The Top Property Management Newsletter and Events for September 2022
The Kids are Back in School!
We wanted to bring you a round up of the latest news, ideas and tips to maximize your experience as a landlord or REALTOR®.
“Back to School Season” and the Real Estate Market
A recent study showed that an estimated 60 percent of all houses sold in 2022 will have been sold between the months of May and August.
What is happening to the Market?
The Seasons Happened! Seller’s love listing in spring. Not only is the cherry tree in the front yard in full bloom, but also home buyers are out in full force. School is out and families are preparing for change during the summer months.
Families with school-age children ideally want to get their kids settled into the preferred new school district early in the summer to allow time to adjust. Then the children are ready when classes begin.
This all contributes to the frenzied spring market of multiple offers and overbidding.
But what happens when Spring and Summer are over?
Once the buying frenzy is over, listing agents experience a slowdown during late July through early September that continues through Labor Day. Many times, this continues the entire fall season.
During these months, a listing typically receives a few offers, not 10 to 15, and they are more likely to be at or slightly below asking price – not above like we have experienced in the past.
Here’s the opportunity to think outside the lunch box. Yes, look at houses in late spring, but take advantage of the fall, school start slowdown and watch the weekly sale prices.
When your REALTOR® informs you that slowdown has begun, be ready, preapproval in hand, to make an offer. You may need to experience a late summer move, but you could get a great house, in a wonderful school district and on your own terms.
Remember, the real estate market is always cyclical.
Now is the time to call Polaris Property Management for help and assistance. Sales typically are higher spring through early summer and slower in the fall and winter. Why? School schedules certainly play a large part.
The Indianapolis market is still suffering from a severe lack of inventory, and with the thin market, low interest rates and generally at the beginning of summer, there was an influx of buyers to get in to their homes before starting school. Now, there is still low inventory, and interest rates are climbing and appear to be continuing to climb.
The problem is finding buyers a place now that they can afford, because they go so quickly. Buyers have to jump right as soon as they see a home that will work for them.
This makes it a great time for investors to ramp up their real estate search, since the market naturally is slower with purchasers who have school aged children.
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And While We Are Talking About Garage Safety…
Investing in real estate can be successful, but going it alone can be challenging and highly risky. Joint ventures, wholesaling, and property management are just a few of the ways that investors can profit from real estate. It also takes a little savvy to become successful in this highly competitive arena.
- Real estate is a challenging business that requires knowledge, talent, organization, networking, and perseverance.
- Becoming knowledgeable and educated about the real estate market is crucial, but this often comes with more than just in-class learning.
- Understanding the risks, investing in an accountant, finding help, and building a network are all part and parcel to the successful real estate investor.
While certain universities offer general courses and programs that can benefit real estate investors, a degree is not necessarily a prerequisite to be profitable in real estate investing. Whether an investor has a degree or not, there are certain characteristics that top real estate investors commonly possess.
Here are the 10 11 habits that highly effective real estate investors share.
11 Habits of Highly Successful Real Estate Investors
1. Make a Plan
Real estate investors must approach their activities as a business professional to establish and achieve short- and long-term goals. A business plan is a good place to start, as it also allows investors to visualize the big picture, which helps you maintain focus on the important goals rather than on any minor setbacks.
Real estate investing can be complicated and demanding, and a solid plan can keep investors organized and on task. The plan would include estimated outlays and inflows of cash from rentals, how many units to own, when to refurbish or upgrade units, demographic changes, and anything else that could impact your investment over time.
2. Know the Market
Effective real estate investors acquire an in-depth knowledge of their selected markets, such as narrowing in on a particular geographic region and focusing on residential vs. commercial properties. Being aware of current trends, including any changes in consumer spending habits, mortgage rates, and the unemployment rate, to name a few, lets real estate investors acknowledge current conditions and plan for the future. This enables them to predict when trends may change, creating potential opportunities for the prepared investor.
3. Be Honest
Real estate investors are usually not obligated to uphold any particular pledge of ethics. Although it would be easy to take advantage of this situation, most successful real estate investors maintain high ethical standards. Since real estate investing involves people, an investor’s reputation is likely to be far-reaching. Effective real estate investors know it is better to be fair, rather than to see what they can get away with.
4. Develop a Niche
It is important for investors to develop a focus to gain the depth of knowledge essential to becoming successful. Taking the time to build this level of understanding of a specific area is integral to long-term success. Once a particular market is mastered, the investor can move on to additional areas using the same in-depth approach. Some niches might be high-end residential, low-income multi-unit housing, or rural farm rehabs.
5. Encourage Referrals
Referrals generate a sizable portion of a real estate investor’s business, so it is critical that investors treat others with respect. This includes business partners, associates, clients, renters, and anyone with whom the investor has a business relationship. Effective real estate investors pay attention to detail, listen and respond to complaints and concerns, and represent their business in a positive and professional manner. This builds the kind of reputation that makes others interested in working with those investors.
6. Stay Educated
As with any business, it is imperative to stay up to date with the laws, regulations, terminology, and trends that form the basis of the real estate investor’s business. Investors who fall behind risk not only losing momentum in their businesses, but also legal ramifications if laws are ignored or broken. Successful real estate investors stay educated and adapt to any regulatory changes or economic trends. Moreover, keep up on real estate, tax, and lending laws and regulations that could directly or indirectly impact your business.
7. Understand the Risks
Stock market investors are inundated with regular warnings regarding the inherent risks involved in investing and the potential for loss. Real estate investors, however, are more likely to see advertisements claiming just the opposite: that it is easy to make money in real estate. Prudent real estate investors understand the risks—not only in terms of real estate deals but also the legal implications involved—and adjust their businesses to reduce those risks.
