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4 Task You Must Complete to Maximize Your Property Sales Price


 

Hi All, I Just want to go over briefly four things that you can do when you’re selling your multi-family. Your two, your three, your four unit, your residential multi-family property. Four things that you can do to make sure that you maximize the price. That you get the most. When putting that property on the market, you walk away with the most money that you possibly can as a potential seller.

Four things that you can potentially do. Let’s start with number one. You can provide a unit vacant. Why would it be beneficial to you as a seller to provide a unit vacant when selling your multi-family? You have two potential buyers when you’re selling, let’s say a three family property. You have the owner-occupant buyer. Someone who’s going to purchase the property, move into the property, move into one of the units and rent out the other two to supplement their income. Then you have the investor. An owner-occupant buyer is almost always going to pay more for the property, their primary residence, the place that they’re going to live, than a potential investor.

Investor’s going to come in and they’re going to analyze the numbers specifically and strictly and say, “Does this property make sense from a financial standpoint and if it does or it doesn’t, I’m going to make my decision based on that.” An owner-occupant buyer is going to move in and make it their own. It’s the place that they live. There’s an emotional attachment to that place. By you providing a unit vacant, you’re essentially allowing them to move in. Without a unit vacant, essentially if all three units are occupied, only an investor can buy that property from you. Basically you’re eliminating the owner-occupant opportunity if all three units are tenant occupied and there’s not a space for an owner-occupant.

The first thing I would say is I wouldn’t go out and necessarily kick a tenant out, but if there’s a tenant moving out and you’re considering selling somewhere around that same time, you know you have a lease expiring in three or four months, it may be a good time to say let’s put the property on the market while I have this potential vacancy and move in at that time.

Number two. Make obvious repairs. If there are some things that need to be done, you are going to maximize your selling price by making sure that the property is shown in it’s best light. That seems obvious to some people but many people don’t do it prior to selling. Making sure that any appliances that are broken, light fixtures, front door, back door, the front porch, back decks, making sure that those things that are quite obvious as soon as you walk up to the building or as soon as you walk inside a unit, this is clearly not the way it should be. Making sure that those things are done prior to putting your house on the market or prior to putting that property on the market is going to maximize your sale.

Prepare for a spring or summer sale. If you are, let’s say it’s January, 2017 and you are moving into, considering selling, you have about three or four months before that spring market hits, that April, May, you really want to preparing your property for that spring marker or that summer market coming up. The reason you want to ideally sell in the spring or the summer, you have a larger pool of buyers at that particular time. Investors are going to be around all year round. But your owner-occupant buyers, if they’re renting an apartment right now and considering buying, their leases typically end sometime during the summer months. You’re going to have a much larger pool of buyers. People typically like to move during the summer when things are easier and not moving in the snow, especially in a place like New England. Preparing yourself mentally, getting your documentation ready, letting your tenants know about the sale, and making sure that you’re getting those things done during the winter months so when the spring and summer rolls around that your house or your property is prepared for that sale.

Last but not least, overpricing your property. Don’t overprice your property. Price it, I would say accordingly. Talk to your realtor, pull comparable sales, what’s going on in the neighborhood, what makes sense for this particular property compared to other sales. When you overprice the property, what you’ll end up with is potentially a stale listing. A stale listing is something that’s been sitting out there for 60, 90 days and now it’s not getting as much attention as it should be. When you do that you actually tend to get a lower sales price then you would have if you just priced the property appropriately from the beginning and sold it as quickly as possible to the best buyers during this spring or summer market.

Again, providing a unit vacant you’re going to get more money from an owner-occupant than you are from a potential investor. Making the obvious repairs. Making sure that your property is presentable and showing in the best light. Preparing for that spring or summer sale and not overpricing your property. Making sure that your property comes on the market at a reasonable and fair price compared to other similar properties that are selling on the market. If you do these four things, you’ll be sure that your sales price is maximized and you’ll get the most money and put the most money in your pocket after the property is sold.

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On December 14th, 2016 I finally closed on my first rental property! For over a year I have been educating myself as much as possible in real estate investing to one day finally take the plunge. That day finally came. A couple months ago, a property on the MLS cam back on the market. It was a 3-family in Mattapan that needed a decent amount of work to get it up to rental condition. Listed at 390k, I initially tried to get the property at 350k, a price that, once I ran numbers, felt would put me in the best position when it came time to refinance out of my purchasing loan, which I ultimately used hard money for. I submitted the offer with no contingencies, all cash and gave up the buyer’s side commission because I knew on the back end it would be worth it, but that was still not good enough and after some continued negotiation, had to settle for purchasing it at the full asking price. This would create additional challenges, but at the end of the day, if you believe in the deal, you’ll make it work.

