Real Estate Investing: How Long Will It Take To Rent My House?

How many times have I heard the question ?How long will it take to rent my house?? Every investor that brings us their property wants to know the answer to this question. So, being in the property management business for five years I pull out my crystal ball and give them the answer. It isn?t always what they want to hear, but it is the answer.

I tell them that renting a house is similar to selling a house. If an investor chooses to do it themselves typically the results match the efforts that are put into it. Certainly a sign is necessary, so they pick one up at the local home improvement store, but will the homeowner covenants allow rental signs? They can put an ad in the local paper, but it is expensive. Don?t all the gurus tell you that print ads are a thing of the past and that the internet is the way to go? Well maybe you put it on a free internet site, and wait.

If they choose to use a professional property management company, the Management Company should put the property on multiple internet sites that reach agents, other property managers, as well as individuals. Individuals know to look for property managers because they remember their signs and other marketing and the tenants know they have a wide variety of properties. The better tenants also feel more comfortable renting from company because they know that they have recourse if there is a problem.

We have had investors turn properties over to us that they have had on the market for six months and they are amazed when it rents so quickly with us. The professional property manager does the marketing and also the qualifying so the resident you get is typically a better caliber of tenant, better screened and managed. They also know landlord tenant law protecting you and your asset.

There are cycles to the real estate market whether buying, selling or renting. Spring and summer are the best times to be on the market. There is a big rush to get into a house over the summer before school starts. It typically slows down in the fall, and then picks up again at the end on the year. We find that at mid month people are looking for a place for an end of month move in. Very few tenants look more than one month in advance.

Currently the Atlanta market has good rental absorption. Finally, the apartments that we compete with are no longer offer three months free rent and a flat screen television just for moving in.

For the past several years we have seen rental properties sit on the market and rental rates drop. Rents have declined for the past three years in the Atlanta area, but we are now turning the corner. Now we are able to increase rents each time there is a renewal. Every 3-5% helps.

One thing that has helped is the rise in mortgage rates. With many lenders raising rates and becoming more stringent in lending guidelines, many would be homeowners are now being priced out of the market. Less and less people are qualifying to buy, so they must rent. Everyone wants a house with their own yard. This is good for you and for us.

In reality you never know how quickly the property will rent. Curb appeal, cleanliness and livability mean a whole lot, so make your place look good. Look at what price comparable houses are renting for and then keep your price in line.

Soon you will have a qualified resident moving in and then you will have that answer to that question ?How long will it take to rent my house??

About the Author:

Mark Lackey is a real estate investor in Atlanta and works with The REI Team at Solid Source Realty, Inc. http://www.theREIteam.com. He frequently helps other investors in their pursuit of financial freedom. In addition, he is the Vice President of Solid Source Property Management, Inc. http://www.solidsourcepm.com.

Real Estate Investing By The Numbers: Part 1

In our recent Mastermind Group training session, our key topic of discussion was how to invest by the numbers. The longer that I spend investing in real estate and also evaluating projects around the county, the more and more I am astounded at the lack of knowledge from “so called” professionals. For most individual real estate investments, the level of analysis is not terribly difficult?. You find yourself doing the same thing over and over again. In this article, I will try and share this simplistic view and how you can know more than 95% of the “professionals” in this market.

What You Need To Know? For any investment, there really is 4 things you need to know and guess what, NOBODY gives them to you in a normal sales presentation. Let’s break down each one and how it is obtained:

1)Purchase Equity ? This is one of the simplest to obtain but is easily abused by sales people. What you want to know is what is your purchase price, relative to the actual STREET PRICE; i.e., the price a real individual in the area would pay to own your property. How do you get it? Appraisals, talking with agents in the area, running test ads in newspapers, etc.

2)Annual Appreciation (%) ? Now the witch craft begins?.. This requires a CRYSTAL BALL to look into the future. Because of this, appreciation is an OPINION that you should form on your own?. An “Experts” OPINION is still an opinion and you should treat it as such. To make an opinion, you had to consider things like job growth, lack of similar product, future demand, etc. Bottom line is that you would like to come up with a % number and this takes a little practice but after looking at a few areas, you can pretty easily form an opinion. PLEASE NOTE: If we “project” appreciation rates in an area, we are violating securities laws so we don’t do this. We share all the information about an area and why we like it and then have to leave it up to the individual to form their own opinion. However, when we have decided to introduce a property, we have formed our own OPINION and we like what we see.

