Securing your real estate investment

You must care for your property to keep your real estate investment safe.

• Do regular maintenance and make the necessary upgrades to keep or even boost its value. Make sure you follow safety rules and regulations if you do any renovations or fixes to your property.
• Stay informed about market trends, economic indicators, and local developments. It will help you make well-informed decisions on where to invest, property type, location, and whether it’s a good time to buy or sell.
• As you navigate the complexities of real estate investment, it’s also crucial to stay prepared for tax season. Effective planning and organization throughout the year can streamline the process of filing taxes and identifying potential deductions related to your real estate activities. Keeping accurate records of expenses, renovations, and income is key. Additionally, consulting with a tax professional who specializes in real estate can provide invaluable insights, ensuring that you’re leveraging all possible benefits while staying compliant with tax laws.
• Deal with risk by having good insurance if unexpected things like natural disasters or accidents mess with your property. Spread your investments around so you don’t increase the risk if the market goes up and down. Keep up to date with the rules and laws about real estate. They can affect how you take care of your property and decide what to do with it.

What the experts say

As you get familiar with the ups and downs of real estate, we put together the advice and insights of some experts to help you make smart decisions, ensuring your portfolio keeps growing and stays protected for the long run.

What key factors should I prioritize to maintain and increase the value of my real estate investments and effectively manage risks to ensure long-term profitability?

“It is crucial to prioritize key factors that can help increase the long-term profitability of real estate investments. This includes risk mitigation and compliance to safeguard assets against potential losses. For instance, property maintenance is essential to protecting the functionality and value of the property in case the time comes, and you need to sell. Investing in comprehensive real estate insurance can further protect investments by covering liability claims, tenant disputes, and property damage. A good policy can decrease the financial burden of repairing or replacing big-ticket items. Like insurance, property management services offer added peace of mind to owners through thorough tenant screening, market analysis, proactive upkeep, legal compliance, and proper cash flow management. Staying informed about economic indicators such as inflation, rising interest rates, unemployment, market trends, and local regulations allows investors to navigate changing circumstances that are inevitable in the real estate industry. By focusing on these factors, investors can effectively manage risks and secure the long-term profitability of their real estate investments.”

Eva Rose from Bay Property Management Group

What are the most common risks I might face as a real estate investor?

“1. Analysis Paralysis – there are countless ways to analyze investment opportunities, and there’s no scientific way to determine what investment is good for a particular individual. Investors can easily become a victim of inaction based on their over-analysis of an opportunity and getting caught up with achieving a certain metric in their pro formas. A big risk that investors face is missing out on the long-term benefits of owning investment property simply because they are waiting for a perfect deal.

2. Relying On Other People’s Advice – getting educated and thinking for yourself is crucial as a real estate investor. I’ve coached countless investors who heavily relied on a real estate agent’s opinion of a property’s resale value, only to be surprised when the agent’s comps were pulled from another zip code, subdivision, or market area that made the appraisal irrelevant. Without personally verifying valuations, property condition, and repair costs for one’s self, investors may put themselves in a situation where their entire investment can be lost.

3. Not Knowing Your Numbers – investors who do not understand the fundamentals of analyzing an investment property, whether it’s for wholesale, fix-and-flip, or rental, are simply guessing. The most savvy, successful investors can look at any property investment and know what to look for to determine its feasibility. This type of knowledge can help investors mitigate risk by ensuring their pro formas are not only conservative but realistic.”

Ryan Zomorodi from Real Estate Skills

How can I leverage online real estate platforms to safeguard my investment property while selling, ensuring maximum security and value retention?

“Online real estate platforms can be a powerful tool to safeguard your investment property and maximize its value during selling. Here are some ways you can leverage them:

Security:

• Screen potential buyers: Utilize platforms that offer pre-qualification tools, background checks, and verification of financial information. This helps ensure only serious and qualified buyers are interacting with your property.
• Control access and information: Many platforms allow you to control who can access details about your property and schedule showings. This helps prevent unauthorized entry and protects sensitive information.
• Virtual tours and 3D scans: Offer virtual tours and 3D scans of your property. This allows potential buyers to explore the space remotely and reduces the need for physical showings, minimizing potential risks.

Value retention:

• Competitive pricing: Analyze market data and use the platform’s analytics tools to set a competitive asking price. This ensures you attract serious buyers while maximizing your potential return.
• Professional photos and descriptions: Invest in high-quality and compelling descriptions showcasing your property’s best features. This helps your listing stand out and attract more interest.
• Negotiate Online: Some platforms offer features like online offers and counteroffers. This allows you to negotiate with potential buyers efficiently and transparently, potentially securing a better deal.”

