First Rental Property

Due to popular demand, guest posts have returned back to First Rental Property.  It has been a while since our last guest post, however, the wait has been well worth it.

Today I have for you a very well written article compliments of Phil Wiper of Family Lending.

In today’s article, Phil discusses 5 important factors that every new real estate investor needs to consider when they are buying their first rental property.

Enjoy the article, and please leave your comments in the comments section below.

Also, don’t forget to check out the article I wrote for The Family Lending Blog titled, Here Is A Method That Is Helping Home Owners Save Thousands On Their Mortgage.

Best Regards,

Neil Uttamsingh

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5 Items to Consider When Purchasing Rental Property

If you are ready to purchase your first rental property or still sitting on the fence wondering if you are making the right decision, I am here to tell you that the decision to purchase your first rental property is never an easy one but once you have done so, you will never turn back.
You’re probably wondering why should you listen to me, but I have bought and sold over 10 rentals in the last couple of years. I am here to say that if I just looked out for these 5 items that I am going to share with you, I would have been a much happier camper. Instead, I had to learn the hard way, one building, and one tenant at a time.
These 5 important items include:

1. What is the expected cash flow from the rental property?
•    First lets say that you are looking at a duplex for $200,000
•    Through your market research and the information you obtained from your appraiser, you have determined that the market rents for your area are X.
•    Next you should have been given a pro-forma of expense for the property which includes the mortgage, insurance estimate, property tax amount, utilities (if the tenant is not paying them) and the property management costs.
•    Your objective is to have this property putting POSITIVE CASH FLOW in your pocket from day ONE.
•    Not all areas of the city can support the rent required to cover the mortgage and the expenses. My suggestion, do not purchase in the areas where you know that this will not work. You are looking for areas where you can have positive cash flow, after all you are in this to make money right?

2. Pick a neighborhood with low vacancy rates in comparison to the rest of the city.
•    From my personal experience, it is best if you look to purchase a rental home in a healthier neighborhood. There are a couple of reasons for this; one is that you will be looking at a higher rental payment and two, the vacancy rates tend to be lower.

3. Take your time in picking a qualified tenant.

–  Taking your time to select the right tenant will help you reduce risks in the future. A better qualified tenant also means lower costs and problems down the road for you, the owner.

4. For your 1st rental property or two, the home that you purchase should be in move-in condition.
•    Since you will be busy making sure the home is fully rented out when you take over, the best thing that you can do is buy a unit that is move-in ready. Now I am not including the minor jobs including making cosmetic changes such as cleaning or maybe painting a room or two but the changes should not include major repairs.

5. Buy low and sell HIGH – always be on the look out for homes that are priced under the current market value.
•    Low sale price does not mean low value or low rents
•    How do you find these deals? Ask. Ask everyone you know. Take the time to get to know the area you are looking for.
•    Be on the look out for pre-foreclosures, foreclosures, and homes that have been on the market for a year.
Now what do you do? Go buy a rental unit of course. Still need help calculating what you can afford? Try our handy mortgage calculator canada which can help you calculate payment options, schedule of payments and much more. Also, follow FamilyLending.ca on Facebook and Twitter!

Check out the folks at Family Lending today!

First Rental Property is creating it’s first every Ebook!!!

The Ebook is going to be on the topic of ‘How to Buy Your First Rental Property’

We will be creating the Ebook based on feedback that we receive in our survey. Click here to take survey

If you are looking to buy your first rental property, please take a quick moment to fill out this survey.

There are 10 questions that will take you about 6 or 7 minutes to complete.

If you know anyone else that is looking to buy their first rental property, please forward this blog post  to them.

Thank you very much.  Keep on checking back in with the blog regarding updates on the Ebook as well as the launch date!

Thank you very much.

Neil Uttamsingh.

Click here to take survey

ps: If you are looking to buy your first rental property, subscribe to my blog today for helpful insights that will help you to buy your first rental property.

[youtube]http://www.youtube.com/watch?v=xlyFEXfrAoY[/youtube]

The most important thing that you can do while you are dealing with an eviction, is to actually  know the process.

Not only do you need to know the eviction process well, you need to know it better than anyone else.

I can’t stress these words enough.

Know the Process!

You need to know the process better than your tenants and better than your property manager if you are working with one.

If you do not know the process better than everyone else, you are going to be in for trouble.

You are going to be in for trouble because this means that someone else, other than you knows the eviction process better.  This could be your tenant, or this could be your property manager.

So what if they know the eviction process better?

You better be concerned if you do not know the process better than others.  Having a misunderstanding of or having a lack of knowledge concerning the eviction process is what causes a lot of pain and suffering.

This pain and suffering is felt by you, the real estate investor.

The pain and suffering manifests itself in the form of missed deadlines and misinterpretations of the eviction process.

Missed Deadlines

As we have covered in previous posts, the ruling body responsible for overseeing your hearing requires you to submit documentation at different times throughout the eviction process.  Paperwork needs to be submitted either to the tenants directly, or straight to the ruling body itself.  Keeping in mind that rules and regulations concerning evictions vary between jurisdictions.

You have to have an in depth understanding of when all of the deadlines are.    This is important as failing to submit documentation by a certain date can delay the eviction process and in some cases void the eviction process altogether.

