Investment property is a business

I often have to remind new investors that the tenants they have or will put in place are your source of income. Careful screening of all tenants is required. My number one rule is if you feel sorry for them because of financing deficiencies o when you put them in will most likely result in your having a financial deficiency after they are in and can't pay. So stick to the rules on screen and complete background checks on finances, housing court, Cori & Sori reviews. Your business depends on this.

Do the numbers work?

When buying an investment property you need to make sure your income will cover your expenses. Simple concept to think about but if the numbers don't work on paper you already are behind before you start. Make sure you account for all the expenses. Current rents not projected rents. Utilities, taxes, fees, maintenance (monthly and future repairs and asset replacement). Don't forget wages ad outside labor costs. Don't skip the preliminary review of all information you can find on a property before you purchase it. Preview it, research the public records (registry of deeds, field cards and city/town permits and files on the property for all departments: water, building, housing enforcement, permits, ceritifcates),rent roll (rents by unit, types, copies, housing court review of owners and tenants names), Check the address out on line and with past articles inlocal papers, with the town or city neighborhood/landlord association and neighborhood patrol officer if the property or area has a "history" you need to know about. Fair Housing laws prohibit steering buyers. I always recommend driving to the area your interested in at night and on weekends and see if your comfortable getting in or out of your car as this is a good prepurchase must do as you will be required to do this in an emergency at all hours of the day or night unless you have a property manager that will do this on every call. If you don't like the area or how the numbers add up move on to another area you do.

Do the numbers work?

Unless your buying for a write off you need to account for all costs plus a vacancy factor of 10% to 20%. Accounting for the vacancy rate covers unexpected vacancies as well as repairs & maintenace items and allows you to build up a reserve for that amount to put toward fixed aseet repairs when you need it.

Investment property built befor 1978 Lead Law

The lead law in older houseing is pretty straigh forward. Any home sold that was byukt before 1978 may have had a substance called lead that was added to the paint or plaster. It was a stabilizing agent still allowed in Marine & commercial uses wiht the discliamer that it is not allowed for residential property usage. The areas that it references are an peeling or chipping paint up to 5 ft on a mouthable serface or any frictional surface regardless of height or an peeling or chipping paint or plaster regardless of height. Over 5 feet the surfaces must be intact. Frictional surfaces are any surfaces 4 inches or under a child under 6 could put there mouth on or around or that dust could be created by rubbing surfaces. This includes all doors and windows. It is important to note that not all 1978 pain, plaster , or stain had lead added to them so testing maybe needed if a child lives in the property or visits the property on a regular basis and if you should delead the surface. There are lots of guidlines that the EPA puts out on this and each state further clarifies and inforces the law. Some states include soil testing for dropped dust or lead chips and some do not. ALL federal grants include all federal guidlelines, including the soil test. Sometimes lead is more suspect if the paint is cracking like an aligator or little squares. But some vanishes and stains may have a similar pattern without any lead at all. Newer paint types like latex tend to peel off in sheets. However, it not uncommon to see lead paint on lower layers covered by laytex or encapsulation paints. The only way to know if there is lead in the property is to have the surfaces tested either with kits or by hiring a licensed lead inspector. Seller are not obligated to test or delead on a sale only disclose there knowledge of lead, testing,& certificates unless they have been issued a violation order to correct based on an inspection.

Say yes to the ready willing and able customer and no to the "tire kickers"

There is nothing more important than to make sure your buyer is really a buyer. Lots of people unfortunately like tot waste our time if we let them. Make sure you ask your buyer or seller what they want to accomplish immediately after introducing your self. If there goal is anything other than to purchase then you need to decide if you need to ask more questions to see if your goal to sell a product or service is the same as the"buyers" goal. You should also always request how they plan on financing the purchase if is of any size that normally requires financing. Lots of people respond, I'm only looking or I'm looking for my son, freind etc. The sales presentation is a lot faster to these people as you don;t have the buyer infront of you. You also need to make sure if they are the only buyer. Don't be afraid to turn away none buyers or to shorten the walkthrough of the product or service, after all, you really want to sell to a true buyer. Once again in all cases your company may and should have a policy on how to handle none buyers. A simple sentence such as, I'd love to show this to your friend/relative/etc when they are available. Here's my business card I'll be happy to meet with them or send them infomration onlineor through the mail if you would like to pass theis on to them or I can do it now if you have the infrmation with you. The office policy is to only work directly with ready, willing, and able buyers for the security reasons. Then if they continue to object I turn the table sand say I'm sure you or your compnay has a similar policy. Thank you for stopping in and once again here is my card for your friend/relative/etc. This way I have time to work with only buyers that have the same goal as you; the goal is the sale. So keep your eye on the price. At open houses if two groups of people walk in and one is a buyer and one is previewing for others my focus would be the buyers that are the actual buyers. I'm sorry the previewer isn't a buyer but a hugh potential time waster as taste of one person is most often quite different from there friends/family/etc. But you be the judge based on your product and time. But remember the business card and to be polite but firm about company policy.

Important: The effects of government shut down on loans for purchasers and sellers.

Check with you lender if your buying or selling your home on the effects of the federal shut down effect on your home sale or pruchase: Items to review should include: (1) Type of loans that may need extension or need to be flipped to other types of loans including FHA, VA, USDA to convensional, hybrid, hard money, or in house portfolio loans that are closing today or during this period. (2)Cash buyer purchases and sales without government back loans that are not effected themself. by the shut down. (Conventional, hard money, portfolio or in-house loans and private loans). As always, the phrase cash is King will be heard multiple times today and during this period. (3) Loans of other parties in a multiple transaction that may effect closing dates of non-government backed loans. (4) Debt ratio impact of health insurance increases that may effect buyer debt ratio, etc. (5) Weighing offers on based on loan types. (6) Possible problems with short sales approved during shut down and the need to keep these property listed with contingencies accepting backup offers. (7) Federal bankruptcy delay in processing, filing, and approvals of cases and related claims and delays to releases or obtaining relelases of federal liens.

Proactive Investment property tips

(0) Prior to purchasing pull housing department, public record field cards, and building permit history, and housing court records. Read the files to see aoid or know in advance if your taking on prior owners problems. (1) Make sure all tenants are screened for prior credit, rental, housing cout, and fiancial history nationally. Get a written rent roll at time of purchase to see the status of all tenants rents including arrears, evictions, deposits, etc. (2) Make sure all tenants are listed on lease or tenant at will (TAW) agreement are in writing. (3) Make sure these written agreements include all required disclosures: property transfer/lead paint if built prior to 1978 with all required attachements, property condition report at time of move in or renewal of written TAW or lease. ALL agreements need to be signed by all adults over 18. (4) Clearly indicate boundaries of lease and storage areas and parking, restrictions and prohibited storage areas(example halls, yard, common area). (5) Make sure you understand state laws on first, last,& security deposits and lock change fees. If you plan to charge for other items such as water, pet deposits, renters insurance. Know your local laws. Make sure deposit interest is accured &/or returned to tenants per state law annually or transferred to new trustees acoounts at time of purchase/sale. (6) Spell out clearly trash requirements and storage. Storage containers by law may be required by law. (7) Verify eviction & move and store laws prior to needing them in your state. (8) Join a local home owners association to stay up to date on changes and how to hand issues in your owners association and for local advise from fellow investors. (9) Check you mail boxes monthly for names or occupants to avoid unnecessary tenant moving in or out surprises. (10) Post contact info for police or emergencies. If there is a neighborhood watch or officer assigned to the area introduce yourself to them to familiarize yourself with potential problems to avoid or to watch out for now or in the future.