Vatsal from Houzeo

What crucial tips should I consider to protect my property from fraud?

“Most homeowners don’t think about having their homes stolen. After all, it’s attached to the ground and hard to move.

An alarming trend we’ve seen in recent years is fraud perpetrated against a property owner in the form of theft of title, which, in extreme circumstances, can result in the transfer of legal ownership.

Title theft can occur when someone is able to steal your personal information and then access accounts and services in an effort to impersonate you. Alternatively, they can glean enough information to create a fake deed and have it recorded against your property.

While not completely preventable, the good news is that there are several things you can do to avoid this type of fraud, including to make sure your home internet is secured (and you change your password often), retrieve your physical mail soon after it’s delivered (or better yet arrange to pick it up at the post office), and refuse to answer phones calls from numbers you don’t recognize (and never share sensitive personal information with a stranger, no matter who they claim to be).

Should you suspect you’ve been a victim, contact your real estate broker, title company, credit bureaus, and the local police. There are also title monitoring services that inform you when a change in your title is attempted.

Happy Investing!”

Robert Helms from The Real Estate Guys Radio Program & Podcast

What strategies should I adopt to manage and grow my real estate investment portfolio successfully, as leading industry coaches and consultants advised?

“The key to building a real estate investment portfolio is knowing your numbers before you actually start investing!  Too often, clients will hire our coaches to help their underperforming portfolios produce as they had initially hoped back when they started investing.  Portfolios can also become a drain on both time & money if they aren’t built properly, and just because a portfolio contains a large number of properties does not necessarily mean that it performs well.

Most savvy investors understand that real estate investing is not just about buying low and trusting that the property appreciates in value over time to generate a positive return on investment. They also know how to conduct a proper cash flow analysis to ensure that their investments cover ongoing expenses & generate positive net income. In addition, they understand all of the tax advantages that can be realized by the different types of investments they might make.  They know how to compare different types of investment properties against each other by calculating capitalization rates, gross rent multipliers, cash-on-cash returns, debt service coverage ratios, and other numerous investment formulas.

Conducting these analyses systematically prior to purchasing each property is what creates strong foundations that successful portfolios can be built upon!”

Brian Icenhower from Icenhower Coaching & Consulting

How can I leverage CRM-generated insights to enhance customer experience in my rental properties, thereby increasing tenant retention?

“By leveraging CRM-generated insights, you can create a tenant-centric approach that enhances customer experience, fosters tenant satisfaction, and increases tenant retention.

Let’s have a quick look at three practical approaches to CRM-generated insights:

Approach #1. Tracking retention rates and identifying areas for improvement

Within a CRM system, you can analyze client engagement history, maintenance response times, and amenity satisfaction. Having that, you can then identify areas for improvement required to enhance the tenant experience.

Approach #2. Identifying and prioritizing tenant needs and preferences

CRM data provides a treasure trove of information about tenants, including their demographics, communication preferences, and property preferences. By analyzing this data, brokers can gain insights into the needs and preferences of their tenant base. This information can tailor marketing campaigns, provide personalized communication, and prioritize maintenance requests aligning with tenant priorities.

Approach #3. Staying on top of clients’ minds by reminding them about yourself

Successful customer experience and tenant retention are based on regular reminders about your services as a real estate broker. For example, when you remind clients about the lease expiration and then offer suitable property that suits their needs, you enhance your stellar reputation as a broker who considers the needs of every client no matter how long your last communication was. As a result, your name comes first when it’s time to buy, sell, or lease.”

Wes Snow from Ascendix Technologies

What’s the best way for me to invest in a rental property with a limited budget?

“If you’re eager to get started in real estate by investing in a rental property, there are a few ways you could go!  One of my favorite options lately is finding properties that are listed where the seller is open to financing the deal themselves.  This is called seller financing.  Essentially, instead of using a bank or mortgage company to get a loan, the owner will do this for you.  The benefit of seller financing is that you may be able to put less money down, and you’ll also save on closing costs!  Instead of 20% down, which is normally the minimum for an investment property, you may be able to find a seller willing to work with you and do 5-15% down.

Another creative way to minimize your out-of-pocket costs is to find a property owner with an assumable mortgage!  Someone may be in need of getting out of their current property for personal reasons, and taking over the mortgage from them could benefit you.  There is a potential to get into a deal like this with no money upfront – win-win for both sides!”