3)Annual Cashflow ? Over time, you will either be making or losing money on this investment. It may turn out that small amounts of negative cashflow make sense if the annual appreciation and purchase equity are strong. The components that you have to gather for annual cashflow are

?Gross Annual Income; ?Management Expenses; ?Taxes, Insurance, HOA; ?Interest Expenses; and ?Maintenance Estimates

Fortunately, most of the expenses can be estimated pretty closely. For gross annual income, realize that again, NOBODY can predict the future. So, you can gather market rents data that you believe are comparable, apply any safety factor that you like, and then use that for ESTIMATES.

4)Special Tax Situations ? This is typically an unusual situation for individual investors but applies in areas such as the Go Zone where bonus depreciation can be used.

How Do You Use This Information Suppose you could see EXACTLY what was going to happen into the future?.. Of course, we know this is unrealistic however it still does not hurt to try based on our assumptions.

Suppose you looked into the future and you saw that in 5 years, your net gain on a property was going to be a little over $87,000 with a $21,000 dollar total investment and a little bit of your time. If you KNEW that was GOING to happen, what would you do? Would you purchase the property? Would you pass on the property? Why?

Realize, that for a $21,000 investment, this equates to making 33.9% on your money, year after year after year. That is not too shabby. Let’s apply the “rule of 72″ here which states that you can calculate how long (approximately) it will take to double your money with a certain return %. You take 72% / 33.9% = 2.1 Years to double your money. Is this something that is good?

The answer of course depends on a few factors but let’s put it into perspective. Suppose you invested $100,000 at a steady 33.9% rate of return. In 15 years, then you have now turned that $100,000 into $7.9 Million. Got your attention yet if you KNEW this was going to happen? Of course, if we have to take on all kinds of risks to get that return, then that may, or may not be such a good idea. If, however, it is low risk, now you have the makings of a good investment.

My argument now is that IF YOU COULD SEE INTO THE FUTURE, and you saw this kind of performance, you would be excited. Right? Well, why not pretend we can look into the future and CALCULATE what the future looks like using our 4 KEY parameters above. If we like the “future” answers, and we believe our assumptions, and we believe the risk to be low, isn’t that a prudent approach?

For many non-investors, they believe that real estate investors take on tons of risk and are gun slingers?? Quite contraire, monsieur, that is exactly what we DON’T do. Good investors simply look at all the FACTS, make some estimates of key parameters, estimate future performance, and then play “what if” games to what happens if things don’t work out exactly as thought.

Real Estate Investing By The Numbers: Part 1

In our recent Mastermind Group training session, our key topic of discussion was how to invest by the numbers. The longer that I spend investing in real estate and also evaluating projects around the county, the more and more I am astounded at the lack of knowledge from “so called” professionals. For most individual real estate investments, the level of analysis is not terribly difficult?. You find yourself doing the same thing over and over again. In this article, I will try and share this simplistic view and how you can know more than 95% of the “professionals” in this market.

What You Need To Know? For any investment, there really is 4 things you need to know and guess what, NOBODY gives them to you in a normal sales presentation. Let’s break down each one and how it is obtained:

1)Purchase Equity ? This is one of the simplest to obtain but is easily abused by sales people. What you want to know is what is your purchase price, relative to the actual STREET PRICE; i.e., the price a real individual in the area would pay to own your property. How do you get it? Appraisals, talking with agents in the area, running test ads in newspapers, etc.

2)Annual Appreciation (%) ? Now the witch craft begins?.. This requires a CRYSTAL BALL to look into the future. Because of this, appreciation is an OPINION that you should form on your own?. An “Experts” OPINION is still an opinion and you should treat it as such. To make an opinion, you had to consider things like job growth, lack of similar product, future demand, etc. Bottom line is that you would like to come up with a % number and this takes a little practice but after looking at a few areas, you can pretty easily form an opinion. PLEASE NOTE: If we “project” appreciation rates in an area, we are violating securities laws so we don’t do this. We share all the information about an area and why we like it and then have to leave it up to the individual to form their own opinion. However, when we have decided to introduce a property, we have formed our own OPINION and we like what we see.

