Features Every Rental Property Should Have

Rental Property

Rental Property

The benefits of investing in real estate include passive income, stable cash flow, tax advantages, and more. If you own a rental property, you’ll want to minimize vacancy losses and attract high-quality tenants. The ideal tenant is one that never fails to pay the rent on time and keeps the property safe and habitable.

To make your rental property stand out and increase your chances of securing reputable tenants, your rental home should include these five features:

Security System

Adding a security system not only provides peace of mind, but it can also make the difference when prospective tenants are weighing their options. Remember that tenants are looking for a safe place to live, first and foremost. Make installing a security system a priority and confirm existing features are up to snuff.

Energy-Efficient Appliances

Energy-efficient systems and appliances are particularly appealing to many renters and buyers who are willing to pay a little bit extra on rent or the sale price if it means that they will save on electricity later on and help the environment by decreasing power plant emissions.

Renovations

Providing regular maintenance ensures that your rental property is safe and has curb appeal, so it continues to provide an income stream throughout its useful life. But renovations are key to keeping up with changing trends and bring many benefits that you may not have thought about, including the possibility to charge higher rent on the property and to deduct the cost of improvements from your rental income to reduce your tax liability.

Storage Room

A home with plenty of storage space is something most tenants look for. While building in new cabinets or closets can be pricey, you could opt to invest in more affordable shelving units for your rental property. Additionally, be sure to add new hangers, rods, hooks, and baskets to allow tenants to store sundries. Outdoor storage buildings such as sheds may also be worth considering so tenants have access to increased storage capacity.

Outdoor Space

As many people have shifted from in-office to remote work due to the pandemic, access to a backyard or a balcony is at a premium. Consider investing in a small patio or deck, outdoor furniture sets or even a fire pit. Done right, these investments can pay off big!

Would you like to speak with a member of the RLG team to discuss the value of your current investment property portfolio and determine areas for improvement? Give us a call today! We would love to help you with the properties you currently have and multiply your investment portfolio.

Are You Prepared for a Housing Inventory Surplus?

It goes without saying that real estate supply and demand are off-kilter. Home sales are continuing to fall due to housing shortages. As of late May 2021, existing home sales were down 2.7% to $5.8 million, marking the third consecutive month that activity has dropped off.

In recent times, there have been a number of severe disruptions in the supply chains that collectively led to the current situation, many of which revolve around lumber. The reasons include the U.S.-China trade war, tariffs imposed on lumber imports, supply shortage in transport, pandemic-driven home improvement craze, and new construction. The supply bottleneck in lumber, for one, has sparked much higher prices. In May 2021, lumber prices hit an all-time high of $1,686 per thousand board feet, an increase of 406% from the $333 it was trading at the same time last year.

Historically low interest rates have also played a significant role in fueling the demand for homes. These low rates coupled with the ability to finance over a 30-year term have made housing much more affordable for a large swath of buyers.

Relief may be right around the corner, however. National Association of Realtor (NAR) chief economist Lawrence Yun predicts that we should see further inventory come to the market later this year with more covid-19 vaccinations being administered. He also believes that potential home sellers will become increasingly comfortable listing and showing their homes. In addition, as forbearance activity declines, more foreclosures are likely to hit the market.

With the anticipated uptick in housing inventory on the horizon, real estate investors must stay on their game and prepare ahead. Ridge Lending Group offers a diverse product line available to clients, including conventional loans, commercial loans, short-term bridge loans, non-QM, and unsecured lines of credit.

To learn more about our mortgage programs and products, watch the video below or give us a call today! We would love to help you work with the properties you currently have and multiply your investment portfolio.

Making a Fair Offer on an Investment Property “As Is”

Selling a house “as is” means that the seller is putting the house on the market without making any repairs or improvements to it. There are a number of reasons why people choose to sell a house as is. Perhaps the seller is in financial trouble or must relocate quickly to care for an ailing parent. Sometimes, a home is inherited by an out-of-state relative who doesn’t have the time or resources to maintain or renovate it. More often than not, they simply want to avoid making costly repairs.

