Category Archives: planning

buying, commitment, Communication, education, Inspiration, organizing, planning, tips

Vacation time is a great time to scope out retirement areas.

March 12, 2014 Bettina Settles Leave a comment

This winter has been brutal and ruthless to all of us and we are seeking the warmth and relaxing times of spring break, or just a plain vacation.

Many of us who are in the colder climates are talking about retiring in a warmer area but many just don’t take action until the clock hits 5 minutes until noon. How about getting an earlier start on choosing places where you think you may like to retire and vacationing there to so you can see what they are like ahead of time.

A retirement area may look great in their advertising but as soon as you take a weekend or longer to spend time in the area you might find out that it is really not as good as you had hoped. It happened to me. I picked an area that sounded like it might be a great spot to retire. They had a lot to offer and many things to do so I decided to spend a weekend there to scope things out. I discovered that the traffic in the area, even in an off season, is so horrendous that even going to the grocery store just down the road would take over 3 hours.

You might also find out that home prices are affordable but the overall cost of living is much higher than advertised. Things like this you only find out when you spend time in the area and see what they are not telling you.

Another example I can think of right now is an area that is located at the Atlantic. I visited another beautiful historical area but found out the hard way with my dog at the veterinarian clinic that the area is heavily infested with flees. Dealing with this would be a constant battle. Do you think you find this out by just looking at pictures? No. You have to go there and find out for yourself or find someone who has already been there and are willing to tell you.

When you find an area you like, you might want to return several times for vacation and scope out areas where you may like to buy or rent a home. Just be sure to visit the area during different times of the year. This will give you a more well rounded picture of the area.

buying, commitment, Communication, education, Inspiration, organizing, planning, Team work, tips

Do your “due diligence” before you make an offer on a potential investment.

March 11, 2014 Bettina Settles Leave a comment

As the mortgage rates continue to remain low, and many of the current investors leaving the market, new investors are beginning to invest in the market. When buying an investment property you should do your due diligence and run all of your numbers before you buy.

Many investors have their own list of criteria that a property must meet prior to viewing and making an offer. Depending on what type of investment you plan to purchase your list might be longer or shorter. For instance, when an investor is looking to purchase a multifamily home of up to 4 units, they will pick a price range in an area they would like to purchase. With that in mind they begin shopping online to see if there are any properties that meet their criteria. When a potential investment has passed the first hurdle, the second hurdle the investment must pass could be a basic ROI calculation.

Some investors have a set ROI% they would like to meet after expenses. When running the ROI% make certain you use the current real estate tax that is owed and the current or potential rental income, if the property is vacant. If your research reveals a range of rental incomes use the median rental income for that area. After the property has passed this hurdle of due diligence investors will then move to the next step which is a property drive by. You would be surprised how much wear or damage a pretty picture can mask which you may deem undesirable. It depends on the willingness of the investor to put money and sweat equity into an investment. Some of the properties might not make it past this point. The properties that are still in the running and currently have tenants have to now pass the lease agreement test. Make certain you look at the current lease agreements. You would be surprised what you can find or don’t find while looking at the current lease agreements. Make sure you can live with the terms of the current lease agreements.

By now you should have eliminated many of the properties and have a much shorter list. Now it is time to complete a walk through to check the internal condition of the property. When you are not comfortable running your own repair numbers take a contractor with you who can give you an on the spot repair estimate of what it will take to get the property back into shape. Also, don’t forget to call your insurance agent and have them run a CLUE report on the property to find out if it is even insurable.

This is just a short list of due diligence items you should do prior to buying an investment property. Your list of criteria may be shorter or longer depending on what type of property it is and what type of tenants you would like to have.

The bottom line is you should do your due diligence prior to making an offer.

commitment, Communication, education, Inspiration, planning, tips

Don’t become a victim when renting.

March 10, 2014 Bettina Settles Leave a comment

For many years rental fraud has become a growing nationwide issue. Due to the high foreclosure rates in many markets renting has become the only option for many individuals who lost their home through foreclosure or even a short sale.