Melissa from Beach Life Bliss!

Can you provide me with the best tips for finding a successful investment property?

“Finding a successful investment property hinges on three key factors: location, financials, and growth potential. First, location is paramount. Look for areas with strong rental demand, evidenced by low vacancy rates and consistent rent increases. Anecdotal evidence supports this; one of my clients saw remarkable returns by focusing on up-and-coming neighborhoods near major employment centers.

Second, scrutinize the property’s financials. Beyond the purchase price, consider the costs of maintenance, property management, and potential renovations. A property might appear lucrative at first glance, but hidden expenses can erode profits. I recall a case where unexpected maintenance costs turned a seemingly profitable property into a financial burden.

Finally, evaluate the property’s growth potential. This isn’t just about immediate returns but long-term appreciation. Research local development plans and market trends. For instance, a property near a planned transit hub may appreciate significantly.”

Dennis Shirshikov from Awning

How can I protect and profit from short-term rentals?

“Turn your worrying about your short-term rental into profit by thinking of ways to enhance your property for your customer and protect it at the same time. When you think about what your customers want, you need to think like you are your own customer. You also want to have good people stay in your place and keep the bad or potentially destructive people out at the same time. After all, as you keep your property in good shape, you will attract better-quality customers. And those customers will take care of your property better.

There are a number of things to profit by protecting your property that you can do.  Implement thorough screening processes for renters to reduce the risk of property damage or disruptive guests. If someone has a record of bad stays at other places, you need to keep them from staying at your property. You want people who have been good to past hosts. Past experiences do not dictate the future but it does give you a good probability that you will have a good customer. Install good door locks with programmable key codes for each guest. As each new customer books, you can change the code to protect your property and your customer.

In your listing, you can train your customers how they are to respect and take care of your property. Carefully wording your description, cancellation policy, fees, etc., will help you to set the expectations for the customer that you take care of your property and you expect them to do the same. Lastly, consider offering additional amenities or unique experiences to attract guests and differentiate your property in the competitive short-term rental market. By combining a commitment to security, strategic marketing, and adapting to market dynamics, you can both protect and profit from your short-term rental investment.”

Dustin Heiner from Master Passive Income

How can I leverage software and productivity tools to optimize my investment strategies and manage my portfolios more effectively?

“Managing investments these days is way easier with digital apps and tools. I use a different variety of apps to stay on top of not just my investments but my overall finances. Specifically, I use apps that help me understand the market movements. Pair these apps with tools that make your research easier and handle the routine stuff. It keeps you updated without drowning you in details. Our company, TaskSpur, is built on this principle of simplifying the complexities of managing life. I use it every day to track my financial, personal, health, and career goals and make sure I’m consistently working on the things that matter. And hey, customizable alerts can remind you to tweak your portfolio when needed.”

Bernard Boodeea from Life Intelligence Group

What are the best practices for successfully investing in real estate during economic downturns or recessions?

“During expansionary periods, every investor looks like a genius because everyone is making money. No one is going to complain if one investor makes 18% while another makes 20%. Since everyone is making money, everyone is happy. What separates the businesses that will survive from the majority that will go bust during a recession is how well they can manage their operations.

The single most important factor for achieving success while investing during a recession is cost control. Cost control is achieved through tight operations with good oversight. Your operations/processes are the difference between losing your shirt or breaking even. It’s the difference between a marginal deal and a great deal.

The reason is that during expansionary periods, the focus is on growth and revenue. A lot of mistakes can be made because people are fighting to outbid each other to pay more for rent or price. This allows you to absorb a lot of mistakes. During contractionary periods, the exact opposite is true, as people are fighting to undercut the competition. Therefore, the focus needs to be on cost-cutting, savings, and trimming the fat from your projects, team, and transactions. This famous saying says it perfectly – protect the downside, and the upside takes care of itself.”

Eric Bowlin from Real Estate Investing

How can I protect my vacant property from squatters?

“Protecting your vacant property from squatters involves a combination of vigilance, regular inspections, and strategic use of technology. Start by conducting regular property inspections to ensure everything is in order and to demonstrate active management. It’s also crucial to market your vacant properties effectively to find tenants faster, reducing the time the property is empty.

Use Lockboxes to enhance security for vacant properties, restricting access to authorized individuals only. It significantly reduces the risk of unauthorized squatting and break-ins.

