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All posts in rental income

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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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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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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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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South Boston Rental Prices Quickly On The Rise

Are you a current or aspiring landlord in South Boston? No matter your years in the rental business, fully understanding your local market is one the most important things 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 units rent for in comparison to your neighbors. Should you be increasing your rents?

 
Here are South Boston’s rental market statistics for the last 6 months.

 
Total South Boston 1 Bedroom Listings Rented: 125
Average Rent for 1 Bedroom Units: $2,107

Total South Boston 2 Bedroom Listings Rented: 252
Average Rent for 2 Bedroom Units: $2,735

Total South Boston 3 Bedroom Listings Rented: 98
Average Rent for 3 Bedroom Units: $3,391

Total South Boston 4 Bedroom Listings Rented: 23
Average Rent for 4 Bedroom Units: $4,070

 
Would you like a FREE Sales and Rental Market Report for your specific area(s)? Just send a quick email (or complete the contact form below) 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.

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The numbers don’t lie! Before you decide to accept your next tenant application take a closer look at their income. Many landlord find themselves in trouble shortly after accepting a tenant into their rental units…mainly because the tenants are financially overextended.

A good rule of thumb is to require that your tenants annual income is at least 40 times the monthly rent. For example, if two roommates are looking at a $3,000 per month apartment, you would require a combined income of $3,000 × 40, which equals $120,000. To determine how much rent you they can afford, simply divide their combined annual incomes by 40.

You might have also heard that you should spend no more than 30% of your annual income on rent.  Spending 30% of your yearly income on rent is believed to be an affordable amount, leaving enough money for all your other expenses. What’s the difference between 30% and 40 times the monthly rent? Absolutely nothing, they’re just two different ways of deriving the same number.  The 40x trick is just easier to calculate.

For example, let’s take $120,000 of income.

  1. 30% of $120,000 = $36,000.
  2. $36,000 ÷ 12 months = $3,000 per month.

But to make the calculation easier, just divide $120,000 by 40.

  1. $120,000 ÷ 40 = $3,000 per month

Again, to determine how much rent your tenants can afford, simply divide your combined annual incomes by 40. Don’t have a calculator handy?  Use the following table to look up your maximum rent.

Gross Annual Income

Max Monthly Rent

$40,000

$1,000

$44,000

$1,100

$48,000

$1,200

$52,000

$1,300

$56,000

$1,400

$60,000

$1,500

$64,000

$1,600

$68,000

$1,700

$72,000

$1,800

$76,000

$1,900

$80,000

$2,000

$84,000

$2,100

$88,000

$2,200

$92,000

$2,300

$96,000

$2,400

$100,000

$2,500

Need help renting one of your units? Contact us! We can help you find qualified tenants….often at no cost to you!

Contact@MandrellCo.com or 617-297-8641

 

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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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Dorchester Income Property Sales & Rental Market Update

Below is a quick rental market update for the Dorchester area. Apartment rental numbers are provided for the last 30 days while, multifamily sales are shown over the last 6 months. You can download a full report for both below!

Rental Market Statistics over the Last 30 Days:

Total Rental Listings Closed: 23

Average Rental Asking Price: $1,751

Average Number of Days to rental the apartment (DOM): 31.91

Average Price Landlord Received When Rented: $1,758

 Dorchester Rental Market Update – Download Full Report! 

 

Sold Multifamily Homes Over The Past 6 Months:

Total Number of Sold Listings: 106

Average Living Area (Square Feet):  3,511.95

Average Listing Price: $413,123  

Average (DOM) Days on Market: 58.50

Average Sales Price: $407,990

 Sold Dorchester Multifamily Homes – Download Full Report!

 

Want to know what your apartments are worth?  Want to know what your property is worth? Want statistics for a different area? Call us at 617-297-8641 or email your request to Contact@MandrellCo.com

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As a rental property owner you understand that tenant turnover can be very costly. Every time a tenant moves out there will be a period of loss rent, repair cost for the vacated unit as well as cost associated with finding a new tenant.  As a landlord it’s in your best interest to retain good tenants as long as possible and to do that you need to provide your tenants with comfortable and convenient living arrangements. Here are a few items every rental property owner should consider for their property.  

Storage:  

Create a place for your tenants to store personal items they don’t want to keep in their apartment. Often you can build several storage bins in the homes basement and assign one for each apartment. If you decide to use a common area like the basement, make sure each bin has a door and the tenant has the ability to lock their items away. This type of system does not need to be very fancy and can often be done with 2×4’s, plywood and a pad lock.    

Laundry:

On site laundry is a big plus for many tenants, especially during Boston’s cold winter months. On site laundry can include providing a washer and dryer to each tenant or just providing a washer and dryer “hook-up” for each tenant to access. In either case you will need to hire the services of a plumber an electrician.  If your tenants pay their own utilities then you’ll want to make sure your contractors are making electrical, gas and hot water connections with each separate unit. If you happen to pay utilities for your tenants then you should consider the added cost to adding this service in comparison to the added value.  You may consider adding a couple coin operated machines in this case.

Outdoor Space:

Yard space, a terrace, patio, and roof decks are all value added items here in the city. Any type of personal and private outdoor space you can provide your tenants is going to bring higher rents and longer term tenants.

Parking:

Off street parking in Boston can go for big money. If you have land attached or near your rental property that can potentially be converted to parking spots, this could be a real nice opportunity to earn some extra cash.  We often meet landlords that spend a few thousand dollars leveling, paving, and marking out 2 or 3 parking spots, which they turn around rent for $150 per month.  Before a full year is over the spots have paid for themselves and everything going forward is profit.

