“We know that committing to Social Equity and Diversity is the right thing to do for our society. We also know research shows organizations that actively pursue responsible efforts to these goals are organizations that become stronger, both internally, and in their industry. This ‘double bottom line’ emphasis is important to our company,” says Tom Brenneke, President (pictured right).

The formal commitment made by Guardian features a policy designed to explore all avenues that could lead to increasing the diversity of the Guardian workforce and of its supply chain. Currently, 24% of its staff self‐identify as ethnic minorities, 47% are female, and 60% of Executive Management Team are female.   The company plans to actively recruit certified minority firms and advise its vendors to extend opportunities to certified minority firms.

Guardian shows Social Equity is a top priority through increasing awareness of the issue. Guardian’s Executive Management Team decided they needed to put more efforts into expanding the company’s initiatives to become a strong contributor to improved social equity company‐wide.

Image courtesy StockMonkeys.com

A turn-key investment company will find the property for you, renovate it for you, find a tenant for you, manage the rental of the property for you, collect your rent for you, and send you a check at the end of the month.

The idea is that you collect a regular return on your investment, while someone else does all of the work related to managing the property. Over the years I’ve supplied properties to several turn key operations and have been part of a large turn key operation as well. I’ve witnessed many of the turn key challenges, mistakes and outright scams first hand.

First of all, consider the fact that the company is selling you a property. They are the SELLER

Generally speaking, a seller is not typically motivated to act in the buyer’s best interest. Most turn-key operations make their real profit by selling the property at a substantial mark up. As such, the deal may not be as good as it looks in the documentation that the seller provides to the investor buyer.

I’d check out the company and their “deals” as thoroughly as possible before investing. I’ve seen fraudulent appraisals used to fool absentee owners into believing that the property value was much higher than it actually was. If you are not there in person, you have no way of knowing whether the information you are being given is correct. Pay a local real estate professional who can check out the details for you. Have them verify the property and appraisal information provided by the company.

Verify that the cash flow will actually be enough to generate the advertised return on investment

This is important when paying all cash, and is incredibly important if you are going to be carrying a mortgage on the property. It’s not unusual for rental rates to go up or down over time. Make sure the rental income projections are accurate.

Ask how your property taxes and insurance will be managed

Make sure that you or your investment entity is shown on the insurance as the “Loss Payee”. And don’t forget that property taxes can increase quickly in some areas, this can reduce your cash flow over time, and can be critical in a market where rent rates are flat.

In some counties liens can be placed on the property for unpaid items like a former tenant’s water bills. I’ve seen a county attempt to collect a $5,000 unpaid water bill from an investor buyer who bought the property after it had been vacant for several years.

What about home owners association dues? Be sure that the income can cover the expenses adequately. A turn-key company should have a complete and accurate income and expense statement. But keep in mind that their numbers may be, shall we say, “generous” when it comes to making the cash flow look good. These items can often be verified with a quick phone call to the appropriate entity, or via online public records. Be sure you know who is personally responsible for paying these items, and request copies of paid receipts for critical items such as taxes and insurance, if these are being handled by the turn key company.

Consider this: How can you be sure that the income you are earning on your investment is actually being produced by the cash flow on your investment property?

Is your property really going to generate the advertised return, or will your “profits” be paid with other investors money? What happens if your property is vacant for an extended period of time? Everyone thought Bernie Madoff was a brilliant investor, but we now know that all he did was pay one investor with money from another investor. I’ve seen this happen several times where the company meant well, but did not have enough experience to generate the promised returns, and faked it as long as they could. Trust but verify.

Ask the turn key company for references from existing customers

Talk to the investors. Are they making money? Are their properties staying rented? How long have they been doing business with this company? Where specifically are their properties located? What proof can you gather to prove that the investor reference is really a customer of the company and not someone who is pretending to be a buyer? Is this investor showing as the owner of record in the public records?

The moral of the story is this:

No one cares more about your money than you do. Real estate investing is a “buyer beware” business. If the company makes mistakes, even if there are good intentions, it can still cost you a lot of money.

Turn-key companies are subject to the same challenges and problems that any investor faces when managing rental properties. And when they are managing dozens of them, it’s even more difficult. It’s still up to you as the investor to do a proper investigation of the details to insure that everything is just as represented, BEFORE you invest.

