Rental Properties

Real Estate Investing Course - Lesson Seven

If you really want the great deals in investment properties, you have to increase your odds by finding more potential properties. Who is more likely to get a cheap apartment building, an investor that looks through the MLS listings and calls it a day, or one that uses ten resources? Here are the ten:

1. Talk. Let people know you are looking and sometimes the properties will come to you. There are a lot of owners out there who want to sell, but haven't yet listed their property.

2. Use the internet. Go to a search engine and enter the type of real estate you are looking for, along with the city you want to invest in. You never know what you might find.

3. Drive around looking for "For Sale By Owner" signs. Owners often don't want to pay to keep the ad in the paper every week, so you won't see those properties there.

4. Find abandoned or neglected properties. That's a pretty clear sign that the owner doesn't want to deal with the property. He might sell cheap.

5. Find old "For Rent" ads. Call if they are a few weeks old. Landlords are often ready to sell, especially if the haven't yet rented the units out.

6. Talk to bankers. You might get a foreclosed-on investment property cheaper if you buy it before they list it with a real estate agent.

7. Offer someone a finder's fee. There are people that always seem to hear about everything. Have them coming to you.

8. Eviction notices. If your local papers publish eviction notices, or if you can get the information at the courthouse, it can be useful. A landlord who just went through the process of evicting tenants is a likely seller.

9. Old FSBO ads. If you call on two-month-old "For sale By Owner" ads, and they haven't sold, they may be ready to deal. Owners often give up the effort, but still would love to sell. Help them out!

10. Put an ad in the paper. "Looking for investment properties to buy," might be sufficient to generate a few calls.

Bonus Lesson
Rental Properties: 10 Ways To Increase Income

What if you want better cash flow from your rental properties? You can't just raise the rents arbitrarily. If tenants leave, income goes down, not up. There are other ways, though, including the ones listed below.

1. Install coin-operated washing machines. Even if you don't have the money to do this yourself, there are companies that will do it for you, and share the income with you.

2. Rent extra parking spaces. When I got tired of a renter's extra car, I just started charging a weekly fee. Then I didn't mind so much.

3. Raise the rent. Okay, we did dismiss arbitrary rent hikes as a cash-flow solution, but check on the rates for similar units. Are you renting at below-market rates? If so, you can raise rents without losing tenants.

4. Rent storage sheds. Especially if your apartments are small, your renters may need a place to store their things. Don't let them spend their money elsewhere. Put a few sheds on the property.

5. Enforce late fees. It is perfectly fair to have a fee for late payment of rent, and guess what? Those who are chronically late usually don't even mind - they just don't look at these things the same way as others.

6. Offer improvements for rent increases. If it's worth $25 more monthly rent to a tenant, install that dishwasher. Even on a credit card you'll pay less than that per month for it. Ask tenants what they would like, what they would pay, and do the math.

7. Install vending machines. If your rental properties are large enough, others will do this for you for free, and give you a share of the income.

8. Rent by the room. A four-bedroom house might make more money if you include all the utilities and rent by the bedroom. This has made a lot of fortunes for investors in college towns. It does mean a lot of management, however.

9. Rent-to-own sale. If you have single-family homes as rentals, you may want to rent them on a lease with option to buy. Usually there's a non-refundable deposit, and higher than market rents in these deals. When your renters change their minds, as they often do, you got the deposit and higher rents. This is great when poor rental income makes you want to sell. You either sell or get the higher income as you repeat the process.

10. Reduce expenses. Every dollar of expense you cut goes straight to the bottom line. List every expense of your rental properties, and look at them one at a time. How can you reduce them?

Steve

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Make That Offer | Rental Properties