Intercom & Alarm Systems

Safety and convenience is the name of the game. There are so many different types of intercom and alarm systems out and the prices are really responsible. If your rental property has more than 2 living levels, consider investing in an intercom system.  Many of them allow tenants to “buzz” guest in and some of them come with video capabilities so the tenant can view the individual at their door. Alarms systems are always a good idea. Anything to make you tenants feel safer is a good investment.

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Your tenant’s move in day is a very important time for you as a landlord. Move in day sets the tone for how your tenant(s) will view your apartment business during their tenancy.  If you’re organized and professional most tenants will show you the same level of respect. On the other hand if you are, sloppy and unorganized you will be setting yourself up for headache as your tenants will see you as such and treat you poorly during their stay. Here are a few quick ways to make a good first impression to future tenants.

  1. Create an apartment walkthrough checklist. This checklist should be used a guide so every aspect of the apartment is reviewed by you and the tenant on their first day. Your checklist should include a review of flooring, walls & ceilings, windows, cabinets, doors, and everything else in the apartment that could be damaged during the tenants stay. This checklist tells the tenant that you will also be looking at these same items on the day they move out and you expect them to be in the same condition…minus normal wear and tear.
  2. Make sure you have a copy of the apartment keys ready for the new tenants. This seems like a no brainer, but many landlords forget this simple step and cause themselves lots of running around the day of move in. You should also consider changing the locks depending on your apartment building and neighborhood. Many tenants come to expect that the locks will be changed and you should be prepared to manage this expectation.
  3. Briefly go through the lease and rules of the building again. For some, moving is a very involved and emotional experience and sometimes things get mis-understood or loss during the shuffle. It’s a good idea to remind your new occupants of the rules and regulations of the building.  
  4. If you didn’t already have a W9 form completed by your tenant, now is a good time to collect this. If you are collecting a security deposit from your tenant, than it need to be placed into an interest bearing bank account (separate from your personal funds) during the tenants stay. To open this landlord-tenant account, the bank will require this form from you. This account also allows any interest earned on the deposit to be accredited to the tenant as well as saves you from paying taxes on that interest.
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Is your tenant’s lease is expiring soon? Do you have a current vacancy ? Let us help get you back to collecting rents!

Dear Boston Area Landlords,

My name is Lloyd Mandrell and I’m a Licensed Realtor, and fellow Landlord, in the Greater Boston area.  My firm would love to assist you in finding and placing an ideal tenant in your residential rental unit! 

As a Realtor, specializing in the Boston rental market,  I work directly with only best and highest qualified tenants. I currently have several  such tenants looking for rentals in almost every area of the city and would like to talk to you about your available rental unit. It would be great to see your apartment, take some pictures to begin showing it to my very interested client base, as soon as possible. 

When you place your rental with me and The Mandrell Company, we will handle your tenant’s application, credit checks, employment verification, criminal background checks, lease agreements and more. The best part about listing your rental with us is that our tenants pay our fee and there is absolutely no charge to you for our services!

Our company also offers a terrific property management service if you need assistance beyond filling you vacancy.

Please contact me if interested or if you have any questions. I can be reached at 617-297-8641 or at Lloyd@MandrellCo.com.

We want to help you get back to full occupancy and collecting rents…

I look forward to hearing from you!

 

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This is a excellent opportunity for the right investor. This 9 unit property is split between 2 buildings (one lot). There are (6) One bedroom units and (3) three bedroom units and they bring in close to 90k gross annual income. Local rental comps indicate current rents are below market. 10.17% cap rate and 14.87% ROI. All tenants pay own utilities and are TAW. Newer gas boilers and hot water tanks are just a few of the many updates done in 2005. Off street parking for 15 and a central location minutes to U-Mass Lowell campus.

For more information see our information pack by clicking the link below or by calling 617-297-8641.   https://docs.google.com/open?id=0Bxs7bwzc2QLTZlJCS0ZMNDFzRUE

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Buying a single family home is about personal preference and necessity more than anything else. You buy based on what you like and what you and your family have a need for. The typical multifamily investor is not concerned personal preference, but more about the return on investment the property will produce. Cash flow investors consider what the property cost versus what the property can produce in rental income. If you are new to multifamily investing, here is a quick overview of what the your average investor considers before making the commitment to purchase.

Evaluate Your Rental Income:

The amount of income you can generate from a particular property should be one of your primary concerns. Whether you are purchasing a 2 family home or a 20 unit apartment building, the total rental income that the property can produce will be a major factor in how that property matches up to others you’ve seen. You will want to have a clear understanding of market rents in your area and if possible, the specific rental history for the property you are buying.

Evaluate Your Rental Expense:

Understanding the expenses of a prospective property is just as important as your knowledge of the income being produced. Your property may be generating a terrific amount of income but actually losing money, due to operating costs that are out of control. When evaluating properties to purchase take note of the operating expenses of each and how they compare to other properties. Insurance, property taxes, utilities, and general maintenance costs are some of the expense items you should become familiar with. You will also want to know whether the utilities are shared throughout the home or if the tenants are responsible for paying their own.

Remember It’s A Business:

The income property business can be a time consuming, but ultimately a very rewarding venture. Whether you plan to buy an income property as an investment or as your primary residence, it is important to recognize that you will be running a business. Tenants, passive income, rental expenses, and certain tax issues are among the concerns of multi-family owners. You should become familiar with your responsibilities as a landlord and business owner if you want your rental business to succeed. Like any business, the effort you put in and the knowledge you obtain will ultimately determine the success you achieve.

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