Donna S. Robinson is a real estate industry veteran, and residential investment consultant located in Atlanta, GA. She has provided hundreds of investment property evaluations to professional investors. Follow her on twitter at donnaconsults, Facebook.com/RealtyBizConsulting and watch her videos on youtube. Her latest book, Basics of Real Estate Investing, is now available for Kindle on Amazon.com

Example of Zillow’s new free rental websites

This latest installment has less to do with consumers and more to do with the property management side of the business. Now available to property managers and rental agents are free, state-of-the-art property management websites that will automatically allow for your rental properties to have a substantially bigger web presence. This new Zillow product is designed for professionals or landlords working in the rental housing market who don’t already have a strong website or are looking to improve the way they’re marketing their properties on the web.

Of course larger property management firms with extensive portfolios already have high-end websites and a comprehensive marketing budget. The target market for the new Zillow property management websites, however, is the small business sector or property owners with just a few assets. The ultimate goal is to provide landlords an easy and affordable solution for marketing their properties and getting units rented–and it would appear this free website builder will do just that.

The new Zillow property management websites come in an assortment of templates, themes, and color schemes and are also compatible with all of Zillow’s mobile applications. In addition, users are also able to customize website pages to include Zillow’s local market data, school information, and “Walk Scores” and the sites are fully search engine optimized.

For more information on Zillow property management websites, visit Zillow.com or follow the Zillow blog to keep up with all the latest news on what’s next for the mega real estate corporation.

Joe Heath is a graduate of Indiana University and also holds a Graduate Certificate in Real Estate Development from Drexel University. After working as a Market Research Associate and writing published Market Snapshots for Hanley Wood Market Intelligence in Chicago, Joe now works as a Web Marketing Specialist and is a managing partner at Real Estate Web Creation, LLC.

The RES.NET solution enables agents to perform tasks and communicate with other real estate agents, companies and consumers, helping them better address the demands of today’s tech-savvy players in the market. The solution also provides increased accessibility and accountability, allowing them to improve their productivity and their business’ performance.

RES.NET’s platform comes with six cloud-based portals. The Agent Portal helps agents connect to fellow real estate professionals, buyers and sellers and allows them to handle every aspect of a transaction through a single, centralized system. To keep up with the current on-the-go business environment, the system integrates a mobile application.

Using this platform, agents can define a customized task workflow and input all details on the properties they handle, along with relevant photos and video footage. The portal focuses on transparency among agents and other participants, making it extremely easy for them to send and sign documents online through e-signature technology.

“Our network has grown to include more than 200,000 users, some of which are Fortune 500 companies with very complex workflows and stringent requirements,” said Todd Mobraten, COO and president of RES.NET. “With our experience in the default space and as a response to the real estate market’s evolution, we elected to expand our platform’s capabilities to support the traditional market. With more than 80 percent of consumers now beginning their home search online, it is important for agents to leverage technology that meets their expectations. With the platform agents can eliminate communication gaps and securely share information in an automated, paperless environment or even from a mobile device, which minimizes their time in front of the computer and lets them focus on serving homebuyers, cultivating relationships and increasing their business opportunities.”

The RES.NET portal also enables agents to access the offer submission link tool, a handy application that allows them to submit offers to listing agents directly from the platform, making it easier and faster than mailing of faxing documents. The portal also gives increased control and centralized management of offers, negotiations and counter offers, aiming to deliver faster closings.

”One of the portal’s most valuable features for agents is the ability to add and invite contacts to their network,” Mobraten added. ”Not only does this contribute to more efficient communications and accelerates transactions, but the technology also empowers them to increase their professional networks and improve their businesses.”

Image/FreeDigitalPhotos.net

I believe this is a “penny wise, pound foolish” approach.  Of course, the person who decides to do it themselves will save the monthly management fee they would have paid to their property manager, but they risk losing much more in the long run.

A good property management company is worth their weight in gold.  The problem is, not every property management company is good.  To make matters worse, rental property owners do not generally find out they have engaged a bad property management company until after the damage is done.

So, how do you know you have a good property management company?  A reasonable indicator is when your property management company provides you a benefit that far exceeds the expense of their monthly management fee.  In other words, you should expect your property management company to provide value for the fee they collect.

For example, a good property management company can shorten the time it takes to prepare your property to be rented.  One reason for this is because they are able to coordinate the repairs and maintenance needed to get your property ready to rent much quicker than you could on your own.  This is true because many vendors give property managers preferred treatment since the property management companies control so much of their business.  So, by reducing the amount of time your property is vacant, your property manager is essentially increasing your rental income.