3)Annual Cashflow ? Over time, you will either be making or losing money on this investment. It may turn out that small amounts of negative cashflow make sense if the annual appreciation and purchase equity are strong. The components that you have to gather for annual cashflow are

?Gross Annual Income; ?Management Expenses; ?Taxes, Insurance, HOA; ?Interest Expenses; and ?Maintenance Estimates

Fortunately, most of the expenses can be estimated pretty closely. For gross annual income, realize that again, NOBODY can predict the future. So, you can gather market rents data that you believe are comparable, apply any safety factor that you like, and then use that for ESTIMATES.

4)Special Tax Situations ? This is typically an unusual situation for individual investors but applies in areas such as the Go Zone where bonus depreciation can be used.

How Do You Use This Information Suppose you could see EXACTLY what was going to happen into the future?.. Of course, we know this is unrealistic however it still does not hurt to try based on our assumptions.

Suppose you looked into the future and you saw that in 5 years, your net gain on a property was going to be a little over $87,000 with a $21,000 dollar total investment and a little bit of your time. If you KNEW that was GOING to happen, what would you do? Would you purchase the property? Would you pass on the property? Why?

Realize, that for a $21,000 investment, this equates to making 33.9% on your money, year after year after year. That is not too shabby. Let’s apply the “rule of 72″ here which states that you can calculate how long (approximately) it will take to double your money with a certain return %. You take 72% / 33.9% = 2.1 Years to double your money. Is this something that is good?

The answer of course depends on a few factors but let’s put it into perspective. Suppose you invested $100,000 at a steady 33.9% rate of return. In 15 years, then you have now turned that $100,000 into $7.9 Million. Got your attention yet if you KNEW this was going to happen? Of course, if we have to take on all kinds of risks to get that return, then that may, or may not be such a good idea. If, however, it is low risk, now you have the makings of a good investment.

My argument now is that IF YOU COULD SEE INTO THE FUTURE, and you saw this kind of performance, you would be excited. Right? Well, why not pretend we can look into the future and CALCULATE what the future looks like using our 4 KEY parameters above. If we like the “future” answers, and we believe our assumptions, and we believe the risk to be low, isn’t that a prudent approach?

For many non-investors, they believe that real estate investors take on tons of risk and are gun slingers?? Quite contraire, monsieur, that is exactly what we DON’T do. Good investors simply look at all the FACTS, make some estimates of key parameters, estimate future performance, and then play “what if” games to what happens if things don’t work out exactly as thought.

Real Estate Investing By The Numbers: Part 1

In our recent Mastermind Group training session, our key topic of discussion was how to invest by the numbers. The longer that I spend investing in real estate and also evaluating projects around the county, the more and more I am astounded at the lack of knowledge from “so called” professionals. For most individual real estate investments, the level of analysis is not terribly difficult?. You find yourself doing the same thing over and over again. In this article, I will try and share this simplistic view and how you can know more than 95% of the “professionals” in this market.

What You Need To Know? For any investment, there really is 4 things you need to know and guess what, NOBODY gives them to you in a normal sales presentation. Let’s break down each one and how it is obtained:

1)Purchase Equity ? This is one of the simplest to obtain but is easily abused by sales people. What you want to know is what is your purchase price, relative to the actual STREET PRICE; i.e., the price a real individual in the area would pay to own your property. How do you get it? Appraisals, talking with agents in the area, running test ads in newspapers, etc.

2)Annual Appreciation (%) ? Now the witch craft begins?.. This requires a CRYSTAL BALL to look into the future. Because of this, appreciation is an OPINION that you should form on your own?. An “Experts” OPINION is still an opinion and you should treat it as such. To make an opinion, you had to consider things like job growth, lack of similar product, future demand, etc. Bottom line is that you would like to come up with a % number and this takes a little practice but after looking at a few areas, you can pretty easily form an opinion. PLEASE NOTE: If we “project” appreciation rates in an area, we are violating securities laws so we don’t do this. We share all the information about an area and why we like it and then have to leave it up to the individual to form their own opinion. However, when we have decided to introduce a property, we have formed our own OPINION and we like what we see.

