Buying:
Invest Wisely
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- Research your investment area; learn the house prices and the rents being received.
- Buy newer homes, they will require less maintenance and have current functional designs.
- Buy in nice neighborhoods, good tenants don't live in bad neighborhoods (for very long).
- Buy homes in the middle to upper range of standard rents; (e.g. rents are $600. - $1400. Your homes should rent for approx. $1150.)
- Pay market value. You may find deals from time to time, but nice homes in nice neighborhoods will generally sell for market value.
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Pre-purchase inspection
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Once you have a signed deal, protect your interests by knowing the condition of the property you are buying. An experienced inspector will check out your new property from head to toe (roof to crawl space). If anything is found you can negotiate its repair prior to closing.
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Evaluate the house (inside) |
- Assess carpet condition, may need cleaned or replaced.
- Determine whether to paint the walls and ceilings.
- Check the smoke detectors for proper working order and add new batteries.
- Set the hot water tank to 120 degrees or less.
- Check furnace for current service tags, service furnace yearly.
- Remove the washer and dryer, two less items to maintain and many tenants have their own.
- Repair miscellaneous problems.
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Evaluate the house (outside) |
- Determine whether or not to fence the property.
- Determine whether or not to do any landscaping.
- Remove a freestanding pool or hot tub, these are liability issues.
- Assess condition of paint, paint and caulk (if needed).
- Repair miscellaneous problems.
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Replace door locks
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This is standard practice when you take possession of your new house. Some locks can be rekeyed, however a better idea is to just replace the locks with high quality locks from a locksmith. Depending on the amount of rental properties you plan to own you may consider a master key system. Each house can have its own key (change key) and you will have one key that opens all the locks on every house (master key). This is your best bet if you plan to own more than four homes. Any locksmith can help you set up a master key system.
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Update Utilities
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This step is done once you have signed the closing documents at escrow. If the house is vacant after closing you will need to put the utilities in your name. Once you have a tenant you should put all (electricity, water, sewer, gas/oil, cable, phone, and garbage) utilities in their name. Don't expect your new tenants to do this, it is your responsibility.
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Open a 'house specific' checking account
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This is an option to the standard (rent check in the mail) way most landlords receive rents. Each house will have its own checking account with deposit slips (in your name). The tenants will deposit their rents and any other monies through a teller, drop box, or ATM (eliminating any doubt when the money was received). Once a month, either online or at the bank, you will transfer all the money from each 'house specific' account into your 'rental business' account. This will be a well organized and time saving process for you and it makes life easier on your tenants, (a win-win proposition). Any bank should be able to help you set-up these types of accounts, it's best if you use a well-known bank with multiple branches.
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