Financing the deal was another challenge as I really wanted to find a lender that would finance a percentage of the purchase price and renovations. It was not until it was too late that I found a couple lenders where this was possible. At least for the next one, I will have this component lined up for a more streamlined process. I ultimately had to settle on using hard money, which is great for a short turnaround, but is so incredibly expensive to someone like me who hates to waste money. When it comes to hard money, if you have any other option, please use it instead.

Since the closing, it has been a mad scramble to start the renovations and make sure everyone is working constantly and as efficiently as possible. This is just another thing you will have to do when you slightly overpay for a property. Despite the challenges early on, I couldn’t be happier or more excited to have closed on my first rental property. Every day that passes makes me want to find the next deal more and more. Just always be ready for the more than likely roller coaster ride!

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4 Task You Must Complete Before Selling Your Boston Rental Property

Hi guys. Willie Mandrell with the Mandrell Company and today I want to talk to you about five things that you must do prior to selling your multi-family property, your 2- to 4-unit residential or larger investment property. Here are five things that you must do or consider prior to putting that property on the market.

Number one, and the most important thing, is keeping your tenants informed. Nothing can spoil a sale faster than having a tenant who was uninformed about the sale and now objects to that sale, is uncooperative in terms of letting potential buyers in or coordinating with your realtor. You really want to keep your tenants informed about the sale and educating them about the process prior, letting them know that if they’re under lease currently, their leases are going to be respected by the new buyers. If they are worried about rent increases, having that conversation with them prior.

I think the most important thing is also informing them about showing times. We’re going to be having an open house on Saturdays and Sundays from 11 to 1. The realtor is also going to be contacting you for showings in between on Tuesday nights or Wednesday nights. We’re going to try to keep it to a minimum, as not to disturb your quality of living. We don’t really want to interrupt your dinner time or special family events. Keeping that open line of communication with your tenants is going to help the sale move a lot more smoothly than having them uninformed. Making sure you keep your tenants informed, number one.

Have a pre-sale inspection. This is not an absolute necessity, but it can really help move the sale along. If you have a home inspector come in prior to actually putting the house on the market, the home inspector will tell you which appliances are not working correctly, which plugs are not grounded, does your roof look a little older, does the foundation need some type of pointing? If you have a pre-sale inspection, you can learn a lot about the property that you might not have otherwise known, and give you an opportunity to address some of these issues prior to putting the house on the market, and can make the sale go a lot more smoothly than having the reverse happen and having the buyer do the home inspection, and then them coming up with issues and the potential sale falling apart later on.

Number three. Check your smokes. If you are operating with a two- to three- or four-family residential property, the sale cannot take place unless the Boston or local municipal fire department comes in and assures that your smoke detectors are in the proper working order and the proper position within the home as well. Making sure that you’re going around and checking your smokes, that they’re ten feet from every bedroom, that if you own a three-family or above, that the hallways, the common area, the back and front hallways, plus the basement are hardwired to an electric panel. Talk to your realtor about the requirements for the smoke inspection. They are most likely going to coordinate with the municipality, the local fire department and make sure that smoke inspection happens for you. Making sure your smokes are in good working condition, because the sale of that property will not happen if they are not.

Number four, very important as well, talking to your CPA about the sale of that property. If you’re selling that property, are you taking the cash and doing something with it? Are you cashing in? Is it closer to retirement? Your CPA is going to be able to advise you on the tax consequences. The federal government wants their money. The state and local governments also have a stake in the sale of your property as well. Talking to your CPA will give you a good understanding of what’s going to happen with the cash after the sale of that property. It’s something you really want to do and really understand prior, so you can make accommodations. Maybe you want to minimize your tax liability, and talk to your CPA about a potential 1031 exchange, an exchange from one investment property to another. Talking to your CPA is very important.

Last but not least, is you want to talk to an attorney, a good attorney. If you don’t have an attorney that you work with, not everyone does, you can get an excellent real estate lawyer or attorney suggestion from your real estate agent. We, as real estate agents work with attorneys on a regular basis, and we can refer you to someone good that’s in your area that knows your real estate. The reason you want to do that is you really want to have a relationship because as you’re going along and there’s certain paperwork, the offer form, the purchase and sales, the closing itself, the attorney might want to get power of attorney to sign for you at the closing, so you don’t necessarily need to attend. There’s a lot of legal aspects of selling property that you want to talk to your real estate attorney with as well.

THere’s the five things that if you do these five things, you’ll be in very good shape to have your sale move smoothly. Keeping your tenants informed, getting a pre-sale inspection, check your smokes, talk with your CPA, and hire a lawyer. If you do those five things, you’ll be in very good shape for a smooth sale of your multi-family property.

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East Boston Multifamily Sales & Rental Market Data

Are you a current or aspiring landlord in Massachusetts? No matter how many years you have in the rental business, fully understanding your local market is one the most important thing you can do to ensure your long-term success.  Receiving regular market updates will help you determine when’s it time to buy and when it’s time to sell. It will also allow you to see what your apartments rent for in comparison to your neighbors. Should you be increasing rents?