Whatever the reasons may be, many real estate investors build their business models around helping homeowners in these kinds of situations to move out and get on with their lives. If you have your eyes set on an investment property listed for sale “as is” and want to make sure it is priced right, your offer should be based on these key factors:

  • Comparable homes in the neighborhood
  • The potential cost of repairs

For example, if comparable homes in the area are worth $250,000 and the cost of repair is around $30,000, a fair market value would be no more than $220,000. Though this math can be helpful in determining how much you may be willing to pay, a fair offer will also factor in whether the area is experiencing a seller’s market, the number of houses available for sale, the growth outlook for the area, and seasonal patterns in the market.

To ensure the purchase makes sense, investors should always elect to do a home inspection. While you will have to foot the bill for the inspection, it is well worth it as it may reveal any additional problems and can often help you negotiate down the final price.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more.

5 Up-and-Coming Cities for Real Estate Investors

Raleigh NC real estate investorsWhile there are no hard-and-fast rules to real estate investing, most real estate investors share a host of common traits. These shared attributes include an entrepreneurial spirit, adaptability, and ambition within reasonable bounds. Additionally, successful investors benefit from a fair amount of extroversion and love of networking. To find the hidden gems of real estate and get the numbers to add up, they will often do the upfront work of connecting with real estate agents, cold-calling sellers, and dealing with contractors.

By and large, the best places to invest in real estate will feature high rental occupancy, high rents vis-à-vis your mortgage payments, and the expectation that the value of the property will continue to appreciate over time. However, to determine the best cities for real estate investors, one has to consider a multitude of attributes beyond market dynamics and macroeconomic factors, including tax and regulatory framework and quality of life measures.

Here are the top 5 cities for real estate investors based on CrowdStreet’s Top Real Estate Markets in 2021:

  1. Raleigh-Durham

With its proximity to top universities, world class research facilities, a highly educated workforce, relative affordability, and increasingly walkable urban center, there is just so much to be bullish about regarding Raleigh-Durham’s future, arguably one of the nation’s hottest “work from anywhere” markets.

  1. Austin

Austin is a market with an unfair number of competitive advantages. Strong population and job growth (with a thriving tech scene), the presence of the state capital, a major research university, and location within a tax-free state combine to provide a strong long-term outlook.

  1. Phoenix

Phoenix is the top market in the West. A 2020 exodus from urban CA locations has bolstered already strong underlying fundamentals in the city. Arizona also ranked #5 for inbound moves in the Annual 2020 United Van Lines Moving Study.

  1. Salt Lake City

Consistent population growth, low unemployment, and tight vacancies are perennial attributes of this market. Salt Lake City is maturing and becoming more institutional in nature.

  1. Dallas-Fort Worth

Dallas-Fort Worth continues to unlock new areas of growth via fresh development. Consistent growth, a business friendly central location, and a favorable tax environment provide strong underlying fundamentals for both multifamily and industrial strategies.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

4 Ways to Quickly Sell an Investment Property

If you are in the business of flipping investment properties, you know that time is a key factor to making profits. By quickly selling a fixer-upper, you are cutting down on monthly expenses, such as maintenance and utilities, while maximizing your returns. With that said, there are some ways you can facilitate the sale of your properties. Here are some tips to help you sell an investment property posthaste:

  1. Deal with Homebuying Companies

Private individuals looking for their dream home are likely the most demanding group of buyers. If you don’t have time to waste, dealing with homebuying companies may be your best bet. These companies will typically buy houses for cash to ensure a fast closing and put in an offer without much ado. This means that you won’t have to worry about the buyer being approved for financing or bankroll expensive repairs.

  1. List Online

Listing a property online is a sure-fire way to get your investment properties more exposure. But rather than settling with one platform or website, branch out and promote your homes across all channels, including social media. If you’re hosting an open house, you can use Instagram’s “Live” feature to give followers a taste of what is happening in real time.

  1. Make Repairs

Some repairs are inevitable if you want to avoid a lengthy home sale. As buyers will predictably order an inspection before closing, you might as well take care of some of the home’s issues beforehand and curtail potential negotiations that could drag out the process even longer. Hire a professional to inspect your property and make the recommended repairs or improvements.

