise.
Making a profit via sale of investment property – Dc Fawcett Real Estate:
Property is by no means a trivial investment. Every step you consider pertaining to your portfolio should adhere to the comprehensive goal of the portfolio. If you mission is to gain money, selling off an investment property is reasonable.
Selling off your investment property is not as easy as selling a stock. When you are in the process of selling your own home it can be daunting when you are not aware of where to commence. In fact selling off an investment property is also par to the process of selling off your home. The capital issues as well as the tax implications add more difficulties to the sale.
Now let’s see some of the factors that are important so that you can make a profit out of your sale of investment property:
- You will first list your property for sale. Here then, confirm whether you have looked up all the possibilities so that it makes a good sale. You may be having different reasons to part off you with property but be cognizant of the tax concerns which will eventually burn some extent of your income.
- Real estate investors are those who are mainly interested in investment properties as far as promotion concerned. But this doesn’t mean that the other types of purchasers are not interested in your property. Your property might have given use to you to give you a stable profit. This would have been done through rent. But again there are different types of purchasers too who would be the target of the deal.
- A real estate agent comes to the aid of you and will help you in expanding the options as far as promoting your house for sale is concerned. By this you have keen interest in the property and get in a substantial deal.
- When you possess investment property, capital gains is one of the many major benefits. What is its main benefit? These gains are taxed at a lesser rate and there are no fixed limitations on the frequency of utilizing these rates. At the time of selling your investment property you will have the responsibility to pay a capital gain tax. You would be paying a tax when your primary property is being sold off. The capital gains tax is in fact more than this tax.
- You can avoid expending money on capital gains on the income generated from the sale of your investment. This is done by using the escrow which is utilized straightaway to buy another investment property. There is a section IRS 1031 which gives the benefit of this tax deferral.
- For instance you have taken the help of property managers to assist you in dealing with your portfolio of income-generating properties. Here then you can use incorporation to get the benefit of more advantageous tax rules. But again if the investment property falls under your corporation your means of monthly income will not be simple.
- While selling off your investment property if you do it at the right time and with appropriate methods, you would surely get a substantial profit.
DC Fawcett VREIC is a real estate entrepreneur come trainer, helping all real estate fervents to achieve their goals by means of his seminar and camps. In addition, he also teaches how to develop a real estate business and produce different income streams.
Dc Fawcett, the founder of the Virtual Real Estate Investing Club, gives a fair idea in his blogs about going for the Rental properties. Also, one could go through these blogs to understand the real estate scenario better.