Here are East Boston’s multifamily sales and rental market statistics for the last 6 months.  

Total Multi-Family Listings SOLD: 44

Average Living Area by Square Feet: 2,462.00

Average Listing Price: $615,435

Average DOM (Days on Market): 66.98 Days

Average Sales Price: $610,560

Average Rent for 1 Bedroom Units: $1,677

Average Rent for 2 Bedroom Units: $1,943

Average Rent for 3 Bedroom Units: $2,307

Average Rent for 4 Bedroom Units: $2,875

I Want To Know My Home’s Value!

Want to get a FREE Sales and Rental Market Report for your specific area(s)? Just send a quick email to Contact@MandrellCo.com to receive your monthly report. In the title put the words “FREE Boston Sales Statistics” and in the body, add the up to 3 areas you’d like to receive data for. Your name and email will be added to the next monthly reporting cycle. It’s that simple to stay up to date and ahead of the curve!

Please call us directly at 617-297-8641, for custom reports or questions above the data provided.

http://www.EastBostonHomeValues.com

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In our latest series of educational webinars, we explored the topic of self managing your rental properties vs. hiring a property manager. In the fourth and final section of the webinar, we talk about six ways to create more value in Boston rentals, creating a “preventative maintenance schedule” and should you hire a professional and what do they charge.

For more resources and tips on managing your properties, please contact us.

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In our latest series of educational webinars, we explored the topic of self managing your rental properties vs. hiring a property manager. In the third of four sections of the webinar, we talk about protecting your real estate investments and essential landlord/tenant forms that you will need throughout the course of running your business. Many people will say it’s not “if” you will get sued, but “when” so learning about all the strategies that can protect your investments is imperative.

For more resources and tips on managing your properties, please contact us.

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In our latest series of educational webinars, we explored the topic of self managing your rental properties vs. hiring a property manager. In the second of four sections of the webinar, we talk about how you should handle your income, expenses and taxes when it comes to your rental properties. This is another area of focus that is very important when running your business.

For more resources and tips on managing your properties, please contact us.

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In our latest series of educational webinars, we explored the topic of self managing your rental properties vs. hiring a property manager. Even if you initially plan to self manage your properties, it is important to still factor in the cost of hiring a property manager. In the first of four sections of the webinar, we talk about the eight tools every small landlord needs, mastering your rental market and marketing your rental units. Each topic is very important when running your properties like a business and making the best decisions for the business.

For more resources and tips on managing your properties, please contact us.

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Recently we hosted a webinar on the topic of Building Wealth In Your 20’s & 30’s. In the third and final section of the webinar we covered building equity, tax savings and some very important closing thoughts.

For more resources and tips on how to build wealth, please contact us.

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Many people think they can’t buy a home because they don’t make enough money. I honestly believe you can accomplish almost anything you put your mind to with hard work, sacrifice and some thorough research on your options. I am a fan of real estate as a tool to building wealth because it is tried and true…tested for centuries and when executed correctly (which isn’t that hard), it can really propel your financial trajectory. 

Let’s say you are looking for your first home purchase…. what are some sacrifices you are willing to make to get into the game? I’ll tell you what I would do in this aggressive Boston market, especially if I HAD TO stay in Boston.

  1. I would research the most inexpensive yet safe and inviting neighborhoods in the city…. currently, Mattapan is wide open but picking up steam, some parts of Dorchester, and Hyde Park, however, the prices in these areas are constantly being pushed to a new limit. 
  2. See you qualify for any city programs. There are numerous options available to first time homebuyers through the city. Although you may have money saved for a down payment, if there is free money available… utilize it.
  3. I would research streets within these neighborhoods to identify where I could see myself living for 3-5 years. Select multi-family homes in decent condition. Depending on the time of year and your pre-approval amount, the property condition could be a little worse and you can utilize a rehab loan. 
  4. Screen ALL tenants to ensure they are most likely to pay rent on time monthly. If the place comes with tenants, when do their leases expire? What is their payment history? Are they paying market rent? (sidetone: I am for giving a discount to great tenants but still keep within reach of market rents; not more than $200 discount. If you are providing a larger discount, this WILL hurt your resale value.)
  5. Occupy one unit for 3-5 years which will allow the market to possibly rise and therefore increase your equity; you can start saving again for the downpayment to your second property (now at 20-25% down)
  6. Be smart…run this like a business. Set aside 3-5% of rent toward long term maintenance and repairs (water heater, furnace, plumbing, roof). Budget for incidentals, things break down in every home over time. The income generated from your 1st property will be utilized to calculate your pre-approval amount for your second property.
  7. Depending on which home you like more, decide which you will live in and which will be 100% investment property.
  8. Rinse, and reuse. The key is knowing the numbers of how much to spend. Our agents are trained to evaluate the numbers to ensure you buy at the right price point for your goals.