With “Active for Sale” property listings published online for anyone to find, it has become very easy for scammers to take that basic information such as the address, photo, and description of the property to create a fraudulent “For Rent” advertisement. The scammers pretending to be the legal owner of this property have the interested party contact them, either over the phone or via email, and without even being able to look at the property or meeting them in person, to fill out an application and send a one or two month security deposit via a wire transfer to hold the property for them.

What can you do to help prevent from becoming a victim of rental fraud?

Use a trusted REALTOR association website for your rental searches.
Google the address. The rental will be listed by the owner or with an agent. If you find a rental has more than one person or agent advertising it be very cautious.
Do your due diligence. Find out what the average rental is in the area for the size of home you would like to rent. When the rental price is lower than the average rent in the area be very cautious.
Be suspicious when you are asked to wire your deposit. Most owners are willing to take a personal check, bank check, or money order for the security deposit.
Don’t rely on pictures and the “owners” words. Visit the property yourself. If the “owner” cannot let you in because they “forgot the keys” or give you some excuse on why you cannot see the home’s interior consider walking away. If you cannot view the inside of the property in person consider contacting a local real estate professional to do this for you.
The rental application should never include questions that ask you about your personal banking information like credit card or bank account numbers. Many will ask for your social security number. Many landlords will run a credit and criminal background check.

commitment, Communication, Inspiration, planning, tips

It never will happen to me….

February 1, 2014 Bettina Settles Leave a comment

Had a message forwarded to me that had to do with the securing your house and protecting your family. It said many individuals think that it never will happen to them because they consider the area they live in as safe.

They leave the entry doors, garage doors, and windows unlocked at night or when they go shopping. When they go on vacation they announce it to everyone on social media. They think no one but their “friends” will pay attention and nothing will happen while they are gone.

Many people in the winter warming up their vehicle before they go to work leave the doors unlocked with the key in the vehicle.

Personally I can observe daily women leaving their purses in the top of a shopping cart, turning their backs to the cart while just getting maybe a box of cereal, tending to their child that just demands their attention, or putting their groceries into the trunk of their vehicle.

There are several things you can do to safeguard your home and yourself.

First before you know what to safeguard you need to know what all you own. Not only for your personal knowledge but also for insurance purposes! When you don’t know what you own you can’t file a claim if the need arises. The best way to find out what you own is by getting a home inventory. One place to find a company that does home inventories is though the National Inventory Certification Association.

When you are leaving the house, do the obvious. Lock the doors, but also make sure that all your windows are secure as well. If you have an alarm system, set it! If you don’t have an alarm system consider investing in one. Many insurance companies give you a rate break when your home has an alarm.

Many of the older cars need to warm up especially in the winter when it is super cold and lot of them don’t come with a remote starter which helps to keep the vehicle secure. One option is to install an aftermarket remote starter that would give you the option to remotely start your vehicle without having to keep the key in the vehicle and you would not have to leave it unlocked.

buying, commitment, Communication, education, Inspiration, organizing, planning, Team work

No or bad credit buyers

January 27, 2014 Bettina Settles Leave a comment

With the wave of buyers coming back into the market that have had a foreclosure, short sale, or bankruptcy it will make it for an interesting year. The adventure of mortgage origination and underwriting is getting more interesting with borrowers who paid off all their bills, tossed their credit cards and have been working within their personal budget for about 2 years and possible with that having a 0 credit rating.

Many main stream loan offers will tell this type of buyer that they need to establish another credit rating by opening up several credit cards and start using them.

Not really. Even now with the new mortgage regulations you can get a mortgage with 0 a credit rating. Many mortgage companies are just not willing to work with a 0 credit rating buyer because they have to run the loan through manual mortgage underwriting. Personally compare this to an individual who is self-employed and has no W-2 income.

I recommend to all my clients who are looking to buy and need financing to help them buy to get pre-qualified. When it comes to pre-qualifying a 0 credit buyer it can take a little longer because it has to be done manually.

To find a lender who is willing to work with a buyer who has no credit score is a bit tricky but there out there. Before you contact any lender to help you and you happen to be one of the buyers who don’t have a credit score be prepared to have at a minimum of a 20% down payment for your dream home.

