March 2020 Newsletter
Rental Property Upgrades: What You Should Know About the Trends
In the end, no matter how cliché it sounds (or in this case, reads) it is about ROI. It is not just happening in our market but everywhere: updated properties rent faster and for more dollars.

The current renting "generation" (dominated by Millennials & Gen X, soon to be followed by Gen Z) places a high value on convenience and technology, in large part due to being weaned on it, so to speak.

While "Boomers" may still struggle with adapting to technology and its constant changes, these generations grew up this way.

So, what does that have to do with updating properties? Here in our market, there is currently a proliferation of new apartment communities that are tailoring themselves to what this consumer wants: current (if not state of the art) facilities, equipment, technologies, and surroundings.

We are not suggesting every rental property needs to be a "smart" home but making your investment property as current as possible, where it counts, can go a long way in attracting and retaining a reliable and conscientious resident. So where do you invest in upgrading (an investment property-it's a whole other story if it's a property for sale!)

Conventional wisdom has always been: kitchen and bath, because, well, we typically spend the most "quality" time there.

The key is not to over invest. An investment property may see many residents over time and they will all have different aesthetics so keep it clean, simple and utilitarian.

For the bath, things like lighting & flooring, the tub/sink/toilet (as needed) and mid-range vs. upscale--typically return about $1.71 in increased home value for every dollar spent (as a national average).

For the kitchen, neutral with functionality in mind wins the day. This is not the place to go concept crazy as again, many residents will inhabit this space over time. Updating while maintaining as "blank" a canvas as possible is best. Simple updates include lighting, door pulls & knobs and paint. If it's overdue or needs replacing, counter top and (smart) appliance updates work wonders.

Lastly, when possible make baby steps into the smart home arena as the need to replace arises-smart thermostat, locks, smoke & carbon monoxide detectors and garage door opener are all good options to start to bring your property into the smart world today's renters live in.

Tips on Investing

3 Creative Strategies to Finance Real Estate Deals
One of the things that makes real estate investing so exciting is the creativity one can implement to fund deals. In truth, your ability to fund is limited only by your imagination (and the law, of course), so the purpose of this article is to expand your mind and allow you to explore the more “creative” side of real estate.

Home Equity
If you own your own home, you may be able to use some of the equity in your home to purchase rental properties. As I've discussed before in this book, equity means the spread between what is owed on a property and what the property could sell for. In other words, if you owe $80,000 on your primary residence but it could sell for $200,000, you have $120,000 in equity. This equity can be borrowed against at very low interest rates through a home equity loan or home equity line of credit at your local bank or credit union.

Partnerships have been one of my favorite creative methods of investing in real estate over the past decade, because even though I’m good at a lot of real estate things, I have a lot of shortcomings as well. Partnerships can be valuable tools when investing in rental properties, because two people can work together to cover for each other’s shortcomings and do some amazing things.

Seller Financing
When a seller owns a piece of real estate free and clear (meaning they have no mortgage on the property they own), they can sell the property using seller financing, which can be a really powerful method for investing in real estate without having to work with a bank.

Have you used any of these methods?
Up & Coming Trends

5 Emerging Trends That Will Shape Real Estate Markets in 2020
Change is inevitable. And for investors playing the real estate game, monitoring new trends and adjusting accordingly is do or die.

Here are a few examples of the ways in which advancements in tech, travel, and more will impact real estate markets this year.

1. High-Speed Rail
Transit-oriented real estate developments are becoming hotter and hotter. As more folks wait to buy their first home or want the convenience of getting around without a car, rental housing near rail lines—particularly those of the high-speed variety, which are promised to be completed in coming years in states like California and Texas— check the boxes for tenants‘ needs.

2. Going Green
This factors into real estate in more ways than updating properties with energy-efficient lightbulbs. But yes, green buildings are a must—not only for reducing ongoing costs and for being kind to the environment but also for attracting tenants.