8. Invest in an Accountant
Taxes comprise a significant portion of a real estate investor’s yearly expenses. Understanding current tax laws can be complicated and take time away from the business at hand. Sharp real estate investors retain the services of a qualified, reputable accountant to handle the business’s books. The costs associated with the accountant can be negligible compared to the savings that a professional can bring to the business.
9. Find Help
Learning the real estate investing business is challenging for someone attempting to do things on their own. Effective real estate investors often attribute part of their success to others, whether it’s a mentor, lawyer, or supportive friend. Rather than risk time and money tackling a difficult problem alone, successful real estate investors know it is worth the additional costs (in terms of money and ego) to embrace other people’s expertise.
10. Build a Network
A professional network can provide important support and create opportunities for both new and experienced real estate investors. This type of group, composed of a well-chosen mentor, business partners, clients, or members of a nonprofit organization, allows investors to challenge and support one another. Because much of real estate investing relies on experiential learning, savvy real estate investors understand the importance of building a network.
11. Know the Terms
What is real estate?
Real estate is the land along with any permanent improvements attached to the land, whether natural or man-made—including water, trees, minerals, buildings, homes, fences, and bridges. Real estate is a form of real property. It differs from personal property, which are things not permanently attached to the land, such as vehicles, boats, jewelry, furniture, and farm equipment.
What is an accountant?
The term “accountant” refers to a professional who performs accounting functions such as account analysis, auditing, or financial statement analysis.
Accountants work with accounting firms or internal account departments with large companies. They may also set up their own individual practices. After meeting state-specific educational and testing requirements, these professionals are certified by national professional associations.
What is a business plan?
A business plan is a written document that describes in detail how a business—usually a startup—defines its objectives and how it is to go about achieving its goals. A business plan lays out a written road map for the firm from marketing, financial, and operational standpoints. Business plans are important documents used for the external audience as well as the internal audience of the company. For instance, a business plan is used to attract investment before a company has established a proven track record or to secure lending. They are also a good way for companies’ executive teams to be on the same page about strategic action items and to keep themselves on target toward the set goals.
The Bottom Line
Despite the numerous (an questionable) advertisements claiming that real estate investing is an easy way to wealth, it is, in fact, a challenging business requiring expertise, planning, and focus.
In addition, because the business revolves around people, investors benefit in the long run by operating with integrity and showing respect to associates and clients. Though it may be relatively simple to earn short-lived profits, developing a long-term real estate investing business requires skill, effort, and these 10 11 important habits.
Thank You for Dedicating Your Time and effort.
I really want to wholeheartedly thank you for dedicating your time and effort to making sure that our initial survey received such a great response.
Your attention to detail and being willing to share truly made our first attempt successful.
And now, the results:
- DO YOU DO CREDIT CHECKS?
- 75% indicated that they always perform credit checks, and 25% said they do sometimes, or not consistently.
- A recent report from a Tenant Screening Service shows that approximately 95% of all landlords nation-wide do a “soft pull” credit check on perspective tenants. Future tenants need to be reassured that you aren’t just looking for a high credit score and reminded that the soft pull for a rental will not impact their credit score. As a landlord, you are just ensuring that the person they are likely renting their property to has a history of making payments on time.
Also, some types of rental property (Section 8 housing for example) put a low weight on credit checks since it involves a voucher program. However, the owner of a condo or single-family home wants to make sure that the prospective tenant does not have a history of non-payment or that they cannot afford the property.
Landlords also consider employment history, income, job stability, eviction history, criminal history, and a number of other factors. Many prefer someone with decent credit and a reliable job over someone with stellar credit and a spotty employment history.
- WHAT DOES AN EVICTION COST?
- The majority stated that they felt it was between $3001 and $6000. A small number indicated between $1000 – $3000.
- While the initial cost to file an eviction notice in Indiana has filing fees that range from $86 to $158, the total cost for an eviction can range much higher.
The number one reason for an eviction is payment problems (84%). When rent is not paid, or the lease is violated, you are required to try and resolve the problem before sending the eviction notice. After that, there is a waiting period before you can start the process. If it is not resolved, a complaint is filed in court and your tenant will receive a summons – and that may take a few days. The summons must be served within a number of days and depending on where it was filed can be anywhere from 5 to 20 days.
Indiana law does not specify how quickly eviction hearings must be held, varying from 3 – 20 days.
After the hearing, if the judicial officer has ruled in the landlord’s favor, it can take anywhere from a few hours to a few days for the Writ of eviction to be issued.
After the writ is issued, the tenant has 48 or 72 hours to vacate the property (depending on the reason for the eviction).
In Indiana, an eviction can be completed in 3 weeks to 4 months or longer, depending on the reason for the eviction, whether it is contested, available court dates and other possible delays.
The total cost could be anywhere from 2 month’s rent up to 4 months or longer.
- RATE THE IMPORTANCE OF THESE CREDIT CHECK REPORTS
- The top three responses were
- Delinquent Accounts in Rental History
- Low Credit Score and
- Other Items
- The top three responses were
- What is the LEAST IMPORTANT information
- Late Payments
- Payment gaps
- Collecting Information
- Top response was to Ask a Potential Renter to give you a copy of report
- Pull a credit report yourself
- Screen tenants with online automation
If you own property, or are thinking about investing, and would like to discuss steps to obtain your own financial independence through property ownership and professional property management, please contact us today: Dan@PolarisManage.com