To connect with one of our real estate specialists, please click on the link

Below is a story of a gentleman who followed the steps above and owns 9 properties while working full time. 

Full Story

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When you are preparing to sell a MultiFamily, Here are 8 things you should do to ensure a smooth transition and to limit surprises. 

  1. Hire a Certified Professional Accountant (CPA) who is well versed in real estate. You want to know what your tax consequences are when you sell. There are capital gains taxes associated and you want to know next steps before you begin the process.
  2. Talk to a Realtor who is familiar with your area and multi-family homes. It is not just about listing your home, they need to understand the intricacies of a multi-family and how rent, condition, location etc affects the value. Is it a buyer’s market or a seller’s market?
  3. Does it make sense to sell as condos? Boston is experiencing a real estate boom and oftentimes in some neighborhoods, it is more profitable to divide the property and sell as condos as opposed to selling as a multi-family.
  4. Informing tenants of the sale. You want to inform them as early as possible. You want to be respectful of your relationship because a disgruntled tenant can hinder the sale of your property. You want their cooperation in coordinating showings, assist them in providing information for relocating.
  5. Gather property Financials. Buyers want to know the additional cost associated with the property so they know if the numbers make sense
  6. Gather tenant lease information. The buyer will want to see the lease agreements. When do leases expire? Are they market rent rates or below market rents?
  7. Fix any major and minor repairs in home. You want building in best shape possible as first impressions are lasting. Also, home inspections are a time to renegotiate the price. If you do not want to renegotiate the price, repair as much as you can that makes sense (discuss with realtor) so that you get the strongest offers.
  8. Connect with a real estate attorney. You want to ensure your best interests are protected.

For more information and helpful tips, please follow our blog posts or connect with us on  facebook or email at contact@mandrellco.com

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Cash Flow

Cash Flow by definition is the total amount of money being transferred into and out of a business, especially as affecting liquidity. In real estate investing, what this means is:

Total Income – Total Expenses = Cash Flow

While you would assume total income would consist of just rent, make sure to include other potential sources of income including application fees, late fees and laundry income. If these sources are possible, also make sure to estimate your numbers using a conservative approach. In the long run this will be the most beneficial approach. On the flip side, your total expenses are NOT simply your mortgage, property taxes and insurance. Other expenses that cannot be overstated include utilities, potential flood insurance, repairs, vacancy, property management and capital expenditures. The last three expenses can be used as percentages against your monthly income from the property. Failure to include ALL possible expenses could lead to you purchasing a “deal” that actually turns out to be no deal at all.

Depreciation/Appreciation

Once you have purchased a property and become a landlord, it is to stay up to date with the value of your property and identify whether appreciation or depreciation has taken place. While this is very important post purchase, factoring in appreciation for an investment decision is speculative in nature and brings unneeded risk into the situation. In the event that your property has depreciated over time, there may be significant tax advantages to this and those same advantages may even be available to you if your property has appreciated over time.

Net Operating Income

Net Operating Income by definition equals all revenue from the property minus all reasonably necessary operating expenses. To look at this simply, NOI is calculated on a monthly basis using monthly income and expense data, therefore it can be converted to annual data just by multiplying by 12. The important thing to remember with NOI is that the formula does not include debt service costs, (loan costs) which differs from cash flow. One of the biggest reasons a landlord will want to know this number is because Net Operating Income plays a huge role in determining the value of your property. For this reason, it is in your best interest to work towards maximizing this number using different strategies to accomplish this.

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The last topic that we covered in our sit down with Anastasia Tacewicz from GMH Mortgage Services was some of the things you want to be considering when choosing a mortgage professional. This is a key individual throughout the home buying process so you will really want to do your due diligence when selecting someone to work with. Anastasia is a great reference as she is someone who we have worked with in the past and have had great experiences with.

Need more info about mortgages or about getting pre approved? Contact us at 617-297-8641

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There is an alternative to simply saving for retirement over the course of a 40 year career. One of the most effective options is to acquire income producing assets. A perfect example of accomplishing this is to purchase rental properties that cash flow every single month. This is a great way to supplement your employment income and actually provides you the opportunity to immediately increasing your spending power if you so choose. We are seeing more and more that just simply saving for retirement has left people in difficult situations once they reach that point. Therefore, if done right, investing in long term rental properties can be an incredible vehicle to allowing people retire the way retirement was always meant to be.

 

If you are looking for more information about Boston real estate or investing in general call us directly 617-297-8641

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Boston real estate is determined by supply and demand. There is a high demand for housing in our city due to our world renowned universities and hospitals. As long as there is a high demand for housing and the supply is limited… prices will continue to rise. We have a finite amount of land so developers are forced to be creative and build upwards or convert multi-families into individual condominiums.