  1. Time it Out

Spring is the best time of the year for the real estate market. With the increased demand during the months of April, May and June, it is wise to time the renovation of your investment home so that it’s ready for listing by springtime. More demand means not only more buyer traffic, but also higher prices, which can be a boon to sellers. Other market circumstances to consider include mortgage rates, tax outlook, and economic growth.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

How to Set a Budget for Real Estate Investments

Real Estate InvestmentsOne of the most effective ways to build wealth for the future and attain financial independence is to invest. Rental properties, for one, have the potential to provide solid returns through passive income and tax benefits. They do, however, entail a number of expenses that you must consider, such as property taxes, maintenance, utilities, marketing, vacancy costs, and more.

It is critical that real estate investors break down the costs associated with the property they’re eyeing and plan a realistic budget in line with their financial circumstances and the home’s estimated return on investment (ROI). The key to success is being able to determine the amount you can invest into those properties and to figure out how the spending aligns with your goals and long-term ambitions.

If you are new to real estate investing, wholesaling can be a good starting point. Wholesaling is the process through which the wholesaler contracts a home—usually one that is distressed—with a seller, shops that home around to potential buyers, and then assigns the contract to one of them. It is a less risky method for new investors as it does not require a significant amount of capital to get started.

Lots and raw lands can also be attractive investment options for those with limited funds in that they require comparatively less upfront cash. Whatever your strategy might be, you should always do your due diligence and consider hiring a well-qualified inspector who can pinpoint problems and give you valuable bargaining power.

As you begin tracking your expenditures in a spreadsheet, make sure to allow for some breathing room in case of unexpected overhead and incidentals. To ensure a firm grasp on your borrowing capacity, take into consideration the following factors:

  • Your annual income
  • Your monthly expenses
  • Down payment
  • The type of loan and current interest rate
  • Loan term
  • Estimated repayments

Once you have set yourself a budget, the next step is to review the must-haves and nice-to-haves and to cut out some of the unnecessary expenses. Just be smart about it as what you may deem unnecessary may actually provide great returns.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

When Is Renovation Worth the Investment?

renovationHome renovations can be an effective way to add value to your investment properties. While some renovations may instantly increase your home’s value, others may not be worth the upfront expense. To help you determine whether or not to pursue a particular remodeling project, we rounded up a few useful tips.

  1. Take Stock

Assess the magnitude of a project to determine how much work will be required. To do so, you will want to map out every step involved in the execution of the project. If you have a specific timeframe in which you are looking to sell the house, factoring in each step of the renovation will give you a better understanding of the estimated time of completion.

  1. Tally Up Costs

With so many items and work associated with a home renovation, it is important to budget for the expenses you expect to incur during the project. Build a spreadsheet that includes costs of labor and materials. This will ensure that you don’t overspend and allow you to more accurately ascertain the overall value it will add to the home. If your costs are higher than the estimated value added, the remodel is not worth the investment.

  1. Cut Expenses Where Possible

Review your financial spreadsheet carefully and determine if there are any parts of the project you can save on. Perhaps you can paint the walls or stain the deck yourself. Just make sure you don’t overestimate your skills, or you risk a sloppy project.

  1. Get Multiple Quotes

Talk to at least three contractors to learn about the services they provide and their pricing. Often times, a cheaper quote will not always be your best bet. While affordability is a key factor, a strong track record and clear communication are equally important to ensure the service provided meets your expectations.

  1. Consider the Neighborhood

If you are considering purchasing an investment property to flip and resell, make sure you do extensive research on the projected growth for the area in which the property is located. If the neighborhood is poised for growth, you will have more flexibility with the time spent on the renovation.

Would you like to speak with a member of the RLG team to discuss the value of your current investment property portfolio and determine areas for improvement? Give us a call today! We would love to help you work with the properties you currently have and multiply your investment portfolio.

5 Low-Budget Ways to Spiff Up Your Investment Property

Investment Property, new backsplash

Investment Property, new backsplashWhether you are skimping and saving for your next real estate purchase or putting off any major renovations on a rental home until they are inevitable, you can still give your investment property a facelift without spending a small fortune. Low-budget overhauls can have a significant impact on vacancy rates. Similarly, if you were to sell the home, you might get more money for it.