If you do not have a good understanding of these deadlines, plain and simple, it is going to be very easy to miss them.

If you lack knowledge with regards to these deadlines, you may depend on information provided to you by other people as to when these deadlines are.  For instance, you may ask a friend or your property manager when a certain deadline is.  Your property manager or your friend give you the information and you do not question it whatsoever.

Now consider this…

What happens if the information that someone gave you  is wrong regarding the eviction process?   For instance, someone can give you the wrong time frame in which you are supposed to submit paperwork to your tenant.

Here is what happens as a result…

What happens in most cases is that people will take the information at face value and not question the information at all.

This is dangerous as this can result in a delayed eviction process.

For example, there are certain time lines imposed by the ruling body in your jurisdiction.

You may get a certain amount of days in which you have to serve your tenants with specific paperwork.  If you fail to serve the required paperwork to your tenants during the necessary timeline, this can cause the eviction process to be delayed.

Time is of the essence during the eviction process.

If your tenants are not paying, as a real estate investor and landlord, it is in your best interest to get non-paying tenants out of there as quickly as you possibly can.

In the next installment of How to Evict a Tenant, I am going to talk about a secret weapon that every landlord should have with them, as they battle their way through the eviction process.

Best Regards,

Neil Uttamsingh

ps: Spread the word about First Rental Property.  Sign up for The First Rental Property Newsletter to get great tips on how to become a successful real estate investor!

pps: Don’t be afraid of the eviction process.  Keep positive and you will get through it!

How to Evict a Tenant Part One

How to Evict a Tenant Part Two

How to Evict a Tenant Part Three

How to Evict a Tenant Part Four

How to Evict a Tenant Part Five

How to Evict a Tenant Part Six

Forming alliances is an important thing to do when you are evicting tenants.  In How to Evict a Tenant Part Five, I spoke of the importance of forming an alliance with your tenant.  By doing this, you are demonstrating to the ruling body overseeing the hearing that you are willing to work cooperatively.

During my recent court hearing, I made an attempt at forming 3 alliances in total.  One of the alliances I attempted to form was with my tenant.  The second alliance was an attempted alliance with a mediator and the third alliance was with a fellow landlord.

The Mediator

As I patiently waited in the court room for my hearing to begin, I would glance back on occasion and peer through the frosted windows.  You can read about the frosted windows in How to Evict a Tenant Part Three.

As I looked through the windows, I saw a group of tenants waiting outside. Standing with the tenants was a lady holding a clip board.  I deducted that she was a representative of the government body overseeing the hearings.

A few minutes later, this official entered into the court room with clip board in hand and made a few announcements to those of us sitting in the room.

This confirmed my initial thought. She was indeed a representative of the ruling body.

I had been keeping an eye out for my tenant, and up until this point I had noticed that they had not arrived yet.

While I waited in my chair in the court room, I realized that in the event that my tenant showed up, I would have to form an alliance with the mediator.

I knew that this was an important thing to do because, being cooperative with others as well as being respectful, is the easiest way to influence someone.  Being confrontation and condescending is the fastest way to get their back up, thus putting them on the defensive.

I wanted to align myself with the mediator, not against them.

At this point, time had elapsed and my tenants had still not arrived.  It became clear at this point that they were probably not showing up.  As a result, I did not get an opportunity to solidify any type of alliance with the mediator, however, I was prepared and more than willing to.

The Landlord

The other landlord that I spoke of was the only other person in the courtroom with me, other than a property manager.  The alliance that I formed with this landlord was out of necessity.  It was out of necessity because I was nervous.

Since I had no entourage with me, I felt that it was necessary to form an entourage, right there and then to help me get over my nerves. By forming this mini-entourage, I felt much more confident, as I felt that I had an ally with me.

I sat down next to this landlord and we started to share stories.  Here are some of the interesting things I took away from our conversation:

• He had been investing for 40 years
• He was originally from Cyprus
• He was now in his mid 60s.
• During the first 5 years of his investing career, he bought 2 houses, valued at approximately $40,000 each.  In these 5 years, he paid off both of the mortgages.
• He was a very unhappy real estate investor.
• He owned 4 houses, that were all free and clear
• He was a very unhappy real estate investor.
• He had attended court hearings many times in the past
• He often argued with his tenants over non-payment of rent
• Did I mention that he was a very unhappy real estate investor???
• His tenants did not like him.  One of them out of spite, left all of the taps running in the house for one week straight, so that he would have en enormous utility bill.
• He did have an enormous bill.  He described to me that when he got the bill, he did a calculation of how much water was used.  It was enough to fill up a small house he told me, from top to bottom!
• When he found out about his tenant leaving the taps on for one week straight, he called the Police.
• He and his tenant are now in court fighting over who is going to pay the massive utility bill.

In my next installment of How to Evict a Tenant, I am going to talk about the most important thing you need to do when you are evicting a tenant.  Stay tuned.  The next post is going to be a good one!

Best Regards,

Neil Uttamsingh

ps: Are you scared out of your mind about buying your first rental property?  Don’t be!  Shatter all of your fears by following my blog.  Gain knowledge and confidence so you can buy your first rental property.  Subscribe today!

pps: Here is “The Landlord with Will Ferrell”

[youtube]http://www.youtube.com/watch?v=pedpJ6PdkCE[/youtube]