Interest rates are relatively low so there are more buyers on the market so the competition is heavy

Price increases when you have multiple people applying for the same property. If you want an apartment or a house, you will increase your offer price to ensure you beat the competition.

 

In short, prices will continue to rise until supply meets demands.

For more information on the Boston Market or to connect with one of our agents please call 617-297-8641 or email us at contact@Mandrellco.com

 

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5 Reasons Boston Real Estate Was The Best Investment I’ve Ever Made!

 

Real Estate in Boston is one of the best investments because Boston has a very strong market compared to other cities.

  1. Appreciation: Over time the value increases. There is a high demand for housing thanks to our educational institutions
  2. Debt Reduction: As the asset is appreciating, the debt associated with the home (mortgage) is being paid down over time and even faster with tenants.
  3. Cash Flow increases over time: Debt pay down combined with rent increases makes this an AMAZING option.
  4. Tax Benefits: You can write several things off for owning rental property. Everything you do is tax deductible
  5. Tangible Asset: We can see it, we can touch it. You have a visual and control over the asset.

For more reasons on why I love Boston Real Estate, please feel free to email me at Willie@MandrellCo.com

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New Year, New Home projects. When you start the process of making renovations, make sure you ask the right questions. Many people fall victim to the bid quote they get from general contractors to renovate their homes. Our goal is to help you stay on budget! No one should pay more than they have to for any service.

Let us use the renovation quotes we often get for a kitchen remodel… many bids are likely to only cover about 33-50% of the total cost depending on the contractor.
The question then becomes, how do YOU the consumer protect yourself from predatory contractors who quote one thing and the final cost is dramatically different?
Ask the right questions upfront.
While the majority of general contractors include demolition, disposal and installation in their bids, many omit the cost of supplies/materials/hardware. If you are dealing with a novice contractor, they do not know the cost of  materials so they wait to price everything based on your specifications. The cost of materials varies tremendously by region, store, and your personal preference. For example, backsplash tiles can run from $7 to $90, a square foot.
ALWAYS ask the contractor what is included in the bid, then use those numbers to estimate further cost. Of course these tend to be ballpark figures but I would prefer to be in the same ballpark as my contractor than be rudely surprised.
A good rule of thumb is to research your potential contractor:
Speak with past clients
See their portfolio of work
Ask what is their statistics on quotes to actual final cost (you want to see if they have a history of underbidding to only cost more in the end or if they are always in the ballpark)
Research them on yelp, google+, Angie’s list (You want to learn everything about this person before you entrust them with thousands of dollars worth of work)
Other Good questions for the general contractor (unless they come highly recommended, I suggest you interview a couple):
How many years have you been in business? (You do not need 50 years of experience to do great work, focus more on quality than quantity. I know several contractors who have been in business for over 10 years but I would not trust them to do any work on my home)
Do you get supplies from a wholesaler (cheaper in bulk) or from Home Depot? If you value neighborhood stores, this is a great way to support local businesses.
What does your bid include? Is this a set price? If you go over budget, will you be responsible for the additional cost/ take it as a loss? (This is important to know upfront and GET EVERYTHING IN WRITING)
Obtain an itemized Quote and Contract and factor in 5% for miscellaneous overages but a good contractor should stay within budget unless they discover issues when walls are opened.
If your contractor does not want to provide a contract in writing with the breakdown of cost…RUN!!

Email us contact@mandrellco.com for recommendations of some of our trusted contractors or general questions.

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Do you have an upcoming or existing vacancy in one of your rental units? Follow these 3 “must do” task to ensure you land a great new tenant.

1. Do your due diligence – Do you fully understand your local rental market? What are your fellow landlords charging for rental units similar to yours? Are you below market value on your rents and leaving money on the table? These are the question you’ll want to answer as soon as you’re informed you’ll have a vacant rental unit. You’ll want to make sure your asking rent is close to market value for the unit. You’ll also want to make sure the tenants quality of living meets whats called for in the neighborhood. For example, if you have a perfectly priced rental unit but all of the apartment features are outdated (and all other available units are updated), you’ll have a difficult time renting that apartment. You can easily find out what going on in your neighborhood by acting as a prospective tenant and searching through current rental listings in your neighborhood. You can also call your local real estate agent to receive a free rental market analysis.

2. Background, Credit check, Employment verification – Many small landlords select tenants with “their gut feelings”. While you should definitely trust your gut, I would suggest also doing a background check for any applicant over the age a 18. This is the very best way to truly know who’s living in your rental. I would also conduct a credit check to verify that they’re financially trustworthy. The last bit of information is probably the easiest to do and the most important. Verify the status of your potential tenants employment and their ability to pay. During the application process you should have asked for pay stubs and for the tenants employer information. Call the employers HR department and tell the representative you’re calling to verify employment for a rental application on the said tenant. Download to packet below to determine whether the your prospective tenants income should qualify for your rental unit.