Also find other forms of alternative credits for your lender like rent payment, or utility payment. When you had medical bills, and they are paid in full, have the creditors write a letter on their letter head stating the bills are paid in full. Your cell phone bill is one of them that will work as well. Make sure you also have 4 current consecutive paystubs available as well and 2 years of tax returns. You will need at a minimum of 4 alternative forms of credit.

Don’t have lenders tell you that you must have a credit score to buy a home. You don’t. You might need a bigger down payment and alternative forms of credit and a lender who is willing to truly work with you. When they are not willing to work with non-existing credit score, and they tell you that you have to open an in-store credit card of apply for a credit card to “establish” credit it is time to find another lender….

Last but not the least; this is not to be considered legal or financial advice and you still should consult your legal and financial advisor before making any legal or financial decision.

buying, commitment, Communication, education, Inspiration, organizing, planning, Team work, tips

Things to consider when buying your Commercial building.

January 20, 2014 Bettina Settles Leave a comment

There comes a time that a business is growing and needs more space to accomplish that goal. This could mean that either having to rent or buying bigger space.

Let’s assume you have decided to buy your own building rather to rent another space for several years and you were able to secure financing for your building.

Before you even making and offer there are some things you should think about:

Location of the current building
Current zoning of the building
Is the building ADA compliant?
Does the building comply with current building codes and zoning regulations for your type of business?

Location:

Is the location suitable for your type of business? When you would like to open a restaurant you should be close to an area that gives you plenty of traffic. Compare too when you are looking to open a trucking company you would need to be closer to an interstate or possible have access to train traffic.

Current zoning of the building:

Is the zoning suitable to your business or would you have to go in front of the planning and zoning board to ask for a zoning variance?

Is the building ADA compliant?

When the building is not ADA compliant you might have to spend extra money to bring the building up to compliance.

Does the building comply with current building codes?

When the usage of the building changes you need to bring the building up to building code compliance and pending how long ago this was done by the past owner. This could take a good sting of money and time before you can move your business into the building.

This is now a true story and hopefully will point out to make sure to cross your T’s and dot your I’s prior to buying a building and moving your business into a building you just bought.

One business owner I know made several costly mistakes as she bought her building to run her business in. The location of the building was a great location but the building she bought was not zoned for her type of business. She moved her business into the new building without getting a zoning variance from the City.

Many months later after she opened for business, the local building inspector came to her and gave her a seize and desist notice, closed her doors and asked her to bring her building up to compliance. At the same time the inspector cited her also for not having her building in ADA compliance and up to the current building code.

She fought the order and she did lose the appeals. She ended up losing her business and she needed to sell the building she recently bought. I have not spoken to her but I only can imagine that she also had attorney’s fees, fines and penalties due to her buildings lack of compliance.

There are other things you should be aware off when buying a building. Being on the planning and zoning board for my city the once I have listed above are ingrained into me and very close to my heart. To be certain all your T’s are crossed and I’s are dotted make sure you hire the proper professionals to help you achieve your goal.

commitment, Communication, education, organizing, planning, Team work, tips

Selling? Have your documents ready before you list the property.

January 16, 2014 Bettina Settles Leave a comment

You have decided to sell your property and there are a few things you should already prepare ahead of the time before calling a Real Estate Professional and prior to signing a listing agreement.

Even when your listing agent does not ask for the documents, have them ready and just hand them to the agent at the time you sign the contract. Sooner or later you will get the midnight call from the agent asking for the documents because they forgot to ask you for them at the time of the listing signing and you did not have them ready to go.

Some of the documents a buyer’s agent might ask for before or after a showing are and many times before making an offer:

Homeowners association documents and costs
All executed lease agreements (when property is a rental). Just black out the tenants information like name, Social security number, phone number.
When the property is an investment property also pull the actual expensed and the numbers for the GOI
Average utility information for an entire year
When you have an odd shaped property or a neighbor’s fence that might be close you your home or lot line, have a current survey ready that shows where the true lot lines are.
Pest inspection documentation

Some of the documentation might not apply to you, just pull the once that do and it will save you from making the add dash to the finish line trying to find them.

buying, commitment, Communication, education, Inspiration, organizing, planning, Team work, tips

Landlords, when you don’t address it in the lease agreement it might keeps you wide open

January 14, 2014 Bettina Settles Leave a comment

When investing in real estate investors may consider holding properties as rentals for another source of income rather than flipping. Dealing with tenants is a whole other ball game and does need a new skill set and paperwork.

