Call EOTM Real Estate Group, Doc… They make life much easier…
Call EOTM Real Estate Group, Doc… They make life much easier…
Investment property management is fast emerging as one of the vital aspects of a successful realty investment. In spite of the currently dull phase of the housing market, investing in properties is still considered one of the most profitable and stable activities. To keep all realty investments profitable, it is important to ensure efficient assets management.
Managing a property that includes managing of any type of tenants can be a daunting task. While purchasing realty is one thing, effective management is another. This is especially true if the owner or the investor does not possess management skills like the management professionals have. These experts can help to maintain the investments in the apartments or homes efficiently and also to manage good tenant relationships.
While management of properties such as apartments, single family homes and commercial properties does include screening prospective tenants and handpicking the suitable ones, it does not necessarily stop there. The property has to be well maintained and there has to be an impeccable system of accountability related to all financial transactions of its equity growth as well as the cash flow generated by renting it out to tenants.
What Makes Management Professionals Indispensable
Most property owners who stress on saving money usually end up hiring a single professional for investment management. Whether it is a house or a small apartment community, it is not possible for a single individual even a qualified one to attend to all the responsibilities associated with management or apartments and commercial investsments, supervise its maintenance and turn it into a profitable investment. This is why the primary concern of an owner or an investor must be to hire an established company that can offer outstanding services to keep all kinds of properties functioning at the highest possible levels.
A good management company will connect the investor with an experienced manager who will handle all matters related to the property. The professional responsible for investment property management will also act as the intermediary between the investor, tenants and the management company. The manager will also make sure that the investor receives accurate financial statements regarding the income generated from the property regularly.
A person who has invested in an single family home, duplexes or something on a more larger scale would definitely require a professional who is an expert is in his field and is aware of the financial goals of the investor. Since all properties are able to generate profits, a property manager must treat all properties as serious business. Therefore, before actually hiring an agency for investment management, the investor must create a great business plan with the management company. If the company seems to treat each investment as real business, they are likely to handle properties efficiently by enhancing their value and lowering potential risks.
Obviously, there is a lot at stake while choosing a company to manage realty investments and keep it running profitably. Therefore, it is important that the company and their overall business ethics inspire confidence and trust in the investor so that he is completely comfortable in assigning the property to the company handling investment property management.
Making the right decision regarding the company selected for managing properties and evaluating the experience of this company can directly influence the success of a realty investment. As long as owners or investors choose the best management professionals, they can create a profitable realty business.
Our goal is to help maximize your most prized investments. Contact Carla Barnes of EOTM Properties today to receive a free rental analysis of your most prized investment(s).
Direct line – 678-548-9466
Email – email@example.com
Website – www.eotmrealestategroup.com
Real Estate Blog – http://activerain.com/blogs/mortgage_diva
EOTM Real Estate Group specializes in providing our clients with a proactive management style which maximizes your bottom line.
And because we’re local professionals – experienced and knowledgeable – we will maximize your investment while putting dollars back in your pocket.
EOTM Real Estate Group was created for the express purpose of providing turn-key management services to our investor clients of single-family, multi-family, retail, and commercial rental properties. From marketing to on-site staff management, collections, and monthly P & L reporting, our goal always is twofold: to maximize our client’s return on investment, and to preserve and/or enhance the quality of their asset.
We take pride in the fact that our size allows us to deliver hands-on site management at all levels; from our leasing agents and region managers to our managing partner.
Call us today and we’ll tell you how we will put more dollars on your bottom line through expense control, volume purchasing and receivables management.
We look forward to hearing from you.
or Contact Carla Barnes today and get a FREE confidential rental analysis of your most prized investment.
How do you know if you are getting a good return on your real estate investment? Calculating the ROI on your investment property is critical to knowing how your investment is performing, or when comparing one investment to another.
In order to successfully decide whether a property is worth buying, an investor must run the numbers to calculate two types of returns: Cash-on-cash return on investment, and total return on investment.
Cash on Cash Return on Investment
The cash on cash return on investment is the before-tax cash flow (BTCF) divided by your initial cash investment. The formula looks like this:
Cash on Cash Return on Investment = BTCF / Initial Cash Investment
Your before-tax cash flow is calculated by subtracting your annual mortgage payment from your net operating income (NOI). The net operating income is simply the total income from the property minus the total expenses.
Let’s take a look at an example using a $150,000 income property purchased with a 20% down payment of $30,000. Let’s assume your mortgage of $120,000 is fixed for 30 years at a 7 percent interest rate.
Let’s assume your BTCF is $3,000 per year ($250 per month):
Cash on Cash ROI = $3,000 / $30,000 = 10.0%
Through the “magic” of leverage using financing to purchase your property, you have created a cash on cash ROI of 10%. This would be quite attractive to most investors in today’s market.