What Can I Afford To Pay For Rent

3. Take a holding deposit – Okay. You’ve done your due diligence and found a great tenant. They are ready to move in a few weeks, but the lease has not yet been signed. Make sure you receive a “holding deposit” from your new tenants. A holding deposit acts as insurance for you. It insure that your prospective tenants plan to move in and not continue searching for another apartment. Let’s say for example you’ve stopped marketing the apartment because you’ve found the perfect tenant. The plan is for them to move into the property in 3 weeks and you’ll draft up the lease in the process and give them a call when it’s ready. 1 week before move in you call them for the signing and they’ve informed you they’ve already found another apartment. You have nothing from them and you’ve also wasted 2 weeks of marketing while you had the apartment off the market. The easiest way to combat this scenario is to get a deposit. Download the packet below for a sample holding deposit form.

Holding Deposit Agreement

Do you need help finding new tenants? We can help you fill your vacancy at NO COST to you. We conduct a background checks, credit checks, employments/income verification and draft all lease paperwork for you.  Contact us for details. 617-297-8641 or Contact@Mandrellco.com

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Is your New Years resolution to get yourself more involved in the Boston real estate scene? Here are a few great events to get you headed in the right path.

Mutlifamily Investments 101 – Investing & Home Buying Seminar

Thursday, January 22, 2015  – 6:00 PM to

 This is a great event for first time landlords or if you’re thinking about getting into the business. The seminar will run you through all the basics of investing in Boston real estate including evaluating cash flow numbers and multifamily techniques. You can find further details and RSVP with the following link. http://www.meetup.com/Networth-Investors/events/219497293/

How To Get An 800+ Credit Score & Never Be Denied For Anything

Saturday, January 24, 2015  –  to

Are you or someone you know looking to buy a home or invest but a less than perfect credit score holding you back? This is the meeting for you! Learn the ins and outs of your personal credit and how to effectively increase your score!  For location and to RSVP click the attached link. http://www.meetup.com/Urban-Money-Matters/events/219296945/

Home Flippers Financing Summit

Saturday, January 31, 2015  –  9 to 5

Are you looking to flip houses in Mass but not sure how to get the financing? Have you heard about investors flipping property using private financing or “other peoples money”? Come learn how they’re doing from real Boston investors. This seminar will teach you how to find and recruit private money investors to fund your flips!  Seating is limited!
Purchase your tickets with the following link. http://www.eventbrite.com/e/house-flipping-finance-summit-tickets-14920536727?aff=WillieMandrell

 

 

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So you just bought your first rental property? Well, congratulations on the purchase and making a huge investment into your future. Now that you’ve become a new landlord, are you wondering what your next steps should be? Here are 8 helpful tips to get you started on the right path.

1. You’re now running a business and you have to treat it as such. This means getting your house and financial documents in order. It’s probably a good idea to buy a file cabinet or safe if you don’t already own one. Make sure you file mortgage, insurance, tax, water and tenants files in a safe place. It’s also a good idea to keep a digital (scanned) file back up somewhere as well. If your paper documents are lost or damaged, it won’t be difficult to replace them if you have an electronic back up.

2. Make contact with your new tenants. You need to introduce yourself as the new owner, provide them with your contact info and collect each tenant’s personal information. This may be a good time to talk with them about any issues the building may have and a little about your plans going forward.

3. Consider establishing separate banking accounts for your rental business. Ideally, you would like to have rental income come into one account as well as rental expenses paid out of that account. You want to keep rental records clean for tax reporting purposes. If you’re combining rental and personal business into one account it can make things more complex for you and your tax preparer. You may also want to consider a separate savings account (reserve fund) or credit card for your rental business as well. You always want to be prepared for rainy days!

4. While you’re at the bank, you may also want to open your tenant’s security deposit account(s). If you’ve collected or plan to collect a security deposit from your tenants, YOU MUST HOLD THESE FUNDS IN AN INTEREST BEARING ACCOUNT AT A LOCAL BANK. Just tell the customer service rep you want to open a “landlord/tenant” account. Before you’re able to open this account you’ll need to have each tenant sign a W9 form. This is so the taxes on the interest paid are reported under the tenant social security number and not you as the landlord.

5. Buy yourself some basic home improvement tools. You don’t have to be very handy to solve many problems in a home; you just need to have the right tool. I would make sure you own a power drill, screw drivers, hammer, tape measure, and a decent size ladder. One $40 tool that will save you thousands is a toilet auger! It’s very simple to use and will help you avoid some hefty plumbing bills when a tenant’s toilet is clogged.