3)Annual Cashflow ? Over time, you will either be making or losing money on this investment. It may turn out that small amounts of negative cashflow make sense if the annual appreciation and purchase equity are strong. The components that you have to gather for annual cashflow are

?Gross Annual Income; ?Management Expenses; ?Taxes, Insurance, HOA; ?Interest Expenses; and ?Maintenance Estimates

Fortunately, most of the expenses can be estimated pretty closely. For gross annual income, realize that again, NOBODY can predict the future. So, you can gather market rents data that you believe are comparable, apply any safety factor that you like, and then use that for ESTIMATES.

4)Special Tax Situations ? This is typically an unusual situation for individual investors but applies in areas such as the Go Zone where bonus depreciation can be used.

How Do You Use This Information Suppose you could see EXACTLY what was going to happen into the future?.. Of course, we know this is unrealistic however it still does not hurt to try based on our assumptions.

Suppose you looked into the future and you saw that in 5 years, your net gain on a property was going to be a little over $87,000 with a $21,000 dollar total investment and a little bit of your time. If you KNEW that was GOING to happen, what would you do? Would you purchase the property? Would you pass on the property? Why?

Realize, that for a $21,000 investment, this equates to making 33.9% on your money, year after year after year. That is not too shabby. Let’s apply the “rule of 72″ here which states that you can calculate how long (approximately) it will take to double your money with a certain return %. You take 72% / 33.9% = 2.1 Years to double your money. Is this something that is good?

The answer of course depends on a few factors but let’s put it into perspective. Suppose you invested $100,000 at a steady 33.9% rate of return. In 15 years, then you have now turned that $100,000 into $7.9 Million. Got your attention yet if you KNEW this was going to happen? Of course, if we have to take on all kinds of risks to get that return, then that may, or may not be such a good idea. If, however, it is low risk, now you have the makings of a good investment.

My argument now is that IF YOU COULD SEE INTO THE FUTURE, and you saw this kind of performance, you would be excited. Right? Well, why not pretend we can look into the future and CALCULATE what the future looks like using our 4 KEY parameters above. If we like the “future” answers, and we believe our assumptions, and we believe the risk to be low, isn’t that a prudent approach?

For many non-investors, they believe that real estate investors take on tons of risk and are gun slingers?? Quite contraire, monsieur, that is exactly what we DON’T do. Good investors simply look at all the FACTS, make some estimates of key parameters, estimate future performance, and then play “what if” games to what happens if things don’t work out exactly as thought.

Real Estate Investing: How Long Will It Take To Rent My House?

How many times have I heard the question ?How long will it take to rent my house?? Every investor that brings us their property wants to know the answer to this question. So, being in the property management business for five years I pull out my crystal ball and give them the answer. It isn?t always what they want to hear, but it is the answer.

I tell them that renting a house is similar to selling a house. If an investor chooses to do it themselves typically the results match the efforts that are put into it. Certainly a sign is necessary, so they pick one up at the local home improvement store, but will the homeowner covenants allow rental signs? They can put an ad in the local paper, but it is expensive. Don?t all the gurus tell you that print ads are a thing of the past and that the internet is the way to go? Well maybe you put it on a free internet site, and wait.

If they choose to use a professional property management company, the Management Company should put the property on multiple internet sites that reach agents, other property managers, as well as individuals. Individuals know to look for property managers because they remember their signs and other marketing and the tenants know they have a wide variety of properties. The better tenants also feel more comfortable renting from company because they know that they have recourse if there is a problem.

We have had investors turn properties over to us that they have had on the market for six months and they are amazed when it rents so quickly with us. The professional property manager does the marketing and also the qualifying so the resident you get is typically a better caliber of tenant, better screened and managed. They also know landlord tenant law protecting you and your asset.

