Before you consider purchasing a multi-family rental unit, it is important to consider the cash flow potential of the building. There are many complex models with which to make the calculation, but the best one is a straight forward look at the historical data on the building and comparing similar properties.
A great place to start is to pick up a free copy of a "Renter Guide" or other apartment search magazine. Check out the available rentals for comparable sized units (sq footage), and number of bedrooms within the same vicinity as yours. If there are apartments located within the same neighborhood as your units, find out how much they are renting for. Your prospective renters will be comparing prices, so you should know your competition. Consider options, updates and other features. What makes your unit better? What are some selling points that your units offer?
Once you have researched the comparables, you should request the Schedule E from the current owner. This document is the income or income loss statement for the unit and shows the rental income and expenses and the net income or loss generated for the year. Remember that a net loss is not necessarily a bad thing, as most owners will try to report a loss for tax purposes. You will need to look beyond the bottom line to examine the rents charged. What are the rental prices of the units (are they at or below market value?) What is being charged for utilities? (And what is the actual cost of utilities?) Are there units that spend a long time vacant? How long does a unit sit vacant on average? If a unit sits empty it could mean that it is not a good investment—or it could mean that the landlord did not market the unit properly. Ask the seller—there may be a good reason. You should also check to see what major expenses that the units had – such as electric work or a new roof. This could be the reason for a loss being shown, but are really positives for you. This says that the owner maintained the property, and those are things you won’t need to take care of in the first year of owning a new investment property.
Your next step is to do some simple math. You can expect that for every dollar you make in rent – you really make $0.95. This will roughly take into account the amount of vacancy time you might have. Take that amount and subtract your monthly expenses such as utilities, insurance, lawn care, etc. and your monthly mortgage payment. Then deduct 10% for incidentals for repairs. If the number ends up a positive… then multi unit investment property may be for you!
Finally you should ask the current owner what the length of each current tenants lease is. If the property is currently renting for under market value, you will need to know when you will have the opportunity to raise the rent to the market price.
Sunday, August 15, 2010
Tuesday, August 10, 2010
10 Questions to Ask Before Hiring a Rental Property Manager
One of the biggest concerns for multi-unit residential landlords is not being able to keep an eye on what is going on at the property. It is difficult to keep track of one property, let alone several! So, if you are not able to monitor your property(ies) you may want to to consider hiring a property management company--to protect yourself, your tenants and your property.
A property manager can oversee all of the day to day issues involved in managing the property, but before you get started, here are a few questions to ask:
1. What is Their Experience? Is your potential property manager experienced in managing multi-unit rental properties? Have they worked in your area, with the types of tenants you hope to attract?
2. Are They Professional? Do the people at the property management company have professional appearances and do they handle themselves in a professional manner? If you hire a company--you want them to represent you!
3. How many other properties do they manage? If your property management company is large - you will want to know who specifically will manage your property, and what other properties they manage --if you have an individual, you will want to know what their work-load is as well.
4. What is their availability? You may need someone who is available 24/7 to handle issues that may arise at the property. Does your potential property manager have full availability, or work with a company that can take calls at 2 in the morning if necessary?
5. What are their memberships and certifications? There are several organizations that provide certification for property managers - membership means they have completed courses, and or meet certain standards.
6. Are they likable? Having a likable property manager goes a long way, especially since this person will be in change of finding tenants and dealing with complaints!
7. Is there a contract?Make sure you get everything in writing! All good property management companies will have a contract already written up. Review this with your attorney. If you are dealing with an individual, make sure to have each aspect of the relationship written down. You can not be too cautious when dealing with properties and your investments.
8. What will be outsourced? Make sure you have a clear understanding of what will be outsourced by the property management company. It would be unreasonable to think that the same company that paves the driveway will be re-stocking the toilet-paper in the common area bathroom, but this is something you need to be aware of.
9. How will they handle rent payments and disputes? Know ahead of time how the property manager will handle collecting rent, late payments and other disputes.
10. What are their references? Always check references before you sign the contract. Make sure they are references from like-properties if possible.
If you are interested in learning more about Carolina Property Management - check out our website at http://www.kuester.com/
A property manager can oversee all of the day to day issues involved in managing the property, but before you get started, here are a few questions to ask:
1. What is Their Experience? Is your potential property manager experienced in managing multi-unit rental properties? Have they worked in your area, with the types of tenants you hope to attract?