The cash on cash ROI is a good measure of a property’s first year financial performance. However, it does not include the additional benefits achieved through real estate such as the amortization of the mortgage and any future appreciation. The total return on investment addresses that.
Total Return on Investment
The total return on investment (TROI) provides a better and more complete measure of a property’s financial performance. That is because it factors in amortization and appreciation gained over time.
Total ROI = (BTCF + Net Sales Proceeds – Initial Cash Investment) / Initial Cash Investment
In order to calculate the total return on investment, one must project the BTCF for each year of expected ownership as well as the net sales proceeds from the sale of the property.
Let’s take our example above and assume that we plan to sell it in five years with an average annual appreciation rate of 4% per year. After five years our $150,000 property would be worth $182,498, and our mortgage balance would be $111,665. Let’s also assume that our selling expenses total 5% of the sales price, or $9,125.
Using the figures above, our net sales proceeds from the sale of the property in year five would be $61,708 ($182,498 – $111,665 – $9,125). Additionally, our before tax cash flow after five years would total $15,000 assuming no annual increase in rents or cash flow. Now our formula looks like this:
Total Return on Investment = ($15,000 + $61,708 – $30,000) / $30,000 = 156%
Note that some investors calculate their TROI using their after-tax cash flow (ATCF) instead of the BTCF. This can provide a deeper “bottom line” measure of the return on investment; however, it does not provide a good measure to compare one investment to another since tax liabilities will vary between individual investors. Calculating the TROI using ATCF is best suited for investor specific use.
By projecting a property’s future cash flows and appreciation, you can calculate the potential gains on your initial cash invested (down payment). Assuming the property is not declining in value, the TROI should increase in each successive year.
However, total return on investment can be a little shortsighted when used in isolation. This is because total return on investment does not measure of the property’s financial performance as it relates to its equity. For this we must calculate the property’s return on equity (ROE). Similar to the TROI, the return on equity calculation replaces the initial cash invested with the properties equity in a given year.
Please feel free to submit all mortgage and real estate related questions directly to me via email @ firstname.lastname@example.org.
Because of the current economic climate, property managers are popping up all over the nation. Some just got their license, some have been listing and selling for a living, and most don’t have a clue what they are getting into. If you are considering hiring a property manager you need to understand the issues. What you don’t know can hurt you! Here are some things to think about before you make the decision, “Who can I trust to manage my rental property?”
First, there are thousands of good realtors in this country that make great listing (buyer’s) agents but are currently starving and looking for ways to supplement their incomes. As properties sit on the market longer and longer customers are asking their listing agents, “Can you rent it?” Realtors who are accustomed to saying “no” to that question are starting to say “yes” and enter a world they are neither trained for nor familiar with. These well-intentioned agents have the license to manage rentals but their skills are not developed in this unique field and it will take them a while to figure things out. Property management is very different than what they are use to and it can cost you plenty of your own hard-earned money to be part of their learning curve.
Next, Property managers must be licensed by the real estate regulatory agency of their state. There are lots of well-intended entrepreneurs running property management businesses out of their homes without a license. This has become a cottage industry, much like the listing and selling business, and it takes almost no capital to get into the management business. They manage properties for others for a fee but are not licensed to do so. This means they are not under the scrutiny and control of the regulatory system created by the states to protect the public from dishonest managers. They typically are not holding other’s money in a trust account registered with the agency and you have no one to report them to when they mismanage the property, the money, or you. If they steal from you there is no place for you to go for help, as there is no regulatory authority with jurisdiction over the unlicensed manager. You are on your own with unlicensed managers so be on your guard.
Lastly, they should manage rentals as a primary business, not as a sideline to another business. Many real estate agents hold themselves out as property managers when their real business is listing and selling. Lots of real estate agents manage a few rentals as a sideline to their brokerage business and these businesses naturally compete for their attention. There are plenty of mom and pop property management businesses in every town and the owner of a rental property needs to consider the shortcomings of these sideline operations. Property management needs the total focus and attention of a manager because it’s demanding and more complicated than it looks. If they are listing and selling homes for a living, and managing a few houses on the side, make sure they have plenty of extra staff doing the managing. The big dollars they get selling houses will distract them from the “nickel dime” business of managing rentals. There is a natural conflict of interest between these businesses and you don’t want them competing for your attention as a landlord. You do not want them having to decide, “do I show a house for sale today, or show a house for rent?” The sale option will always win out because the potential reward is much greater. Find somebody who is focusing on the management business for a living. “I do both” is the wrong answer.
EOTM Real Estate Group is a full service for all real estate needs for Owner’s, Residents and Investors, with services ranging from financial advice, consultations on all aspects of real estate including tax liens, foreclosures, to tenant placement, screening to real estate rental services, management, and sales & marketing training.
