The Old Fashioned Paper Rent Check

Written by on May 6, 2012 in Rent Collection - No Comments
Don't let your rent collection be like this!

The days of the paper rent check are numbered. While the rest of our purchases have changed – we are accustomed to paying with credit or debit cards, online banking and automatic recurring deductions from our bank accounts – rent, mortgage and HOA payments have lagged behind. These are often the only expenses people pay via check anymore.

A recent article from Multi-Housing News discussed how the rental industry is moving away from traditional paper checks into the future with ACH transactions, debit and credit cards, and even mobile payments. It’s really about looking at the generation of renters coming up and identifying how they can and will want pay the rent.

The biggest growing demographic in the rental industry is Generation Y. Classified as being born between 1977 and 2001, those between the ages of 16 and 33 now make up 25% of the population. With the housing market still weak and slowly reviving, many of them are choosing to rent and have contributed to the recent apartment boom.

According to research from MetLife, Generation Yers’  have been shaped by communication technology. Due to the range in age, some of them have used this technology since they were as young as age five and cannot remember a world without it. They were raised on 24/7 connectedness, and are accustomed to multi-tasking: juggling e-mail on their PDAs while surfing online and talking on their cell phones.

Landlords and property managers need to be aware of their changing market and begin preparing for the shift in their renter’s mindsets, if they have not seen it already. Renters will be demanding more payment options that fit into their online lifestyle and will expect the ease of being able to pay when they want from wherever they are.

RentMonitor makes it simple for landlords to offer online payments to their tenants. Check us out at http://rentmonitor.com to see how we can help you move your rent collection process online and automate it.

Photo by: British Postal Museum & Archive

Rentals are Still Hot, Hot, Hot

Written by on January 17, 2012 in Market Outlook - No Comments
Screen shot 2012-01-17 at 1.03.32 PM

A report released earlier this week by Hotpads.com discussed the rental and housing market trends for 2011 and some predictions for 2012.

Rental Markets
The national housing search engine, found that rental prices for two bedroom units grew 3.75 percent in 2011 while two bedroom units for sale saw a 1.83 percent drop in price across the top 20 most populated U.S. metros.

The report also showed that studio rentals remained the highest growth segment, with a 7.12 percent increase over the year. One and two bedroom rental properties also grew 2.59 percent and 3.75 percent respectively, while three bedrooms actually fell by .31 percent. There were no statistics for apartments with more than 3 bedrooms.

HotPads measured the median listing prices of two bedroom properties across the U.S. and found that popular metro areas like New York, Boston, Miami, San Francisco, Los Angeles, and Chicago had some of the most expensive rental listings. San Francisco appeared to be the most in-demand market since listings stayed active for just 28 days on on the site, compared to an average of 49 days across other top metro markets.

Sales Markets
According to HotPads, homes for sale saw a further decline in 2011. The median sales price for home with two bedrooms fell 1.83 percent across the largest metro areas, while three bedroom homes for sale only declined by .19 percent. In 2011 the most expensive two bedroom properties were located in San Francisco, Los Angeles, and New York.

The company concluded the report with a statement, “While we expect demand for rental properties to remain high throughout 2012, we anticipate a slower growth compared to last year. As the price of homes for sale continues to decline, we believe more home shoppers will consider buying over renting (buy vs rent data below). We also predict more foreclosed and long standing for sale properties will re-enter the market as rentals in 2012, which should increase the rental supply and help ease prices. However, if economic conditions extend consumer uncertainty, we may continue seeing would be home owners continue to rent.”

The data in this report is calculated based on the median listing price of 500,000 concurrently active rental listings on HotPads across the top 20 most populated U.S. metros. For consistency, two bedroom properties were used to determine the rental and for sale year over year price changes. The Buy vs Rent ratio is calculated by dividing a metros median house price by annual rent. Higher ratios mean it is more expensive to buy than rent a comparable home. The 20 metro areas include major cities like Atlanta, Baltimore,Chicago, Dallas, Detroit, Houston, Los Angeles, Miami, Minneapolis, New York, Philadelphia, Phoenix, Riverside, San Diego, San Francisco, Seattle, St. Louis, Tampa, Washington, DC. ‘Metro Areas’ consist of a densely populated urban core and its less-populated surrounding territories, ex: “San Francisco-Oakland-Fremont, CA” and “New York-Northern New Jersey-Long Island, NY-NJ-PA”.

Rental & Housing Market Trends for 2011

How to Retire with 15 Rental Houses

Written by on December 12, 2011 in Landlord Tips, Market Outlook - No Comments
How to Retire with 15 Rental Properties

How can 15 rental houses help you retire faster than a million dollars in a 401k? That was a question examined by Brian Lee of Lifestyles Unlimited.

Brian credits Robert Kiyosaki of “Rich Dad, Poor Dad” fame for changing his opinion on wealth and making him understand that wealth can be determined by this simple test:

Quit your job today; and without touching the principle on any of your investments, how long can you live on your passive income?