2. Are They Professional? Do the people at the property management company have professional appearances and do they handle themselves in a professional manner? If you hire a company--you want them to represent you!
3. How many other properties do they manage? If your property management company is large - you will want to know who specifically will manage your property, and what other properties they manage --if you have an individual, you will want to know what their work-load is as well.
4. What is their availability? You may need someone who is available 24/7 to handle issues that may arise at the property. Does your potential property manager have full availability, or work with a company that can take calls at 2 in the morning if necessary?
5. What are their memberships and certifications? There are several organizations that provide certification for property managers - membership means they have completed courses, and or meet certain standards.
6. Are they likable? Having a likable property manager goes a long way, especially since this person will be in change of finding tenants and dealing with complaints!
7. Is there a contract?Make sure you get everything in writing! All good property management companies will have a contract already written up. Review this with your attorney. If you are dealing with an individual, make sure to have each aspect of the relationship written down. You can not be too cautious when dealing with properties and your investments.
8. What will be outsourced? Make sure you have a clear understanding of what will be outsourced by the property management company. It would be unreasonable to think that the same company that paves the driveway will be re-stocking the toilet-paper in the common area bathroom, but this is something you need to be aware of.
9. How will they handle rent payments and disputes? Know ahead of time how the property manager will handle collecting rent, late payments and other disputes.
10. What are their references? Always check references before you sign the contract. Make sure they are references from like-properties if possible.
If you are interested in learning more about Carolina Property Management - check out our website at http://www.kuester.com/
Sunday, August 1, 2010
Advantages of Hiring a Property Manager
Have you ever wondered what the advantages are of hiring a professional property manager?
When a property manager is hired, the property owner or landlord can rest easy, knowing that they have a property management company working for them. The owner does not have to be concerned about marketing for and screening tenants, and they do not have to worry about daily maintenance issues. This frees up the owner to deal with their own business or hobbies and provides a buffer between them an their tenants.
Another advantage of working with a property management company is that the property manager takes on the responsibility of monitoring & maintaining occupancy levels and choosing the right tenants. Also, the property manager can handle the administrative functions of the property and make sure that the occupancy is high.
A good property manager will be a salesperson--able to persuade potential residents/tenants and buyers and have strong marketing skills to find the right people and/or businesses. A property manager will also make themselves available to handle building inspections, property insurance matters, maintenance requests, and showings.
A primary function of the property manager is to handle the finances and make sure residents pay and submit their rent payments on time. They are also involved with managing the finances and budget of that specific property. All insurance paperwork, taxes, billing, and scheduling of property bills can be the responsibility of a property management company, as can the ordering and maintaining supplies and equipment and collecting payments from the tenants.
Property managers can also supervise maintenance and cleaning crews, coordinate marketing and advertising efforts and know exactly the right time to bring in new tenants. In short, a property manager can take care of everything that you would need as a property owner, and do so effectively and efficiently.
Let us know if you are interested in learning more about property management or how Kuester would be able to help you market and manage your Carolina property.
When a property manager is hired, the property owner or landlord can rest easy, knowing that they have a property management company working for them. The owner does not have to be concerned about marketing for and screening tenants, and they do not have to worry about daily maintenance issues. This frees up the owner to deal with their own business or hobbies and provides a buffer between them an their tenants.
Another advantage of working with a property management company is that the property manager takes on the responsibility of monitoring & maintaining occupancy levels and choosing the right tenants. Also, the property manager can handle the administrative functions of the property and make sure that the occupancy is high.
A good property manager will be a salesperson--able to persuade potential residents/tenants and buyers and have strong marketing skills to find the right people and/or businesses. A property manager will also make themselves available to handle building inspections, property insurance matters, maintenance requests, and showings.
A primary function of the property manager is to handle the finances and make sure residents pay and submit their rent payments on time. They are also involved with managing the finances and budget of that specific property. All insurance paperwork, taxes, billing, and scheduling of property bills can be the responsibility of a property management company, as can the ordering and maintaining supplies and equipment and collecting payments from the tenants.
Property managers can also supervise maintenance and cleaning crews, coordinate marketing and advertising efforts and know exactly the right time to bring in new tenants. In short, a property manager can take care of everything that you would need as a property owner, and do so effectively and efficiently.
