Is Now A Good Time To Buy Residential Income Property?

Buying residential income property (from duplexes to apartment buildings and large complexes) has traditionally been a good idea for investment purposes. Many savvy investors have chosen this route to invest their money and it has paid off.

Despite the fact that the real estate industry as a whole is also feeling the strain of the mortgage crisis, now may be the right time for you to consider your entree into investment property, or even expanding your current portfolio. Just like home values, apartment buildings and complexes have also dropped in price, and that means there are some great deals to be had for the right investor.

With so many people falling victim to homes foreclosures, there has been--and will soon be more of an influx of people who need a place to rent, and still have a decent income. These people will need to be carefully screened, and their credit may be hurt, but they may make very good tenants still. Be sure to vet these people fairly, taking into account that they many have filed bankruptcy, (wiping out most of their unpaid debt), which would give them the ability to pay rent and start over rebuilding their credit. These people may be not your typical renters and a good tenant screening process will pay off here!

As you know - there are risks with any investment, and buying rental properties is no different. However, there are still good reasons to take that risk. With a well managed property purchased conservatively, rental income will help pay the monthly mortgage on the property, and temporary short-falls due to maintenance or occupancy, can be make up with good management. Property investment is not for the weak of heart, but it can, and has produced positive results time and time again.

A word of caution: It is important that you do not get caught in the same situation that caused the real estate crisis we are in. Too many people purchased properties that had over-inflated values. Be sure to carefully research any property you consider including the property value, the location, and the comps, and make a significant downpayment so that you can guard against a month or two of lower income from your unit(s) should this happen. Remember to insure against the risks.

So, now really is a great time to buy -- but you have to make sure you get the best property for you. Do not over-extend yourself, make a significant downpayment, and choose a property that will pay off, (does not need major repairs, is in a desirable location, etc.)

If you need assistance finding a great residential investment property in the Carolinas, or have any questions of property investment of property management, please go to our website at http://www.kuester.com.

Investment Property Lingo

If you are considering an investment in property, you will need to know the know the lingo!

Familiarize yourself with the industry terms such as:

Gross Income - Total income before taking out taxes and expenses

Vacancy Rate - Percentage of rental units unoccupied

Effective Gross Income (EGI) - potential Gross Income less a vacancy and collection allowance, plus miscellaneous income.

Operating Expenses - Ongoing cost for running a business.

Net Operating Income (NOI) - Operating income after operating expenses are deducted, but before income taxesand interest are deducted.

Debt Service - The ratio of cash available for debt servicing to interest, principal and lease payments.

Cash Flow - The movement of cash into or out of your business.

Cash-on-Cash Return - The ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage.

Capitalization Rate (Cap Rate) - The ratio between the net operating income produced by an asset and its capital cost or Marketing Value.

With the understanding of investment vocabulary you will be able to make better decisions and turn your dream of investing in commercial property, a reality. Take the time to do the research and consult with the experts before making any major financial investment!

What Do You Need to Know When Investing in Commercial Property?

The commercial investment property sector in the Carolinas is looking strong in the coming year and we predict it will make a near-to-full recovery throughout the year. Expect positive growth in rent and capital values, which will support your investment, and allow you to recoup some costs from the last few dismal years.

This is great news for many commercial property investors and owners like yourself. For those looking at making a start in commercial property, or who are interested in buying an additional investment property, there are some things you need to remember about making an investment in this economy. The industry is vulnerable to a number of fluctuations and does not always follow the trends of the rest of the market--so it is important to understand how!

Design: Codes and Trends- Commercial office space and industrial property responds more strongly to changes in building design trends. Compliance and standards can also add to the costs of maintenance of commercial property which can affect your profit margin. Make an effort to keep

Location, Location, Location- if the prime industrial district shifts, or the other commercial properties around yours close, this could drastically change the capital value of your prospect and your potential rental return of your investment.

Buy With the Intent to Sell- commercial property can be harder to sell in tough markets than other investments. In a tight market, where it is a buyer's market, remember that whatever you buy, will at some point need to be sold. So a good deal needs to be a money-maker - each and every time.

Risk- As with any investment, there is risk involved in commercial real estate. Investing means you are taking on all of the risk associated with the ownership of the property, and will be responsible for any maintenance costs and upgrades that need to be made. You need to be willing and able to accept the risks -- take full responsibility and ownership and

The most important thing to remember, is that if you are interested in making a sound commercial property investment. Make smart choices and have a diverse portfolio! Real estate helps to offset shorter term investments and a good balance of residential and commercial are the often the most practical.