3. Retail
Is the apocalypse here? Retail-wise, I mean. It seems we cannot go a month without hearing a retailer in trouble. This leaves their real estate up for grabs. As we continue to see more and more stores close, these spaces are being transformed into micro-apartments, industrial spaces, and even offices.

4. 5G and AI
5G is rolling out, which means an immense amount of data can be sent and received at lightning speed. And with artificial intelligence, that data can be processed and used to make decisions, influence buying habits, and assess anything and everything about you more in-depth.

5. Suburbs
Housing affordability continues to be an issue. Rising home prices and living expenses in conjunction with stagnant wages are causing stress for a huge portion of the population.The suburbs are likely the answer for many.
For tenants whose salaries have not kept pace with increasing rents, the ‘burbs are increasingly appealing. By creating almost second cities in the suburbs, landlords and developers are able to offer great products at a much lower price.

Ten Rental Features That Attract Cream of the Crop Tenants
The success or failure of your real estate investments depends on your ability to consistently attract and retain great tenants.
In the end, it doesn’t matter how great of a deal you got on the property or how strong your projected cash flow and return on investment are. Without great tenants who pay rent on time and take care of your property, the equity, cash flow, and returns all evaporate into thin air.

So the question that naturally follows is this: How do you find great tenants for your investment property?

The answer is so simple yet so powerful. The quality of the asset you buy determines the quality of the tenant you are likely to get.

A better question to ponder would be this: What do excellent tenants look for in a rental property?

#1. School Quality
The quality of schools zoned to the property is a primary deciding factor for a majority of great tenants. Schools are extremely important to families and single parents with school-aged children.

#2. Safety
Safety is our most basic human need and a powerful motivator for excellent tenants. One of the main reasons why your prospective tenant decided to spend more to lease a home (as opposed to an apartment) is to provide a safe environment for themselves and their family. 

#3. Move-In Ready Condition
Your target tenant plans to take care of your property and has high standards of cleanliness and maintenance. If you provide a move-in ready home, you are communicating that you share those same standards.

#4. Proximity to Employment
As you look at potential properties, think about where your target tenants are likely to work and how close the property is to that area.

#5. Upgrades
Most inexperienced investors subscribe to the myth that their investment properties just need to be “good enough for a rental.” Therefore, they purchase starter homes with cheap finishes and rent them to mediocre tenants for mediocre results.
Don’t do that; instead, purchase homes that have strategic upgrades that move the needle with excellent tenants: hardwood flooring, granite counters, stainless appliances, covered patios, etc.

#6. Appliances Included
If your property does not include a refrigerator and a washer/dryer, the tenant would then have to purchase those items, increasing their upfront cost.Remove the friction to make their decision easier by providing those appliances on the front end. Often your tenants won’t mind paying a little more for a property that includes all appliances.

#7. Neighborhood Quality
Neighborhood quality determines lifestyle quality. Think about the community you live in—didn’t the neighborhood amenities play a major part in your decision to live there? Wouldn’t your lifestyle be different in a neighborhood with running and bike trails, lakes, community pools, tennis courts, a gym, etc.? Quality tenants care about neighborhood quality. A community doesn’t have to have ALL those amenities, but the more the better.

#8. Access to Transport and Basics
Access to modes of transportation and basic necessities like grocery stores, restaurants, and shopping is very important because it affects other important factors, such as commute to work and lifestyle quality. When you’re looking at investment properties think about: how easy is it to get to the main highway/park and ride/public transportation? Are there basic services within easy reach?

#9. Age
If you purchase older properties, they will have older systems (plumbing, electrical, HVAC) that break often, inconveniencing both you and your tenant. Purchase newer properties instead. A good rule of thumb is no older than 15 years, less than 10 if you can.

#10. Rent and Price
Last but not least, your investment is ultimately a business decision for you, as well as your prospective tenant. Your tenant will be concerned with the rent, and you will be concerned with the relationship between the rent and the price you pay for the property.
Make sure the projected rent isn’t so high that it limits your tenant pool—or so low that it lowers the quality.

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