Let us know if you are interested in learning more about property management or how Kuester would be able to help you market and manage your Carolina property.
Sunday, July 25, 2010
Looking to Lease?
Are you looking to lease a commercial space for your business? There are several factors to condisider when trying to find the right place... that is, afterall, why they say: Location. Location. Location!
The first thing to do is to find the right part of town to locate your business. Is Uptown Charlotte your best bet, or is suburb Fort Mill, SC more your speed? Do you need a stand-alone office, or a high-traffic retail spot. Identifying who your clientele is, and where they are will help you choose the right types of locations.
Once you have narrowed it down to a genre of locales, you can start looking at specifics and what is available. Check out thet Kuester site for available properties in your area. Here are some other factors to consider:
1) Are there other businesses in the immediate area that would compete with you?
2) Are there businesses in the immediate area that complement your business? (i.e. a restaurant and an ice cream shop).
3) Is there enough parking for your customers/clients?
4) Does the area have foot traffic?
5) Is the location near a major roadway?
6) What is the rent price?
7) Is there area growing or established?
8) What kind of upfits will you need to have done?
9) When will the space be available
10) What are the contract terms?
If you are interested in learning more about the available properties that Kuester has to offer, just check out our website at www.kuester.com.
The first thing to do is to find the right part of town to locate your business. Is Uptown Charlotte your best bet, or is suburb Fort Mill, SC more your speed? Do you need a stand-alone office, or a high-traffic retail spot. Identifying who your clientele is, and where they are will help you choose the right types of locations.
Once you have narrowed it down to a genre of locales, you can start looking at specifics and what is available. Check out thet Kuester site for available properties in your area. Here are some other factors to consider:
1) Are there other businesses in the immediate area that would compete with you?
2) Are there businesses in the immediate area that complement your business? (i.e. a restaurant and an ice cream shop).
3) Is there enough parking for your customers/clients?
4) Does the area have foot traffic?
5) Is the location near a major roadway?
6) What is the rent price?
7) Is there area growing or established?
8) What kind of upfits will you need to have done?
9) When will the space be available
10) What are the contract terms?
If you are interested in learning more about the available properties that Kuester has to offer, just check out our website at www.kuester.com.
Tuesday, July 20, 2010
What you should know - Investing in property
To many, being an investment property owner is the best way to financial freedom. Owning real estate can certainly create and build wealth. However, owning investment property is not something that comes without work. Finding the best property, negotiating the contract, and then finding tenants and managing the property are all obvious tasks, but the most important things... are Time and Money. Managing these are the hardest jobs in investment property!
Before you get started – there are a two things you should know:
Time is of the Essence:
Do you plan to own the property for a long time, or turn it around quickly? These are important questions when trying to figure out what upgrades and improvements should be done. Also, you can expect that if you do own the property for 5-10 years, or longer, that there will be a new roof that needs to be put on, or a furnace that needs to be replaced. Your investment will need continual investing to keep it in top condition—but if you are only planning on hanging on to it for a year or two, you won’t want to sink money into unneeded expenses that you won’t be able to recoup.
Time is also important as you time the purchase and sale of the property, and balancing that against your needs, situation and the property you are looking for. Timing your sale or purchase is tricky, and that is where having a commercial real estate company on your site can make or break the investment. You don’t want to pay too much when you buy, nor do you want to wait too long when you are ready to sell. Timing can be your best friend or your worst enemy.
Money. Money. Money.
Having money on hand and a great credit situation is imperative for investment property owners. Besides having the cash to buy the property, having the monies available to make repairs and manage emergencies is important.
Work with you financial advisor to determine the property amount of cash vs. loans that you will need to get the right mix for your expenses as well as what you will need to make your payments and still have what you need “just in case.”
You also should make sure you can save enough for retirement and other long-term goals before making the investment. Property ownership is not a sure bet, so it is important to not put all your eggs in one basket!
Property Manager
Kuester Property Management
Charlotte, North Carolina
Before you get started – there are a two things you should know:
Time is of the Essence:
Do you plan to own the property for a long time, or turn it around quickly? These are important questions when trying to figure out what upgrades and improvements should be done. Also, you can expect that if you do own the property for 5-10 years, or longer, that there will be a new roof that needs to be put on, or a furnace that needs to be replaced. Your investment will need continual investing to keep it in top condition—but if you are only planning on hanging on to it for a year or two, you won’t want to sink money into unneeded expenses that you won’t be able to recoup.