6. Buy a few books for yourself and make sure you have a basic understanding of landlord/ tenant laws in Massachusetts. You don’t have to read each book cover to cover but you should have some type of reference available to you for when things come up. Don’t rely on Google for your answers. The law is different in each state and there are tons of “gurus” on the internet giving bad legal advice. NOLO has an excellent book selection and they’re always up to date/ easy to read. Grab yourself a book on landlord tax deductions as well. There are so many tax write offs for landlords and you don’t want to be missing ones you should be getting. Don’t assume your tax pro will tell you.

7. Create a maintenance plan for your property. A systematic maintenance plan is the best way to keep each of your properties in top shape and avoid costly repairs. Each landlord will have a different plan based on the properties you own, but your schedule may include the following:
a. Changing out the apartment air filters once every 6 months
b. Hiring a rodent exterminator every 6 months
c. Changing out smoke detector batteries every 2 months (important)
d. Cleaning out the gutter in the spring and the fall
e. Cleaning out heating systems in preparation for winter
f. Covering your AC units before the winter months
g. Sweeping, mopping and changing light bulbs in common areas every month

8. Have your real estate agent send you monthly rental comps for your area. So many landlords leave money on the table because they don’t know what’s happening in their local rental market. They buy a new place and allow tenants to stay in the unit without ever increasing rent. Not only are they leaving money on the table, but they are also hurting the value of their property. When rents are on the rise you want to be in the know. Make sure your agent is sending you rental statistics for your area at least monthly. These reports are automated and easy for your agent to set up.

 10 must have forms for all new landlords! Click here to download FREE rental property forms! 

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As an investor trying to build a significant portfolio of rental properties, it’s in your best interest to have a good relationship with small local banks within the areas you plan to invest.  The local credit unions or savings and loan will provide several distinct advantages over larger commercial institutions (like Bank of America).  When you’re in the in the market to purchase additional units or to refinance some of the units you own, these local banks will be your best resource for those funds.  The following are 3 advantages of using your local lender for your financing needs.

  1. Quick Loan Decisions: Your local bank is often going to make decisions at a quicker pace than the larger commercial bank. Loan officers are often on the spot and decisions need to be checked by less people as it moves up the change of command. The banks appraisers are also typically local and will be able to put a value on the property mush sooner.
  2. Local Banks Know the Market: Being local means they institutions have an intimate knowledge of the local real estate market. They understand the trends in particular neighborhoods and can better evaluate particular loans that hit their desk. If you’re investing in a hot spot of the city and values are quickly trending upward, the local credit union is more likely to be aware of this trend and make the loan more comfortably.
  3. Adjustments to Lending Criteria:  Here is where your relationship with the banks really comes into play. The typical commercial lender has a minimum credit score, maximum loan to value ratio and other guideline that they need you to fit… and if you don’t you don’t get the loan. Your local savings banks will also have guidelines for lending but will allow for some wiggle room based on the applicant’s history and reputation. If you’ve had a long standing account history with the bank and have done what you say in the past this will mean something here. For example, if you’re trying to purchase a new rental unit and don’t have the full 20% down payment (commonly required for investment purchase), you’re more than likely able to negotiate this requirement than you are with a large commercial bank. If you can show that you have a long standing history of re-payment and have completed several other projects, your savings bank will usually bend for you.
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Boston Wealth Builders Seminar Are you interested in learning more about investment real estate? Would you like a great place to network with new and experienced investors? Join Boston Wealth Builders! We are a group of house flippers, landlords, wholesalers as well as many other investment industry professionals throughout Massachusetts. We gather and discuss local industry trends, new products, marketing techniques, where to find the best deals and how to finance your purchases. We meet in Boston as well locations North, South and West of the city, so there will always be a meeting near you! The group is growing at a tremendous pace and we would love to have you be part of it. Come learn a little and share a little with us! Join anytime for FREE at www.BostonWealthBuilders.com . Hope to see you at our next event!

 

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FREE POF Letters/ Hard Money Pre-Approval:

Julio Evangelista and Commonwealth Equity will be providing attendees of the MA Real Estate Trade Show with Hard Money Pre-Approval Letters! If you’re getting into the flipping business you need a letter of approval or POF to make offers on offers on rehab deals. Come to the Trade Show and leave with a letter for your business! RSVP if you haven’t already… http://www.meetup.com/Networth-Investors/events/125269232/

FREE Business Head Shots:

Boston Photography is offering FREE head shots during the Trade Show! Get there early to make sure you don’t miss out. Use these photos for your business cards, website and lots of other marketing material.

Learn to Flip Houses W/O using Your Own Cash:

Andrew Schena from Capital Equity Partner will be teaching you how to find private investors, market your business to them and secure their funding for your real estate deals! If you’re in the business or soon to be in the business of house flipping you won’t want to miss this event. This event takes place prior to the MA Trade Show and will have limited seating. If you have not already RSVP’d please do so at http://www.meetup.com/Networth-Investors/events/130624832/

MF Real Estate Investment & Home Buying Seminar:

Interested in multifamily investing but don’t know where to start? Already own rental property and want to take your business to the next level? Come join us this Saturday for this Multifamily Investment event. Come listen, learn and share your experiences investing in rental real estate!