Sure we all are aware that we should run a background and credit check on the tenants, and we do know that we have to have a written, dated and singed lease agreement with them. What we put into the lease agreement is also very important and what we don’t put into the agreement is what will kick us in the chin.

There are many places out there where you can buy pre-written lease agreements. You only have to fill in the blanks and the agreements supposed to have been written for your state specifically or some of them even supposed to cover any State in this Union.

Some investors might take other investors (who already have rental units) lease agreement and just run with it, thinking it should be fine.

How do you know that is agreement is the right one for you and your State? Just because it says so does not mean it is.

I have seen so many lease agreements that left the investor wide open for possible legal issues or the tenants had more rights but less responsibility than the landlord it is not even funny.

To make sure that your lease agreement has you and your property covered is to consult a real estate attorney. Just grab your current lease and let the attorney work it over for you. You maybe be surprised what you are missing and did not cover…..

commitment, Communication, education, green, Inspiration, planning, recycle, tips

When it rains it pour’s and where does all the water go?

January 10, 2014 Bettina Settles Leave a comment

Now that we have several inches of snow on the ground and faced head on the freezing cold temperatures and now we are looking at chances of rain this weekend in Indy. With temperatures this week that are above freezing during the day the snow is bound to melt.

While you unburied the fire hydrant have you thought of clearing off the street drain that is located right in front of your property so that the water can run off? When you have not done so, take a minute to clear out an area right around your downspout and made sure the water has a way to move away from your house and when you safely can check your gutters you might take a look at them too.

Also don’t forget to check on your sump-pump to make sure it is working properly and when you have a back-up pump make sure it operates as well. Nothing worse than finding out that your sump pump is not working while you step into an inch of water in your basement.

commitment, Communication, education, Inspiration, organizing, planning, Team work, tips

Things to consider when hiring a property management company

January 9, 2014 Bettina Settles Leave a comment

Sooner or later as a Real Estate investor we might have to make the decision to hire a Real Estate Management company to manage our properties we own and hold.

As a landlord we never think twice about interviewing and running a background check on the tenants before we sign a lease with them but how thoroughly are we checking on the Management companies we are hiring to manage our properties.

Sure the first deciding factor might be a referral from fellow Real Estate investors but we still have to do our own due diligence before we hire a management company. When we own properties that have 10 or more units a single family property manager might not be the right fit for us or when we need a property manager for 40+ properties a manger who managed only 10 or 20 might not be able to handle the extra work load.

We should find out about their current education and ask about their real estate license. It is very simple to check with every state licensing agency to find out if the Manager we would like to hire is a real state professional in good standing. With that we can find out very quickly how long they have been in business.

Great way to find out about property managers knowledge is to ask them about the landlord and tenant law and about local codes that affect rental properties of any type. We also should find out from them how many tenants they have evicted and how they set and or adjust the rents. This will show us if they have good screening processes in place and if they keep up with the current rental market.

Other questions we should ask the property manager are about the handling and storing of the income, tenants security deposits, the handling for repair issues that surly will comes up and what their fee structure is. It might be better for us as owner when the fee is based on rents collected. With that we don’t have to pay for vacancies and the manager has a reason to keep the units occupied. We also should find out if the property management company charges any additional fees, like an eviction fee.

When it comes to the repairs we should find out from the real estate management company if we need to give them money upfront for repairs, if they call us for repair requests, how they account for the repair money spend. How long is the responds time for repair requests? Do they have contractors on call for repairs? Do they get repair estimates or do they rely on their current contractors to do the job?

We should ask about property inspections? Do they do them and how often.

One thing I personally look at as well is the type of lease agreement they use with the tenant they are handling. I have seen some very ugly lease agreements that could hurt us as investors and could get us in some possible legal trouble.

Is this list complete….I don’t think it ever will be but it should give you a good start….