We have rounded up some creative ways to give your investment property some oomph on a tight budget. Check it out:

  1. Lighting

Upgrade the lighting with dimmable LED bulbs. In addition to their energy efficiency, these lights can help create more intimate ambiances or even make your kitchen look brighter and fresher. While you are at it, you might also want to consider changing out the light fixture!

  1. Storage Space

A home with plenty of storage space is something most tenants look for. While building in new cabinets or closets can be pricey, you could opt to invest in more affordable shelving units. Additionally, be sure to add new hangers, rods, hooks, and baskets to allow tenants to store sundries. A fresh coat of paint to existing cabinetry can also make a big difference in your investment property.

  1. Backsplash

If you have a boring, plain backsplash, consider painting it over. If you have a tile backsplash, you can check out tile stickers and decals to cover them with. They are inexpensive and easy to apply.

  1. Tile Grout

Speaking of tiles, while they can be incredibly beautiful and timeless, the grout will inevitably begin to show signs of wear and tear. This can make your tiles look rather lackluster. If you notice cracks and discoloration in the grout, it is time to renew it.

  1. Garage door

We know what you’re thinking. A new garage door might not be the cheapest way to update the look of your investment property, but it is worth every penny! A garage door that doesn’t match the overall aesthetics of the home can take away from the home’s curb appeal.

With around $1000 to $2000, you can replace your garage door with a newer and higher-quality one, which will allow you to raise your property’s rent a bit to recoup the costs and make more money over time.

Would you like to speak with a member of the RLG team to discuss the value of your current investment property portfolio and determine areas for improvement? Give us a call today! We would love to help you with the properties you currently have and multiply your investment portfolio.

Finding Undervalued and Off-Market Properties

real estate

real estateInvesting in real estate is one of the best ways to build wealth. While the market may fluctuate, people will always need a place to live. Finding undervalued and off-market properties to resell at a profit is key to ensuring you make a sound financial investment. However, some properties such as FSBO and pocket listings may not be listed on your local MLS and will sometimes require a little more digging if you want to find them.

Undervalued properties – Properties may be undervalued for various reasons: a distressed seller in need of quick cash; a property that needs major repairs and renovations; or an underperforming cash flow from a rental property, to name a few. There are many undervalued homes on the market, the trick is knowing how to find them. Use tools at your disposal such as Mashvisor’s Property Finder and Point2 to gain insight on potential investment properties.

Off-market properties – Real estate brokers will often try to create interest in a property by word of mouth or social media before listing it publicly. The best way to find off-market investment properties is to network with real estate agents and local wholesalers. Another avenue for finding off-market properties is through direct marketing. Direct marketing includes cold calls, mail campaigns, and social media. Spreading the word is key. 

Have you been thinking about expanding your portfolio of investment properties or purchasing your first? Ridge Lending Group would love to help you! RLG prides itself on providing the education you need use real estate investment to build wealth. Call us today!

Measuring Success of Your Investment Property Portfolio

Investment Portfolio

Investment PropertiesHaving a portfolio of investment properties is a wonderful way to build wealth, but what good is it if it is not providing positive cash flow? When assessing the value of your portfolio, consider each property individually. Here are some metrics that can help determine value:

  • Net cash flow – Your income minus your expenses equals net cash flow. Include all expenses, such as maintenance, utilities, and payroll. This will determine if your investment properties are producing a positive cash flow.
  • Cash-on-cash return – Divide net cash flow by the initial investment. This result will show how an investment property is performing over time. Compare the cash-on-cash return results of your investment properties to those of other properties in the local market and see if there are any improvements you could make to increase the value.
  • Appreciation – This refers to the increase in value of an investment property over time. Compare this appreciation to the local market and determine if this property provides long-term benefits.

After determining the value of your portfolio, you should have a good idea of the investment properties that are worth keeping and those that may not be. In some cases, it makes sense to cut your losses and walk away from an investment property if it is not providing positive cash flow or does not seem to have the potential to provide it in the near future. Investment properties that are not profitable or take up too much time are likely not worth keeping, and the assets are better allocated elsewhere.

Would you like to speak with a member of the RLG team to discuss the value of your current investment property portfolio and determine areas for improvement? Give us a call today! We would love to help you work with the properties you currently have and multiply your investment portfolio.