RSVP at http://www.meetup.com/Networth-Investors/events/133283712/

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Let’s assume you have two identical multifamily buildings on the same street, in the exact same condition and built in the same year. The tenant quality for both properties is similar and both properties have the same monthly expenses.  The only difference between these two properties is the amount of rental income being generated. Both properties started out with rental income of $3000 ten years ago. The owner of property number one has consistently increased rents to match the rate of inflation and is now achieving $5000 in monthly income.  The owner of property number two has only raised rents a few time during the years and is currently collecting $4000 monthly. He’s always felt as if he didn’t need the extra funds to cover expenses then why be greedy and bother his tenants.

 Both property owners are now looking to retire soon and considering selling their investments. Both owners speak with the same real estate agent and try to determine an appropriate selling price for the buildings. The owner of property number one was given a likely sales price of $500,000 based the numbers he provided the agent. Owner number two was provide a potential selling price of $400,000 based on the numbers he provide the agent.

There is a 20% different between the $500,000 that owner two received and the $400,000 that owner two received. There is also this exact same 20% difference in the rental income they are achieving!

Nothing affects the value of rental real estate more than its rental income. It sounds obvious but not everyone fully understand how underachieving on your rentals can affect your investment long-term. In the above (very close to real life) scenario, both owners ended up selling their investments for very close to what their agent quoted them. From her consistent attention to local rental rates and steady trend upward in what she charged, the owner of property number one was able to achieve close to $75,000 more than property owner number two. Owner number two was able to achieve a better than expected sales price ($426) partially because the buyers saw potential to increase rents after purchase and get the property back to achieving at its highest point.    

 Note: not only did the first owner retire $75,000 richer…she also achieved roughly $20,000 in additional rental over the 10 year span they both owned their properties.  

$3000 Initial Rental Income * Annual Inflation Rate: 5.5%  

Year 1 : 3169.22

 Year 2 : 3347.99

 Year 3 : 3536.84

Year  4 : 3736.35

 Year 5 : 3947.11

 Year 6 : 4169.75

 Year 7 : 4404.96

 Year 8 : 4653.44

 Year 9 : 4915.93

Year 10 : 5193.22

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Are you considering selling your multifamily property? If so, you should know there are two types of buyers for your property and they differ in how they approach a purchase. The first potential buyer would be the owner occupant buyer. This person plans to move into the property after purchase and use the home as his primary residence. The 2nd buyer is the investor. The investor is buying your property for investment purposes and will likely keep your current tenants or rent the property to new tenants.  As a multifamily seller it’s important to understand the differing mindsets and resources of these potential buyers. Understanding their wants and needs will allow you to better prepare for the sale and maximize your price received. Let’s take a look at both buyers in further detail.

Owner Occupied Buyers:

  • This buyer plans to purchase your property as their primary residence tends to be a bit more emotional in their decision making.  This can be good or bad for you. If your property shows well and seems to attract lots of attention during initial showings, buyers may jump to make the purchase before someone else does and ultimately pay more than they would have without the appearance of competition. The opposite is possible as well. If your property doesn’t receive much attention, this buyer will automatically assume “if no one else is interested, there must be something wrong that I’m not seeing”.
  • Owner occupant buyers will obviously need a vacant unit at the time of closing. If you have all tenants on long-term leases you will not be able to secure this type of buyer.  Some owners prefer to wait until there is a vacancy within one of the unit before they put the property up for sale.
  • Owner occupant buyers tend to pay more than investors. Their purchase is more about whether the property suits their particular needs and less about cash flow numbers. Owner occupant can often receive better financing at lower rates than the typical investor. This is another factor contributing to their ability to pay a higher price for the same property.

Investor Buyers:

  • Real Estate investors tend to be less emotional in their decision making. They are buying your property for investment purposes and the financial must make sense for them to make a move. A good investor would rather miss a good deal than to buy a bad one.
  • Investors are looking at your properties cash flow and return on investment. To land a good investor for your property you will want to show that you are achieving market or above market rents for the area and that your expenses are relatively low compared to other investment properties. It’s a good idea to keep strict records while you own the property so you are able to show these to potential investors at time of sale.
  •  Investor buyers can often buy your property “As Is” and can close quickly compared to owner occupied buyer.  If you have a property in need of heavy work, it may not qualify for owner occupied loan programs. In this case you will need an investor to step in and buy the property. Investors also have money that is more readily available allowing them to close on your property on a short timeline.

Interested in selling your home or investment property? Call us today at 617-297-8641.

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