There are cycles to the real estate market whether buying, selling or renting. Spring and summer are the best times to be on the market. There is a big rush to get into a house over the summer before school starts. It typically slows down in the fall, and then picks up again at the end on the year. We find that at mid month people are looking for a place for an end of month move in. Very few tenants look more than one month in advance.

Currently the Atlanta market has good rental absorption. Finally, the apartments that we compete with are no longer offer three months free rent and a flat screen television just for moving in.

For the past several years we have seen rental properties sit on the market and rental rates drop. Rents have declined for the past three years in the Atlanta area, but we are now turning the corner. Now we are able to increase rents each time there is a renewal. Every 3-5% helps.

One thing that has helped is the rise in mortgage rates. With many lenders raising rates and becoming more stringent in lending guidelines, many would be homeowners are now being priced out of the market. Less and less people are qualifying to buy, so they must rent. Everyone wants a house with their own yard. This is good for you and for us.

In reality you never know how quickly the property will rent. Curb appeal, cleanliness and livability mean a whole lot, so make your place look good. Look at what price comparable houses are renting for and then keep your price in line.

Soon you will have a qualified resident moving in and then you will have that answer to that question ?How long will it take to rent my house??

About the Author:

Mark Lackey is a real estate investor in Atlanta and works with The REI Team at Solid Source Realty, Inc. http://www.theREIteam.com. He frequently helps other investors in their pursuit of financial freedom. In addition, he is the Vice President of Solid Source Property Management, Inc. http://www.solidsourcepm.com.

Real Estate Investing: How Long Will It Take To Rent My House?

How many times have I heard the question ?How long will it take to rent my house?? Every investor that brings us their property wants to know the answer to this question. So, being in the property management business for five years I pull out my crystal ball and give them the answer. It isn?t always what they want to hear, but it is the answer.

I tell them that renting a house is similar to selling a house. If an investor chooses to do it themselves typically the results match the efforts that are put into it. Certainly a sign is necessary, so they pick one up at the local home improvement store, but will the homeowner covenants allow rental signs? They can put an ad in the local paper, but it is expensive. Don?t all the gurus tell you that print ads are a thing of the past and that the internet is the way to go? Well maybe you put it on a free internet site, and wait.

If they choose to use a professional property management company, the Management Company should put the property on multiple internet sites that reach agents, other property managers, as well as individuals. Individuals know to look for property managers because they remember their signs and other marketing and the tenants know they have a wide variety of properties. The better tenants also feel more comfortable renting from company because they know that they have recourse if there is a problem.

We have had investors turn properties over to us that they have had on the market for six months and they are amazed when it rents so quickly with us. The professional property manager does the marketing and also the qualifying so the resident you get is typically a better caliber of tenant, better screened and managed. They also know landlord tenant law protecting you and your asset.

There are cycles to the real estate market whether buying, selling or renting. Spring and summer are the best times to be on the market. There is a big rush to get into a house over the summer before school starts. It typically slows down in the fall, and then picks up again at the end on the year. We find that at mid month people are looking for a place for an end of month move in. Very few tenants look more than one month in advance.

Currently the Atlanta market has good rental absorption. Finally, the apartments that we compete with are no longer offer three months free rent and a flat screen television just for moving in.

For the past several years we have seen rental properties sit on the market and rental rates drop. Rents have declined for the past three years in the Atlanta area, but we are now turning the corner. Now we are able to increase rents each time there is a renewal. Every 3-5% helps.

One thing that has helped is the rise in mortgage rates. With many lenders raising rates and becoming more stringent in lending guidelines, many would be homeowners are now being priced out of the market. Less and less people are qualifying to buy, so they must rent. Everyone wants a house with their own yard. This is good for you and for us.

In reality you never know how quickly the property will rent. Curb appeal, cleanliness and livability mean a whole lot, so make your place look good. Look at what price comparable houses are renting for and then keep your price in line.

Soon you will have a qualified resident moving in and then you will have that answer to that question ?How long will it take to rent my house??

About the Author:

Mark Lackey is a real estate investor in Atlanta and works with The REI Team at Solid Source Realty, Inc. http://www.theREIteam.com. He frequently helps other investors in their pursuit of financial freedom. In addition, he is the Vice President of Solid Source Property Management, Inc. http://www.solidsourcepm.com.