Make your property appear occupied. Regularly collect mail, adjust curtains during inspections, maintain the landscape, and engage neighbors to report any suspicious activity. Regular visits, at least three times a month, are essential, especially during off-seasons like winter, when you should also turn off the water supply to prevent damage.

Prevent your prospects from turning into squatters by conducting thorough background checks, including contacting previous landlords, and being strict with rent payments. We advise all leads coming in to be pre-qualified, ensuring only suitable candidates book showings. This can be automated and free from human error by using AI chatbots.

Finally, in case of a tenant’s passing, promptly change locks and secure the property until proper documentation is provided.”

LetHub Team from LetHub

How can I maximize my ROI when doing pre-sale renovations?

“Preparing your place to sell by making it “move-in ready” using a pre-sale renovation is one of the best ways to enhance its market appeal, help the home sell faster, and significantly boost its return on investment (ROI).

A successful pre-sale renovation requires strategic improvements to address current buyer preferences and local market trends. Knowing exactly which updates to make to bring the highest sales price is the key to a successful pre-sale renovation and why homeowners today are turning to a new source: a pre-sale renovation firm.

A pre-sale renovation firm revolutionizes the process by offering a comprehensive package of services, including financing the renovations upfront: zero dollars out-of-pocket for sellers. With a deep understanding of the local real estate market and exceptional renovation experience and expertise, they can identify precisely which renovations will yield the highest ROI in your market.

To make the process as effortless as possible for homeowners, pre-sale renovation firms use advanced technology, including AI and computer vision, to streamline the renovation process. From budgeting and design choices to securing contractors and materials and scheduling, today’s pre-sale renovation process can be turnkey to ensure your property improvements maximize its appeal and your ROI.“

Candice Mooring from Revive Real Estate

What key aspects should I consider when looking to buy a rental property?

“I’m a short-term rental investor who buys properties and puts them on Airbnb. When I’m looking to buy rental properties, I aim to have over 25% first-year gross rental yield in a city with high real estate appreciation factors.

I start with choosing the right city with:

1. A high average rental yield.
2. A good appreciation outlook. (5 years average income change and population growth)
3. A short-term rental-friendly regulation.

Once I decide on a city, I look into the specific neighborhoods and property types with high short-term rental demand.”

Jae Seok An from Airbtics

What are the key tax considerations and implications that I should be aware of in managing my real estate investments?

“First and most importantly: depreciation. This is something you can deduct annually, and what you can deduct varies depending on the type of rental, how long it was rented out, and what you do to the property.

Most properties, residential and commercial real estate, use a “straight-line basis” for depreciation. For homes, this can be done over the course of 27.5 years, while non-residential properties can be depreciated over the course of 39 years. If you bought a home mid-year, obviously, you’ll likely have a partial first-year depreciation. The alternative, accelerated depreciation, is rare for properties. However, it is common with tangible property, which can be fully depreciated over the course of 5-7 years — if you need to offset your income sooner. Ultimately, this lowers your taxable rental income by reducing what you owe in income taxes.

Secondly, deductions. While revenue from rentals is taxable income, expenses from managing and maintaining real estate properties are the oft-overlooked deductions. For instance, simply advertising a vacant rental allows you to deduct expenses (even if it isn’t for the entire year). Additionally, traveling to and from the property, paying a landscaping service, insurance, maintenance, and repairs can all go toward deductions for property.”

Derek Hobson from Huddleston Tax CPAs

How can I effectively incorporate real estate note investing into my investment strategy to diversify my portfolio and enhance overall profitability while avoiding common pitfalls?

“1) Never buy notes from people who teach notes. Ipso-facto, they are unethical.

2) Avoid note funds. They are often unregulated and are rife with fraud. Buy individual notes from property sellers who have created them or through a reputable note broker.

3) Do not buy a note from a seller who promises that they will handle any default or foreclosure and/or promises that they will make the payments to you if that happens. Courts have ruled that is a security.

4) Perform the 3 P’s of note investing due diligence: Confirm that the payor, the property, and the paperwork are as represented. If you are new to this investment, consult a real estate lawyer. Ask for recommendations from people at local real estate investment clubs or our Facebook group.

5) Take title to notes. Have the original paperwork signed over to you.

6) Never allow the seller to service the note. Get a servicing company.

7) Do not buy partials. Another party may control your investment.

8) Buy notes that were professionally created and are serviced.

9) Before you buy a note, do internet searches with the name of the seller and words like “fraud,” “scam,” “rip-off,” “ponzi,” etc.

