Financing Rental Properties

Interest rates are still at historic lows and property values continue to be depressed. However, recent actions of the Fed and growing seller demand appear to be forcing an increase in both. Those trends might not be reversing any time soon, so now might be the right time to invest in another rental property. A key focus when expanding your asset property base will be securing a mortgage. These are a few issues to keep in mind when financing a rental property.

Borrowing Strength
Before applying for financing, make sure your credit is in order. Check your business credit reports to make sure they are accurate. Quickly work with the credit bureaus to make any necessary corrections. If your business credit rating is over 75, your business is in good shape. Less than that and you’ll likely have to pay an additional fee to hold the prevailing interest rate. Lenders will also want to confirm that you can cover expenses on all your properties for at least half a year.

Down Payment
The less you have to borrow relative to the value of your investment property, the better chance you have to obtain the necessary financing. Most lenders now require a 20% minimum down, but some may want 25%-30%. If you don’t have cash on hand, consider drawing on equity from your other properties to fund the down payment.

Lender Selection
If you’re not an “ideal borrower” in relation to your down payment or expense coverage look to local banks rather than to the large national lenders. These smaller institutions know the local market and are more interested in investing in local properties as part of their charter. If you have a history of investing in rental properties in the community, you are more likely to be considered a solid investment customer for these local lenders.

Mortgage brokers can sometimes be more flexible than commercial banks since they are focused specifically on financing properties and normally use many types of lending products. Find a long-term mortgage broker who will likely have more access to a deeper pool of investors.

Partner Up
If your business can’t qualify by itself for the purchase of a specific property, consider looking for an investment partner to split the costs. Your combined resources may help you secure the financing you need.

While the days of easy financing have long since passed, with research and flexibility you can still find a way to obtain the mortgage you need to finance a rental

by Aimee Miller   http://www.appfolio.com/blog/2013/11/how-to-finance-a-rental-property-in-todays-market/

Property manager kirkland

Property manager Kirkland Washington. Here’s another maintenance observation. A toilet that the runs periodically can cost hundreds of dollars on the water bill. We ask our tenants to keep an eye these things but sometimes it is not very apparent that it is running periodically. The tenant gets a large water bill and thinks the property manager should cover it and the property manager thinks the tenant should have let them know the toilet was not operating correctly. The best solution is to educate the tenants when they move in and maybe include a clause in the lease giving responsibility to the tenant for an increased water bill.

Property management Redmond Washington

Property management in Redmond Washington is a unique market. The city of Redmond is the proud host to technology powerhouse Microsoft Which brings with it approximately 50,000 employees in this location. Those employees need a place to live and most often they are looking for a rental house or condominium in Redmond as opposed to buying. The difference that I’ve seen in this market is that these prospective tenants are little more discerning and demanding of their surroundings and what they’re paying for. The demand is for newer properties or properties that have significant recent updates. Old carpet and 15 year-old appliances will not cut it in this market. We have learned that If you are a property manager in Redmond, Washington, keeping the rental property in good condition and up to date is very good return on the investment. The property will attract well-educated, well-paid tenants who are willing to pay to have a nice home.

Strong rental market in Redmond Washington

I continue to see a strong rental market, especially in the areas that support Microsoft. If you have never been to the Microsoft Campus, you will be amazed. It’s nothing fancy…a bunch of nice office buildings, but the size is impressive. Its a beehive. A very busy beehive. There are a lot of people working there, 40,000 people, and the company seems to be bringing in new employees daily. As a result, the surrounding areas have strong demand for rental housing. Any property manager in Redmond, Kirkland, Bellevue, and Bothell is seeing strong demand for rental homes and a lot of that demand is from Microsoft employees. Of course their are non-Microsoft people renting homes, but when I see 50% of my rental applicants coming from Microsoft…it makes me take notice. Maybe I should say the computer software, technology industry is pushing the demand because nearly all of the rental applicants I have seen in the last year have been in the Tech industries. I have been calling it the Microsoft micro-economy. I have made a mental note to make sure, when I have a choice, to purchase Microsoft products…its the least I can do.

Maintenance… the little things count.