In addition to reducing the time it takes to prepare your property to rent, a good property management company can also reduce the associated costs of the preparation.  This is because they are generally able to negotiate much better rates on the repair and maintenance work to be performed on your property.  Consider this another benefit of controlling so much of their vendors business.

A good property management company should also be able to quickly identify and define the optimal rental rate for your property.  They have access to a data base that is only available to licensed realtors called the Multiple Listing Service (MLS).  The MLS contains valuable information about exactly how much similar properties in your area have recently rented for.

Being able to quickly and accurately determine the optimal rental rate for your property benefits you in two ways.  First it prevents your property from being on the market for an extended period of time because it is priced too high.  Second it helps you avoid renting it for an amount that is less than the market will allow.

When you do find a qualified tenant, a good property management company will help you thoroughly screen your prospective tenants.  Property management companies regularly screen tenants and as a result are able to identify potential red flags that might not be apparent to you.  Preventing a bad tenant from moving into your property is invaluable.

Perhaps the most valuable thing that a good property management company can provide you is knowledge.  Experienced property managers are well versed in landlord tenant laws and will ensure they are followed.  This means they can significantly limit your exposure to litigation stemming from your tenant.

It is clear that a good property management company can be a valuable asset.  The difficult part is finding one.

© Hauvi – Fotolia.com

If you own multiple properties out of the area or out of state, or are an international investor, you may want to consider hiring a professional property management company to collect rents, fill vacancies and take care of routine maintenance items. Using a good property management company can end up saving you time and money so you can concentrate on acquiring new investments instead of dealing with someone’s toilet being clogged in a unit you own or a leaky faucet.  Having to handle these phone calls and then outsource them to individual contractors can become a full time job and is not the reason you decided to become a real estate investor.

Another way to manage certain properties is by having someone live on the premises and take care of any maintenance issues and collect rents, etc, in exchange for living rent free.  This takes the concept of a building superintendent and expands on it.  Obviously this only works on multi-unit developments.

I have a client who only invests in mobile home parks.  These can be amazing “cash-cows” if they are already rented and generating a nice positive cash flow.  When he takes over one of these developments he runs ads in the local paper saying “Property manager needed for mobile home park. Light maintenance required.  In exchange for salary will let you live on the premises for FREE!”

After running one of these adds he normally has a pile of responses sitting on his desk.  He will do phone interviews with the ones that sound good.  Then do background and credit checks on the ones that he weeded out from the rest.  (You want to make sure they are also not on the sex offender list for that county or wanted by the police!).  Then he will hire them using a contract that specifically states this is a 90 day probationary period and if it doesn’t work out then he can cancel it and they must leave the property immediately.  He also states in the contact that this is an employment contract and not a landlord/tenant lease.  This is to prevent the person he hires from availing themselves of the landlord/tenant courts and potentially starting a long eviction process.

This process works for him because the rent he loses from that particular unit is normally a fraction of what a Property Management Company would charge him to do the same exact work, and they are not living on the property 24/7.  He has told me of incidents where something happened at three o’clock in the morning and his person on site was able to take care of it immediately whereas if he had to wait for a call to his Property Management Company that morning it would have cost him much more to fix the problem.

Either of these management strategies can work for you.  It depends on your level of trust in the individual or company you hire as well as their ability to solve problems and be available to deal with emergencies.

Daniel Doran is a 20+ year veteran in the real estate industry. He is a previous owner of a law firm, mortgage and title company. Daniel has also written several books on mortgage modification, short sales and real estate investing. He currently specializes in Commercial Finance and Real Estate Development and is a graduate of Manhattanville College and Brooklyn Law School. You can contact Dan at Buildings By Owner.

As a result, rental prices in many markets increased with the new demand and rental properties have become increasingly more difficult to find. Today’s prospective tenant needs to be ready to peruse the inventory, maybe make some compromises and jump on a desirable property quickly, as the following infographic demonstrates (click to zoom):

Image Source: Hardwood Flooring Baltimore

Know What You Need and Where to Look

Much the same way buyers have to make certain compromises when purchasing a home renters often have the same scenario to look forward to and perhaps end up compromising more frequently than buyers. As a renter you’re often working with a much smaller inventory than those looking to purchase, and in many areas rental properties are much more quickly snatched up. So before looking you should make a list of your needs vs. your wants.