If you would like more information on commercial property investment in the Carolinas, give Kuester a call at 888.600.5044.

Commercial Property as a Retirement Investment

What is your long term plan for income after retirement? Many people, especially those who have been in business the majority of their adult lives, have chosen commercial property as a way to provide themselves with long-term monthly income through their retirement.


A good choice in commercial real estate can not only earn you the money to live off of, but be a significant asset in your estate, even after your death.


Investing in commercial real estate, as much as it has great potential, is not a decision that should be entered into lightly. As with any investment, there is risk involved, but there are several things that you can do to reduce that risk:



1) Do Your Research: Take your time and research the property before making a purchase decision. What is the land zoned for? Has there ever been any problems on the property, are their current tenants? Are the buildings (if any) sound and ready to be leased, or will work need to be done first?



2) Make sure you have enough money: The purchase price may be in your budget, but is the cost of needed repairs, fees, taxes, maintenance, management, etc.



3) Consult your attorney: As with any real estate transaction, having an attorney to advise you and go through the contract is a must to be able to project yourself.

Investing in commercial property can be a very wise decision--one that could see you comfortably through your retirement. However, it is a choice that should come only after long and careful consideration!

If you would like to know more about investing in commercial real estate in the Charlotte area, just give us a call at 888.600.5044!

Kuester Property Management

So You Say You Are Thinking Of Investing in Real Estate?

Property is almost always a great long-term investment. It can also be a practical short term investment as well. Just depends on when you buy, when you sell, and how much both transactions amount to…For the last year, prices on property has been dropping in many areas. That is bad news if you're looking to sell, but it puts the ball in your court if you're interested in buying. The market is changing, and everyone expects a rebound. Right now is a time to jump into the pool and make an investment if you have the cash available. Buying rental property in a down market can be a lucrative investment but there are some factors you should consider before you jump in.

We’ve quizzed our experts, and have these great four tips for you when looking for a rental property.

• Where do people want to live? Where do they want to shop? Where do they want to eat? Find out where tenants want to be…and buy there. Not only where do they want to be now, but look in areas that are going to be good in a few years. If you want a sure-fire bet, ask your real-estate agent to show you properties with solid rental track records.

• Don’t over extend yourself. Make sure your rental income will provide for your expenses. Don’t hedge too tight to the line. You don’t want to be worried on a month to month basis that you will have a shortfall. Plan for emergencies, for the occasional month you don’t have a tenant, for unexpected repairs, and definitely plan to have a small and tidy profit after you pay off your loans or mortgage.

• Find reliable and stable tenants. Screen the people who are renting your property. Don’t skimp out on background checks, credit checks, or references. Don’t take a leap of faith. These tenants are occupying YOUR investment. Make sure you have people who will provide for your income and not damage the property. Never rent to anyone without having them fill out an application that includes references - then be sure to check those references! Verify their employment record and, if they've leased or rented before, talk to former landlords to see if they've had problems in the past. A credit check is also a good idea - if they are already having financial problems, you don't want to be the next one on the list.

• Always have a standard rental contract drawn up that outlines the rules and regulations of the property, the rent and when it is due, any deposits required and rules regarding landlord access to the unit, etc. Be clear about what repairs and maintenance are and are not your responsibility as the landlord and the rules covering changes such as painting the rooms, etc.

• If you can’t manage the property, invest in an agency that can. Don’t have the time to manage the real estate? Then find an agency that can do it and can do it effectively.

• Make investments in your property that will reap further income. Landscaping, painting, new appliances, new carpet or floors – these will all add to the value of any real estate in the long-term, as well as make your property look more attractive to short term tenants.

• Know the laws and regulations in your state or local municipality. If you don’t know them – learn them. Or hire a agency to manage the property that does!

Those are some simple pointers, and there is a lot more fine points and common sense that we can provide you with when thinking about making the leap.

Kuester Property Management

Commercial Property will hit bottom in 2010--and be a new investors dream!

If you are the owner of a commercial properties, hold on for a rough year. 2010 will likely be the rock-bottom for the commercial real-estate market.