Time is also important as you time the purchase and sale of the property, and balancing that against your needs, situation and the property you are looking for. Timing your sale or purchase is tricky, and that is where having a commercial real estate company on your site can make or break the investment. You don’t want to pay too much when you buy, nor do you want to wait too long when you are ready to sell. Timing can be your best friend or your worst enemy.
Money. Money. Money.
Having money on hand and a great credit situation is imperative for investment property owners. Besides having the cash to buy the property, having the monies available to make repairs and manage emergencies is important.
Work with you financial advisor to determine the property amount of cash vs. loans that you will need to get the right mix for your expenses as well as what you will need to make your payments and still have what you need “just in case.”
You also should make sure you can save enough for retirement and other long-term goals before making the investment. Property ownership is not a sure bet, so it is important to not put all your eggs in one basket!
Property Manager
Kuester Property Management
Charlotte, North Carolina
Wednesday, July 14, 2010
Finding a Good Property Management Company
Finding a good property management company the most important decision when it comes to your commercial real estate. The right management company will make your operations run smoothly--and a bad one will make your life miserable at the very least, and potentially cause significent financial hardship! Property Management should not be a decision based on cost, but rather one based on customer service and experience. We have outlined a process below for finding the best property management company for you:
1) Outline your goals.
What is it that you want? Would you like a full service property management company, or one that just focuses on finding tenants?
The full service companies such as Kuester will advertise your property, help to place tenants, maintain the property, including major repairs, collect the rent, and send reports and a check each month.
A company that finds tenants will just advertise your property and place tenants. Depending on what your level of involvement is, you may choose one or the other options.
2) Set realistic goals.
Depending on what you bought your property for, and what your mortgage is AND what the average rental cost is AND how many tenants you are able to get, AND a near endless series of other factors - you may or may not make a profit on your property! Run through all the factors with your accountant and be conservative. Consider asking other property owners what surprise expenses they have had and make these part of your calculations.
3) Do your research.
Reputable property manangement companies will have a website outlining their services, philosophies and available properties. After narrowing it down, ask for referrals. Also, look for signs from the company posted around town and take notice of their advertising. Do you like what you see?
4) Always get references.
Ask for at least 2 references from current or recent clients. Most property management companies will give this information with zero hesitation, and if they refuse do you really want them managing your investments?
5) Never sign before you read.
Property Management contracts are legally binding contracts and can be negotiated. But sometimes they include details that were not previously discussed! Not only should you read before you sign, but you should also have your attorney review the contract as well. There may be language in the contract about additional costs that you will have to pay (i.e. major repairs), and reasons that either you or the property management company could cancel the agreement. So know before you make anything permanent.
1) Outline your goals.
What is it that you want? Would you like a full service property management company, or one that just focuses on finding tenants?
The full service companies such as Kuester will advertise your property, help to place tenants, maintain the property, including major repairs, collect the rent, and send reports and a check each month.
A company that finds tenants will just advertise your property and place tenants. Depending on what your level of involvement is, you may choose one or the other options.
2) Set realistic goals.
Depending on what you bought your property for, and what your mortgage is AND what the average rental cost is AND how many tenants you are able to get, AND a near endless series of other factors - you may or may not make a profit on your property! Run through all the factors with your accountant and be conservative. Consider asking other property owners what surprise expenses they have had and make these part of your calculations.
3) Do your research.
Reputable property manangement companies will have a website outlining their services, philosophies and available properties. After narrowing it down, ask for referrals. Also, look for signs from the company posted around town and take notice of their advertising. Do you like what you see?
4) Always get references.
Ask for at least 2 references from current or recent clients. Most property management companies will give this information with zero hesitation, and if they refuse do you really want them managing your investments?
5) Never sign before you read.
Property Management contracts are legally binding contracts and can be negotiated. But sometimes they include details that were not previously discussed! Not only should you read before you sign, but you should also have your attorney review the contract as well. There may be language in the contract about additional costs that you will have to pay (i.e. major repairs), and reasons that either you or the property management company could cancel the agreement. So know before you make anything permanent.
Saturday, July 10, 2010
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
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
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