10) Join our Note Investing Facebook group.”

W. J. Mencarow from The Paper Source

What measures can I take to safeguard my property against unlawful tenants or terminate an expired lease agreement?

“Here are the measures we at Managedbnbs do to safeguard our landlords:

• Thorough Tenant Screening, aka Vetting: Conduct comprehensive checks on potential tenants, including Reviews, identity, credit history, and references, to identify any red flags.
• Regular Property Inspections: Regularly inspect your property to ensure proper maintenance and no unauthorized occupancy.
• Legal Eviction Process: For tenants refusing to leave post-expiration or after significant violations, initiate a legal eviction process following your jurisdiction’s laws.
• Security Measures: Implement security systems like surveillance cameras and secure locks.
• Professional Property Management: Consider hiring a firm like Managed BnBs to handle tenant screening, agreements, inspections, and legal matters.
• Stay Informed and Insured: Keep updated on local tenancy laws and maintain adequate property insurance.

Building a positive relationship with tenants can also facilitate smoother management and issue resolution. Always consult a legal expert for advice tailored to your specific situation and location.”

Andrew from ManagedBnbs

What should I consider when selecting an investment fund?

“Both a quantitative and qualitative analysis are required when selecting an investment fund.

Evaluating quality begins with assessing the Portfolio Manager’s experience, reputation, alignment with investors’ interests (if compensation is tied to performance), and track record, with an ideal PM possessing strong scores in all these areas.

In the fund factsheet, checking the weighting of the fund’s top 10 holdings shows the degree of risk concentration, while costs are measured using the total expense ratio (TER, i.e., overall running costs as a percentage of the fund’s assets).

Quantitative analysis involves examining ratios based on historical returns. The starting point is checking the duration of the historical returns and whether the same PM has been in charge throughout that period. It’s also important to verify whether the historical returns cited are live or “back tested” (i.e., simulated). To measure the fund’s historical average annual returns, investors use the geometric mean, accounting for compounding, to determine the compound annual growth rate (CAGR).

Volatility, a measure of a fund’s riskiness based on NAV fluctuations, is the metric to look at to understand risk. A highly volatile fund, all else being equal, carries more risk than one with low volatility.

Also used is the Sharpe ratio, which provides insight into how the fund performed per unit of risk. The information ratio, which tracks a fund’s excess returns beyond its benchmark, and the maximum drawdown (MDD), which is the largest peak-to-trough decline in a fund’s NAV, are the last important data to examine.”

Piero Politeo from Exirio

How can a property manager help me save money?

“Being a landlord can be a blast, but let’s be real, managing your own rentals can be a real hoot. From finding the perfect tenants to keeping everything in tip-top shape, it’s like having a full-time job. But, some landlords like to roll up their sleeves and take on this responsibility themselves to save some dough and have more control over their properties. But, just like with any risk, it can sometimes end up costing more money and causing more stress in the long run.

Hiring a good property manager can be a valuable investment for landlords. They can save you money and stress by handling all the day-to-day tasks of managing your rentals, and provide valuable insights and advice on how to improve your properties and increase your rental income. Plus, they can help navigate the legal and regulatory landscape and find and vet tenants. By hiring a good property manager, you can focus on growing your business and spending time with your family, while your properties are being taken care of. Now, that sounds like a good thing!”

Sell Your House Tulsa team from Sell Your House Tulsa

In the diverse world of real estate investment, various strategies cater to different goals and levels of involvement. For some, investing in rental properties offers a steady stream of income, while others might find success in the dynamic and often fast-paced world of house flipping, quickly renovating, and selling properties for profit. Each approach demands a unique set of skills and market knowledge. For instance, while house flipping requires an eye for potential and a knack for timely renovations, long-term property investment leans more on consistent management and tenant relations. Regardless of the path chosen, the key lies in adapting to market trends, understanding local real estate dynamics, and learning from each venture to refine your strategy continually.

Real estate investment is a continuous learning process. As you dive into real estate investment, it’s smart to learn from a mix of sources. You can tap into real estate podcasts and videos along with classic options like books and seminars. These are great for picking up tips from experts and hearing stories from people who’ve been there. Mixing up these different ways of learning will give you a better grip on the ins and outs of real estate, helping you make smarter choices for your investments. Finding the right balance between improving your property through smart management while keeping an eye on what’s happening in the market and having good insurance to keep your property safe. By applying the expert’s advice, you can confidently explore the real estate game, making informed decisions that set the stage for long-term success.