For instance, you might love a certain building but need a laundry facility which it does not offer. Or you might need for appliances to be provided. Knowing these things before you get started can help you to narrow down your choices to just those properties that most closely fit your needs for viewing, which will not only save you time but also eliminate wasted looking when you could be putting in an application on a property that better suites your needs. It’s also important to know where to look for rental property.

A property management company usually has a list of available properties either posted online or in their office: this approach usually gives you a few options in one shot. You might also looking at online resources for lists of prospective rentals.

Don’t Be Afraid to Negotiate

So you’ve found this great place that has everything you’re looking for in a home, but the rent is just slightly out of your budget. Or maybe you’d prefer to do a six-month lease as opposed to a one year. Renters often don’t realize that there may be some negotiation room in the terms of a rental agreement, particularly if the property needs some work or has been vacant for quite a while. Sometimes, it might be fairly easy to alter the terms of the lease when the owner is anxious for income.

Perhaps you can offer a slightly higher deposit in return for being allowed to have pets, or take on some of the repairs in exchange for a lower monthly rent. Be careful, however, not to ask for more than you need or make ridiculous demands on a property that you really want. For some landlords putting an extremely difficult tenant in place for a long lease is not ideal and they may skip over you for a more amiable suitor.

Unless you have an unlimited budget you probably won’t find your dream home complete with everything on your wish list. However if you know what items you can’t live without and are ready to negotiate where needed chances are that you’ll find a great property that will fit your needs if only in the short term. 

© morganimation – Fotolia.com

According to FHFA, the winners were chosen after a “rigorous” evaluation process that looked at the financial strength of each potential bidder, their experience with asset management and rental property management, as well as existing experience in the geographic location of the properties in each pool. The largest single pool of properties in this round was approximately 572 homes located in Atlanta, GA.

All of the transactions for this initial round of bidding are expected to close early in the third quarter. The FHFA has declared this first round to be a success, and is planning other sales in the near future.

This project, if it were to continue, would represent something of a “water-shed” moment in the single family rental property business. Fannie Mae has over 200,000 such properties that they ideally would like to sell back into private ownership. But small investors who’ve been the backbone of the traditional single family rental market are not eligible to bid on these pools.

The qualified bidders for the FHFA managed bulk REO sales are generally larger competitors with major funding from venture capital firms on Wall Street. This would represent a major shift in the dynamics of the single family rental market and could make it more difficult for smaller investors to compete in some areas.

At present, winning bidders will be required to hold their properties for 3 years as rentals before they can be sold. It is hoped that this will help stabilize housing prices locally by keeping the houses occupied instead of vacant, and a lengthy holding time will avoid too many houses being “dumped” on the market at once, which could drive prices even lower in the affected areas.

It remains to be seen how well these properties will cash flow for their new owners. It will take another couple of years before anyone really knows how well this program will work out at the private investor level. But it is reasonable to assume that the prices paid for these properties is well below the typical prices available to individual investors, thereby giving them an unusual opportunity to generate significant positive cash flow for their new owners.

Integra Group Real Estate says the move is an effort to help investors manage retail investments, as well as to bump up property management services for REO listings. The new services allows for thorough research on all properties with regard to; occupancy checks, property inspections and evaluation; posting of government required notifications; providing relocation assistance if necessary and overseeing utility needs, among other values.

According to the news release, the Integra Property Management aspect is fully staffed, With a full-service property management team, and will guarantee complete transparency and audit trails for clients. The Integra team, in collaboration with clients, ensure a guaranteed compliance with their own specific and state or local requirements. As for client value, they are able to access weekly inspection logs, photos of their properties and property inspection videos through the Integra client portal too. Eric Lichtenheld, president of Integra Group Real Estate, added this:

“The creation of Integra Property Management further enhances the way we manage properties and provides a sound platform that will give our clients confidence that their rental assets will be well managed. Our property management team ensures each property is thoroughly taken care of and not only meets the client’s requirements but exceeds their expectations.”

Founded in 2005 by Eric and Ofelia Lichtenheld. Integra Group Real Estate specializes in the management, preservation and marketing of REO, HUD and distressed properties to underserved demographics in Southern Arizona. The Integra proprietary services allow brokers strategic property evaluation, counseling, preservation and property marketing assistance to four of the top 10 U.S. mortgage lenders. Readers interested in more info about Integra can visit the links provided, or read the original press release via MarketWatch.