With over 10 years experience in Real Estate, Mortgages, Property Management and Marketing, EOTM Properties has positioned themselves as leading providers in Property Management, Real Estate & Mortgages.
We encourage you to visit our site to learn more about the company, our partners and how we are structured to help you achieve the highest investment on your most prized investment.
With the implementation of the new H.O.M.E. Initiative program we predict being able to help thousands of Georgia Families that have been directly affected by the mortgage crisis.
Contact us today for more information on our company and this new initiative.
Unfortunately, things don’t always go as planned. Sometimes you can’t sell properties for what you originally thought. Markets sometimes change as we are seeing in our current situation. Currently the real estate market is softening up in a lot of areas. Below are some tips to help you sell properties faster and what to do if you can’t sell a property.
1. Keep it clean – Properties should be spotless. Chances are, you’re asking a buyer (or renter) to spend a lot of money. There is no excuse for dirt, stains or extra material lying around.
2. Flower boxes & plants go a long way – Especially if it’s summer time, put some nice plants and flower boxes around. If there is a yard, make sure it’s neat and well-groomed.
3. List it with a realtor – If you’ve been trying to sell it yourself, get a realtor. I know 6 percent is a lot, but most realtors will get more money for a property then you will. Plus they pay the advertising costs. Plus you don’t have to waste your time with open houses or showing the property. Plus they’ll sell it quicker… How much does it cost you every month your house doesn’t sell? How much has it cost you so far? What was that? Were you thinking that you can sell it yourself? Obviously not. If you could, you wouldn’t be reading this.
4. Change realtors – If your realtor can’t sell the property, dump him/her. I never recommend signing listing agreements for more than three months. Always choose a realtor in the neighborhood. A realtor 20 minutes away has no idea what’s going on in your neighborhood. Also, don’t negotiate their commission. If you’re paying them 5 percent and someone else is paying them 6 percent, who do you think they’re going to take the hot buyer to? In fact, pay them more. Offer incentives to sell it quick.
5. Reduce price – I know it stinks, but if it doesn’t sell, either offer concessions or cut the price.
6. Rent it – If it doesn’t sell and you have a hard time making the payment, rent it out. I know you want the big “payday”, but how long can you realistically carry the mortgage payments and expenses with a vacant property? Rent it out and try to sell it again when the market gets better. We specialize in property management and tenant placement, contact us for more information.
Consider key factors about a foreclosed home before you buy it as a rental property.
Some investors are eager to purchase single-family homes in foreclosure, hoping to take advantage of low prices and then turn a profit by renting the properties to tenants. But many of these buyers are not experienced landlords, and even experienced landlords often fail to consider crucial factors that will make the purchase of a foreclosed home a success or failure as a rental property.
Wise buyers will consider such things as the neighborhood in which the home is located, how the home has been maintained, and whether any existing tenants who rented from the prior owner will remain after the purchase. Here’s a rundown of the things you should consider before you buy a foreclosed property with the intention of renting it out.
Purchasing a foreclosed home may not be the home-buying experience you might imagine. Instead of dealing with motivated individual sellers, anxious to showcase their home by staging it and working closely with their broker, most buyers will encounter an institution — a bank’s asset management department, where it’s hard to reach and converse with an individual, let alone the same individual each time. Don’t expect quick turnaround and individual attention by people who have the authority to make decisions. Instead, you may find yourself dealing with a department that knows banking but not home selling and stops answering the phone at 5 PM sharp.
However, if you are lucky enough to buy a home in preforeclosure (preforeclosure is the period after the homeowner has received a notice of default but still has months before the auction takes place), often you can negotiate a deal with the homeowner instead of the bank.
A key factor in the success of your rental is the neighborhood. In general, a rental in an area dotted with foreclosures is likely to command less rent when foreclosed properties remain unsold and, more importantly, unoccupied. These forlorn properties are likely to be unmaintained and are targets for vandalism and even squatters. Few tenants will want to join the ranks in such a neighborhood, and those that do may expect the rent to reflect these negative attributes. When making a bid on such a property, factor in the realistic rent the house can command.
A neighborhood of foreclosed homes bodes ill even if they have been purchased and are in relatively good shape. All of these homes aren’t going to be occupied by the owners — many will be rented out, just as yours will be. That makes for a concentration of rentals — in short, a glut on the market, which will drive prices down. The same property in a different part of town might fetch a higher rent simply because there is less competition.
A foreclosed property in good condition located in a neighborhood with few other foreclosures will most likely fetch higher rent. Of course, such a property may command a higher selling price as well.
Our goal is to educate the consumer on one of the biggest investments you will ever make. Please feel free to contact Carla Barnes of EOTM Properties today for a quick analysis of the market you are looking to buy in, we are here for that investor in YOU!