Most people would not be able to live on their passive income very long and that is why they slave away each year building up their 401k plans. However, in this article he explains how 15 rental properties making $200 each per month in profit can help you retire now assuming you only need $3000 per month in income.

Brian explains how 401k plans work in simple terms and what to expect when it comes time to live off of your savings. He makes the comparison between the 401k investments, where you will be drawing down and reducing your savings each year, with the rental properties that will be paid for with rental income and will historically appreciate over time.

Then he quickly demonstrates how you could purchase 15 rental homes over the next 5 years and begin your path to retirement now. The simple plan he lays out is as follows:

The Five Year Plan

Here’s how to buy 15 rent houses in 5 years:
Y1: Save $5k from employment to buy 1 house with a hard money loan. (1)
Y2: Save $5k and refinance $5k out of the 1st house to buy 2 houses. (3)
Y3: Save $5k, refinance $10k out of last year’s 2 houses, to buy 3. (6)
Y4: Save $5k, refinance $15k out of last year’s 3 houses, to buy 4. (10)
Y5: Save $5k, refinance $20k out of last year’s 4 houses, to buy 5. (15)

This example only took $25,000 out of pocket over a 5 year period… much less than a million dollar 401k …and much faster.

For more information and to read about 5 more advantages to buying real estate, check out the rest of the article on Lifestyles Unlimited.

Photo by: arancidamoeba

Landlord Tip – Screening Tenants

Written by on November 28, 2011 in Landlord Tips - 1 Comment
TenantScreening

Make sure you take time to call your prospective tenants references and run a credit and background checks. Too many landlords panic if they have a vacant apartment and rush to fill it. Instead they should take the time to make sure the prospective tenant is a better option than an empty property. In addition, if you can, landlords might want to drive by a prospective tenant’s current home. This gives you a great indicator of what your property will probably look like when that tenant lives there.

Photo by: Robby Mueller

9 Reasons to be a Landlord & Own Rental Property

Written by on October 22, 2011 in Landlord Tips, Market Outlook - 2 Comments
RichLandlordMilkshake

In case you might have forgotten or needed a reminder, there are many great things about being a landlord. Here are the top 9 lifestyle and financial benefits that come along with owning rental property.

  1. Real Estate Appreciation – The recent economic struggles aside, the past has shown us that real estate values increase and appreciate over time. Home prices have risen an average of 5% a year since World War II, even though there were a few nerve-wracking ups and downs along the way. Also, because the property is rented out, your mortgage is being paid by the renters, meaning it’s a great way to increase your wealth.
  2. Low-Risk Investment – Unlike the stock market which contains more volatile investments, the returns on real estate are fairly steady. Even with the recent hit to the real estate market, the assets (land and property) are still there. The same cannot be said for some assets in the stock market, where values can fall or even disappear entirely. As long as you can hold on to the property, any temporary decreases in value should not affect your long-term investment strategy.
  3. Income - Rental property offers a great source of steady income through carefully selected tenants. Good tenants are happy to continue to pay the monthly rent in exchange for living in a well-maintained and managed property. Plus, annual rental increases are expected and continually help boost a landlord’s bottom line.
  4. Diversification of Income – Owning rental property gives part-time landlords an additional source of income in addition to their full-time job. These landlords can continue to work their regular job knowing that they will have a cushion to fall back on if they lose their job. They can also continue to build up their rental property investments with plans to retire early if they choose.
  5. Diversification of Investments - Just like owning rental property diversifies your income streams, it also diversifies your investment portfolio. This is of course one of the most important rules when it comes to investing. Financial planners will tell you that as you approach retirement, it’s best to shift into lower-risk investments. Real estate fits this criteria and is a great way to make sure that the cash you need is there when you need it.
  6. Part-Time Commitment – When you become a landlord, you get to control how much time you want to commit. Owning just one property that’s close to home can be handled in your spare time, while still working a full-time job. As you get more comfortable managing property, it will take less time and you can purchase more rentals. You can also use property management software to keep track of your data and free up more of your time. If time is really a factor, you can hire a property management company, however this will cut into your monthly profits significantly.
  7. Leverage - One of the biggest benefits of buying rental property is that you can leverage your money by using loans (or other people’s money) to purchase it. Unlike investments in the stock market, this means you can purchase a lot of real estate with very little of your own money. Unfortunately, it takes a little bit more these days, but a down payment of 20% of the value of the property should be enough to get you started.
  8. Short-Term Tax Advantages – Although the income from your rental property is taxable, most of the expenses related to owning and maintaining the property are deductible for tax purposes. These expenses include mortgage interest, insurance, repairs, and upkeep, as well as business expenses such as phone calls, office supplies, accountant and lawyer fees, and more. Depreciation is another major tax-advantage. This is the ability to take an annual deduction reflecting the decreased value of the property caused by wear and tear.
  9. Long-Term Tax Advantages – You can defer federal taxes even if your property’s value skyrockets because the IRS won’t expect you to pay taxes on that increase until you sell. Eventually, when you do sell, it’s best to consult a tax professional because there are various strategies you can use to decrease your tax liability.

Photo by: The Rocketeer

← Older Entries