The silver-lining is that new investors will benefit if they are able to step in and buy up the properties. Sellers of these commercial properties have been hesitant to lower prices, however they will need to to get the property sold and avoid foreclosure. Both scenarios work in favor of the buyer, who, if they are able to secure a bank loan, or have the cash on-hand will find remarkable deals towards the year's end and into 2011.

Multi Unit Residential Property

Right out of college, a good friend of mine made one of the best decisions he could. He saved up all his money, and applied his sterling credit rating to get a low-interest first-time home-owner’s mortgage. The property he choose though, was the smart part of this effort: he choose a multi-unit building.

The large brownstone in Charlotte wasn’t in the best area of town, nor was it in sparkling condition. He rented out the two larger apartments to tenants, putting himself and his girlfriend in a smaller downstairs apartment. It wasn’t the most ideal living conditions, and some people would have choose a different path.

The whole deal worked out great for my friend, simply because his mortgage was completely paid for by his tenants. In fact, they paid MORE then the mortgage, and he had enough left over to sock away in the bank, or make necessary and cosmetic upgrades to the building. Since he didn’t have to add any money out of his pocket to the mortgage, he was able to some months pay MORE on the mortgage, or some months to drop a nice chunk of change in the bank.

Flash forward a few years, and my buddy has moved to a beautiful and spacious home in a gorgeous part of town. He still owns his first multi-unit, and it is humming along nicely generating a little extra cash and paying for itself. It’s a great investment, and a wise one.

My point to this story is that multi-unit residential spaces may sound a bit cumbersome. More tenants, more headaches…More units...more costs…But in the end, if a sensible person is handling the property (whether it be you or a property management company) a multi-unit residential property can become a very lucrative and fruitful endeavor.

Property Manager
Kuester Property Management

Investment Property: The Skinny

Can almost anyone can make serious profits in the real estate business? Sorry to shatter your dreams, but not necessarily. Financial success in investment real estate requires skill and knowledge. A limited understanding isn’t going to bring in the types of returns on property that you might see in other types of investments. The part that tricks many investors up is when it comes to evaluating the potentials of properties. Novices often make the mistake of focusing primarily on the return, the income…While the smart investor also considers many additional factors.

If an investment property was just an ATM machine, we wouldn’t be having this conversation. But your investment properties will have people living in them, and that means something called: wear and tear. Your tenants, while contributing to your income, will also expect returns for their rent. Maintenance costs have to be factored into the equation. If the roof leaks, you HAVE to fix it.

Critical to your goals is to determine whether or not the property under consideration fits into your overall investment plan. Having a solid plan is essential to the type of organization that separates losses from big profits. Hopefully your investment strategy is more sophisticated than just amassing properties, if not, you may to address this issue with an investment consultant before buying. Don’t be afraid to seek professional help…

The biggest factor in property investment to always consider is location, location, location…Sure, that is three factors – but you know what we are saying…You want to make sure your property is someplace that people are going to want to live, to work, or to shop. We give the developers in Dubai a big hand – but not all of us have 20 billion to dump into a dessert. Smart investors need to find key locations. Also consider the local tenant quality, who will be renting or visiting your properties. Near a university means college kids, while near Park Avenue means a more upwardly mobile crowd. Both come with their own challenges, needs, and demands.

If this sounds daunting, don’t fret. We can work with you to turn your small nest egg into a nice chunk of change. Property investment is a team sport, and if you put together a good team, you will be able to set the groundwork for a successful investment in property.

Property Manager
Kuester Property Management

Commercial Property For The Personal Investor

In these tough economic times, you have to make savvy business decisions when it comes to your personal wealth. Especially when it comes to any investment opportunities. I tend to remember what my Grandfather said about investing: “Buy land! They don’t make it anymore…”

For many investors, the land best invested in is commercial real estate. In the right climate, commercial real estate can produce instant and healthy returns. Whether you are a large investor or a small investor, there are plenty of deals that can packaged to suit your economic needs. Certainly, larger investors have a greater range of options available. But small investors can find suitable opportunities to help them avoid the ever-risky and stressful stock market.
While some areas of the country have seen some major devaluation in real estate, there are still areas of this state – and the rest of the country – that are pretty much puncture proof. Work with the proper expert to find the right property, at the right location, to suit your short-term or long-term investment needs. Do your research and ask for advice, study the trends and proceed with caution. With a little help and a lot of smarts, you will be able to reap big rewards from the right commercial real estate investment.

Property Manager
Kuester Property Management
www.kuester.com