Alternatively, interested parties can contact the company’s media contact: Sarah Lewis (678) 781-7209 - sarah@integratucson.com

Bulk REO homes for sale © AZP Worldwide - Fotolia.com

Question: So basically, under the current plan to sell large blocks of REO’s to private investors who would be required to hold those properties for rental, you are making several key points: 1. Fannie and Freddie may have to sell them at 10 cents on the dollar. 2. There are not that many professional investors who could qualify for this program that actually want to do single family rentals. 3. These investors would ignore the bad properties they are forced to buy in the pool, to get the good ones they would want, and in so doing, allow those areas already in bad shape to get even worse…so with all of those points in mind, what are some ideas that could be implemented to get these properties off the books, save taxpayer money, and still improve neighborhood conditions in hard-hit areas, and generally result in the best possible outcome for what is obviously a difficult problem? 

Answer: Frankly, in my opinion, you could argue that it would be more cost effective for the GSE’s to literally GIVE the homes away in some of the hardest-hit areas, to owner-occupants who can pay the insurance and taxes on them. Provide these “qualified” owner occupants with access to low cost rehab loans to allow them to fix up the property and live in it themselves for a minimum of 3 to 5 years.

That would create truly affordable housing in the areas where it is most needed, provide opportunities for pride of ownership in neighborhoods that desperately need it, and help improve those neighborhoods overall, while helping bolster the local tax base.

Investors at the pay-grade we are talking about for the current program, simply are not going to worry about improving neighborhoods.” It is common knowledge that neighborhoods with a majority of owner-occupants maintain more value, and are better kept than neighborhoods with high rental populations, especially when concentrated in a relatively small geographic area. Ownership would help stabilize local home values in those areas as well. And maybe some of those homes should be offered to people who were damaged by fraudulent foreclosure practices. And I think I’d also include a deed restriction that the property cannot be refinanced for more than 50% of the appraised value, to protect these owners from another foreclosure.

Question: “I like that idea myself. It’s an opportunity to begin to restore our national tradition of home ownership. But what about the investors? I think you and I agree that the current program as outlined is going to end up being accessible to just a few big players at the top, when the vast majority of single family rental property owners are the smaller mom and pop variety, along with smaller investment companies that do a great job with property management, but can’t begin to qualify to handle 500 to 1000 properties in one big package. How do we get these properties into the hands of those investors who really do want them and will keep them in good condition?” 

Answer: “It would make more sense if the larger investors who can buy these pools were allowed to dispose of them any way they want to. They could afford to pay more for the pool, because these investors know better how to maximize their profits in the market place.

The larger investors could reduce their risk and distribute these properties more efficiently in the local market, with less negative impact, through their choice of selling properties to owner occupants for a mark up that could be specified by Fannie and Freddie, or selling them for a quick profit to the tens of thousands of smaller investors who do want some of these properties.  That is the vast majority of investors.

Only a small segment of the professional investor population that can buy these bulk pools of properties would even want them for rental. If you maintain this mandate to rent, the government is simply eliminating a lot of players who could help dispose of more properties faster. If the government wants to maximize the return for the taxpayers, they should not impose unnecessary restrictions on the free market place. Frankly I don’t think the program will work very well in it’s present form, because it is going to restrict the number of potential buyers so much if you keep the rental mandate and lock out the little investors who make up the vast majority of the single family rental owners.

There are thousands of Real Estate Investor Associations around the country, with members that number in the hundreds of thousands. These folks are the foundation of the rental property industry in America, along with tens of thousands of older folks who own and mange a handful of single family rental properties, to help bolster their retirement income.

“It seems to me that getting these properties out into the hands of the little guys is the key to solving this problem while at the same time providing the necessary support at the local level.”

No one is going to care about these properties or manage them as effectively as the local investors will. So I say let’s create a distribution system that is similar to the wholesale markets in other industries, and allow these properties to get into the hands of those that can really benefit from them, and in so doing, we’ll benefit our communities and restore some stability to the local market place.
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Donna Robinson is a 16 year veteran of the real estate industry and a staff writer for RealtyBizNews.com. She is an active real estate investor who also provides coaching and consulting services. Contact her at donnaconsults@reihelp.com or call her office at 888-915-9968 to inquire about coaching or consulting.