It is easy for us to forget about routine maintenance on our rental properties….out of sight, out of mind right ? When the rainy season comes (insert your Seattle joke here) I am reminded of gutter and downspout maintenence. This simple chore can save thousands of dollors in repairs down the road. Water running down the side of the house, down the facia boards, soaking up under the roofing material is never a good thing, and if left unchecked will cause a lot of damage real fast. We may have a tenant who will take it upon themselves to clean the gutters if they are easy to reach. Mor llikely though, a tenant will never let us know if the gutters need cleaning….some don’t even know that is something that needs to get done. After 20 years in the bizz, I have seen major damage that could have been prevented by simply cleaning the gutters and down spouts a couple of times each year. I remind our property owners of the necessity of gutter cleaning at least once per year, depending upon the property and the amount of trees in the area. Some properties will require a gutter cleaning 2 or 3 times per year. Once as fall begins, again after all the leaves have fallen, and often again in the spring.

Rental Home prices increasing

According to data collected by Dupree & Scott Apartment Advisors (www.dsaa.com) rent for the average single family house in King and Snohomish counties is $1822 per month, up 3.5% from $1761 per month last year. I have felt it for the last couple of years, but now we have some data to back it up. From the Property Management perspective, it started out as simply a few more phone calls on our advertised rental properties. In recent months, this has translated into increased rental asking prices. Kind of like the old sales market…when things were good…if the comparable rental properties indicated a rent of, say, $1500 per month, the market dictates that we reach a little higher…to maybe $1525 per month. For us marketing and managing rental homes, it means we can finally keep up with the increased costs of insurance, maintenance, and repairs. Many don’t remember, that when the real estate market was at its peak, the tax assessments were going up faster than rents. And values were going up so fast that insurance rates increased annually as well. I suspect that this is the first real sign of the real estate recovery. As demand and rents go up for rentals homes, there may be increased interest in buying a home. And the cycle begins again.

Windermere/Gregory Property Management

Property management of rental homes in Seattle’s eastside communities of Bellevue, Redmond, Kirkland, Bothell and surrounding communities

Windermere NE/ Gregory Property Management is proud to announce another quality rental home

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Brad Gregory Property Manager

Windermere NE/ Gregory Property Management

Property Management of rental homes in Bellevue, Kirkland, Redmond, Bothell and surrounding communities

5 Ways a Professional Property Manager Can Help Make More Money and Save More Money

In this article, I will show you how property management can save the owner more than just the cost of the management fee. Let’s say we have a property that rents for $1500/month. As a Seattle Property Management company our average fee in our area is 8-10%. So, let’s use 8% of $1500 which is $120/month. I’ll show you how a property manager can save over $1200/year by using a professional in the business.

1. The first way a property management company can save you money is by maximizing rents. Property managers understand rental prices and what a tenant is willing to pay for a certain unit in a certain area. Property managers also have an edge on advertising and showing. They know all the right places to advertise and are available immediately to show properties to get them rented for the best possible price. On average a property management company can save at least $50/month over 1 year which is already $600

2. The second way a property management company can save you money is by minimizing vacancies. Your average owner takes about 60 days to fill a vacancy depending on the market of course. With a property manager, they average less than 30 days. Again, with an average rent of $1500, the professional saves you over 1 year $1500 from this one area.

3. The third area a property management company can save you money is by advertising. Property managers have discounted rates with websites and newspapers. They can usually save at least $150 in advertising over 1 year versus an individual owner.

4. The fourth area a property management company can save you money is through maintenance and repairs. Most property management companies have access to vendors at discounted rates. Our company saves as much as 30% the regular cost to an individual owner. For an average single family house the cost of maintenance and repairs over 1 year averages about $1200. With a 30% savings this saves the owner $360 over 1 year.

5. The fifth way a property management company can save you money is by finding a good qualified tenant through our screening techniques. Most property management companies have less than a 1% eviction rate because of the thorough screening procedures that they have implemented. The “bad apples” know that they can’t pass a property management company’s screening process so they rent from the individual owners and sell them on how good of a tenant they will be even though they have no credit, or no rental references, or no ID, or a lot of other excuses they use. This alone saves the owner the cost of eviction which in our area averages about $1,000, the cost of loss rent of about 1 month of $1,500, and the cost of repairs of about $1,500. This thorough screening process alone can save the owner $4,000!