Real Estate Investing By The Numbers: Part 1

In our recent Mastermind Group training session, our key topic of discussion was how to invest by the numbers. The longer that I spend investing in real estate and also evaluating projects around the county, the more and more I am astounded at the lack of knowledge from “so called” professionals. For most individual real estate investments, the level of analysis is not terribly difficult?. You find yourself doing the same thing over and over again. In this article, I will try and share this simplistic view and how you can know more than 95% of the “professionals” in this market.

What You Need To Know? For any investment, there really is 4 things you need to know and guess what, NOBODY gives them to you in a normal sales presentation. Let’s break down each one and how it is obtained:

1)Purchase Equity ? This is one of the simplest to obtain but is easily abused by sales people. What you want to know is what is your purchase price, relative to the actual STREET PRICE; i.e., the price a real individual in the area would pay to own your property. How do you get it? Appraisals, talking with agents in the area, running test ads in newspapers, etc.

2)Annual Appreciation (%) ? Now the witch craft begins?.. This requires a CRYSTAL BALL to look into the future. Because of this, appreciation is an OPINION that you should form on your own?. An “Experts” OPINION is still an opinion and you should treat it as such. To make an opinion, you had to consider things like job growth, lack of similar product, future demand, etc. Bottom line is that you would like to come up with a % number and this takes a little practice but after looking at a few areas, you can pretty easily form an opinion. PLEASE NOTE: If we “project” appreciation rates in an area, we are violating securities laws so we don’t do this. We share all the information about an area and why we like it and then have to leave it up to the individual to form their own opinion. However, when we have decided to introduce a property, we have formed our own OPINION and we like what we see.

3)Annual Cashflow ? Over time, you will either be making or losing money on this investment. It may turn out that small amounts of negative cashflow make sense if the annual appreciation and purchase equity are strong. The components that you have to gather for annual cashflow are

?Gross Annual Income; ?Management Expenses; ?Taxes, Insurance, HOA; ?Interest Expenses; and ?Maintenance Estimates

Fortunately, most of the expenses can be estimated pretty closely. For gross annual income, realize that again, NOBODY can predict the future. So, you can gather market rents data that you believe are comparable, apply any safety factor that you like, and then use that for ESTIMATES.

4)Special Tax Situations ? This is typically an unusual situation for individual investors but applies in areas such as the Go Zone where bonus depreciation can be used.

How Do You Use This Information Suppose you could see EXACTLY what was going to happen into the future?.. Of course, we know this is unrealistic however it still does not hurt to try based on our assumptions.

Suppose you looked into the future and you saw that in 5 years, your net gain on a property was going to be a little over $87,000 with a $21,000 dollar total investment and a little bit of your time. If you KNEW that was GOING to happen, what would you do? Would you purchase the property? Would you pass on the property? Why?

Realize, that for a $21,000 investment, this equates to making 33.9% on your money, year after year after year. That is not too shabby. Let’s apply the “rule of 72″ here which states that you can calculate how long (approximately) it will take to double your money with a certain return %. You take 72% / 33.9% = 2.1 Years to double your money. Is this something that is good?

The answer of course depends on a few factors but let’s put it into perspective. Suppose you invested $100,000 at a steady 33.9% rate of return. In 15 years, then you have now turned that $100,000 into $7.9 Million. Got your attention yet if you KNEW this was going to happen? Of course, if we have to take on all kinds of risks to get that return, then that may, or may not be such a good idea. If, however, it is low risk, now you have the makings of a good investment.

My argument now is that IF YOU COULD SEE INTO THE FUTURE, and you saw this kind of performance, you would be excited. Right? Well, why not pretend we can look into the future and CALCULATE what the future looks like using our 4 KEY parameters above. If we like the “future” answers, and we believe our assumptions, and we believe the risk to be low, isn’t that a prudent approach?

For many non-investors, they believe that real estate investors take on tons of risk and are gun slingers?? Quite contraire, monsieur, that is exactly what we DON’T do. Good investors simply look at all the FACTS, make some estimates of key parameters, estimate future performance, and then play “what if” games to what happens if things don’t work out exactly as thought.