Most owners only think about the management fee that they’re losing and not about these 5 areas that a property management company can save them money. With these average estimates above, a professional property management company can save them owner over $7,450 in year. And what was the cost of that property management company? Only $1,200 for the year. This would have saved the owner $6,250 by using a professional.

Why Do You Need a Property Manager?

Once you have invested in a rental property, the responsibility of maintaining and running the property can quickly become overwhelming. For many Owners, the logical solution is to hire a Residential Property Management company to oversee their rental property. But is this the right decision for you? Here are the top 10 reasons to consider why you should hire a residential property management company and how the benefits far outweigh the costs.

1) Rent Collection: A professional residential property management company (“PM’s”) have systems and strategies to improve rent collection and on-time rent payments. This allows you to ensure swift and consistent rent collection. Quick and consistent rent collection is absolutely critical in this real estate market where good cash flow can mean the difference between success and failure as a real estate investor.

2) Local Knowledge of Rental Rates: PM’s have extensive local knowledge of rents and the ability to determine the highest rental rate possible for your property. With the internet and the ability to do large scale searches for rental properties, potential tenants know if your property is overpriced, even by $25. Overpriced properties sit empty while other properties get rented. Knowledge of rental rates is a key factor to fast rentals and quick cash flow.

3) Tenant Screening: A PM requires a detailed written application from each adult with photo identification. Additionally, PM’s will run criminal, social security and public notice (bankruptcy or judgments) searches to determine if the application is accurate. PM’s will also call past and present employers, landlords and other references. PM’s have set requirements and standards for accepting or declining an applicant and thereby ensuring you comply with fair housing rules and other local and state regulations.

4) Marketing Expertise: PM’s have years of experience in how to best market your properties so they are rented in the quickest time possible. PM’s use both offline and online marketing to maximize your properties’ exposure and find qualified tenants quicker. Most PM’s utilizes 10, 20 or even 30 different techniques to rent a property quickly which reduces your carrying cost of a vacant property.

5) Property Law and Regulations: PM’s have extensive and up-to-date knowledge of property laws and regulations and will assist you in making sure you are in compliance with your local, state and federal rules and regulations. These rules and regulations include complying with fair housing regulations, the Americans with Disabilities Act and other applicable local, state and federal laws. Avoiding one law suit will more than pay for any PM’s fees many times over.

6) Tested and Reliable Professionals: residential property management company’s will already have vetted numerous vendors, suppliers and contractors to make sure they provided good quality work at reasonable prices. Failure to properly vet these professionals can be a costly mistake. Many Owners overlook this function because they do not know how to do it or because it is a time consuming and laborious process.

7) Inspection Reports: PM’s perform property inspections before, during and after a tenancy. Additionally, most PM’s will perform routine property inspections at least every 180 days. Your PM should be responsible for preparing frequent written inspection reports for each of your properties. Faults in your property that are found quickly can be resolved before they become expensive items of disrepair.

8) Financial Records and Security Deposit Escrows: PM’s will provide detailed income and expenses reports as well as cash statements every month saving you the bookkeeping headache. Additionally, PM’s will also manage your security deposit escrow funds and make sure you are in compliance with local and state regulations. PM’s will provide end-of-year tax reports for your accountant or financial advisor.

9) Emergency Calls and Shield You From Tenants: A residential property management company will shield you from emergency maintenance calls and tenant headaches. Imagine never having to deal with late night “my toilet is overflowing” call.

10) Low Costs: A PM should only be charging around 10% of the monthly rent collected. Assuming a monthly rental rate of $1200 per month that is a fee of $120 per month. This is less than $4 per day! Can you possible do all these things for less than $4 per day?

11) Bonus Reason! FREE TIME: A good residential property management company will free up your time for doing deals that make money. I mean serious money as opposed to dealing with non-money producing activities like tenant and property management.

content provided by Mike Lautensack @ http://propertymanagementprofile.com/blog/10-top-reasons-to-hire-a-residential-property-management-company/

Rental Scams

An interesting article from King5.com that shows how scammers are seeking out houses advertised as “For Sale” and falsely trying to rent them out.

http://www.king5.com/news/consumer/Scam-artists-trying-to-rent-out-homes-they-dont-own-114758419.html

Definitely something to be aware of! We here at Windermere Gregory Property Management are aware knowledgeable about this instances and work hard to make sure it does not become a problem for our owners or future tenants.