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⋆Victory Property Management Wilmington NC Homes for Rent
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What are absolute deal breakers when it comes to a rental property? Technically, the answer is there are none — or just about none. Every piece of property has a value. Although, as Brandon Turner noted about one deal on the podcast I was lucky enough to be on, “…no matter how I did my numbers, in the end I always came back to they got to pay me about 15 grand to buy this house.”
Sometimes that value is negative.
A better way to put it would be “major red flags” when it comes to rental properties. But before we get to the list, a major clarification is necessary. This list won’t include things like “the HVAC is shot” because that’s just a matter of what price to make an offer at.
These are problems are structural in nature. And by that, I’m not talking about the actual foundation of the building, but something that is relatively unalterable about the property. Some of these problems may be at least partially fixable at a reasonable price, such as the point on storage. Others are not, such as the location or floorplan. But these are not items you can simply and easily add to a repair list and make them go away.
With that in mind, let us begin our list:
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1. The Proverbial War Zone
I wrote an article about how to analyze the crime risk for a potential deal that I would recommend reading to evaluate which areas are proverbial war zones. Furthermore, I wrote another article on why most investors (and all newbies) should avoid properties in D areas. The gist of it is that properties in such areas will usually cost more to maintain than the rent they bring in. And the risk is much higher, to boot.
Related: 5 Tips For Picking a Winning Investment Property (& 5 Red Flags to Avoid!)
Remember, square foot for square foot, a new roof or furnace will cost the same in D neighborhood as it does in an A neighborhood. If the rent is too low, it simply won’t cover the cost of such repairs. And add to this that crime is more common in these areas. It will take a long time at $500/month in rent to cover the cost of an A/C condenser that decides to grow legs and walk off. Tenants in these areas are also more likely to fall behind on their rent or do significant damage to a unit. While there are plenty of good tenants in rough areas, unless you specialize in these types of rentals, really rough areas should be a deal breaker.
2. Terrible Schools
Often, terrible schools go hand in hand with war zones, but no always. Some areas, particularly densely urban areas, have bad schools but some quality areas where most of the people who live there send their kids to private schools. While I personally find this dynamic to be tragic, there’s not much you can do about it as a real estate investor.
Bad schools is definitely more of a red flag than anything that would resemble a deal breaker. But after safety, the most important thing people look for when looking to rent a property (at least a family-sized property) is the quality of the school district. So keep this in mind. is a good place to go to evaluate any given school district.
3. Houses With Only One or Two Bedrooms
I hesitated to even include this because it is absolutely not a deal breaker. But it is worth noting that one and two-bedroom homes are not what any family is looking for, so with these types of houses, you will generally have a more transient clientele. Now, with some such houses, you can add a bedroom, which can be a great value-add. But with others, there simply isn’t the space. Small houses can be risky, and the tiny houses movement is too likely to be a fad to be worth investing in as rental property.
That being said, I have heard of one investor who specifically looks for one-bedroom homes and rents (mostly) to elderly people, and he does very well with it. For our part, we have plenty of two-bedroom houses, and they do just fine. But you definitely need to know what you are getting into with such homes.
4. Huge Units
A 3,000 square foot house does not often make for a great rental. Again, this is not an always proposition, though. But for the most part, the maintenance and turnover will be much higher on such large properties simply because of the sheer size of it. Furthermore, most people looking for such a house will be buyers, not renters.
We find our sweet spot to be around 800 to 1,500 square feet for houses.
5. Huge Lots and Rural Properties
I put these two together since they tend to go together. Now, a big lot is a good thing. But if you are looking at anything too large, especially over an acre, I would start to get nervous. For one thing, that’s a lot of yard maintenance to deal with upon turnover. Furthermore, most people don’t want to take care of such a large yard themselves, so you will turn off a good number of potential tenants. Or you may get a tenant who simply won’t take care of the yard, and then you will start getting letters from the city.
Rural properties are also difficult to manage since they will generally be far away from you. I’m not a fan of rural properties in general (although, for some, I’m sure it’s a very profitable niche). But my advice would be that if you want to invest in rural properties, they make for better flips than holds most of the time.
Related: 10 Glaring Red Flags That Indicate Your “Great Deal” May Be a Costly Scam
6. Any Sort of Environmental Problem
OK, another major disclaimer — this could be a goldmine for a savvy investor who will buy what others won’t. But if you have toxic waste dump or an underground leaking oil drum or the unit is going through meth abatement, unless this is your specialty, move on to the next one.
7. Tiny Bedrooms or Kitchen
There are some instances where you can fix a tiny bedroom or kitchen by removing a wall here and adding a wall there. But often, there’s no economically good way to do it. Some old houses are just designed in a way that makes me think the architects were on LSD — even though that drug hadn’t even been invented when those properties were built. I’ve seen massive and useless hallways connecting one tiny bedroom to another in a 1,200 square foot house with no conceivable way to add a third bedroom. It’s endlessly frustrating.
But it’s important to note that potential tenants do not decide on which property they are going to rent by plugging the amenities and specs into a spreadsheet and running a logarithmic, covariate algorithm that takes the least-squares regression of the hypotenuse to determine the best value. They make their decisions based on emotion and livability. Tiny bedrooms are a huge turnoff for anything other than the third bedroom, which is often used as an office, library, or nursery. A master bedroom is a huge plus, but the first and second bedroom need to be of decent size (at least 10 feet by 10 feet or something equivalent).
And they say that kitchens and bathrooms are what really sell houses. I think the kitchen is particularly important, and a tiny kitchen that cannot be expanded or opened up is a huge turnoff. Not necessarily a deal killer (remember, every property has some value), but it’s a big red flag.
8. Awkward Layouts
Can you only get to the bedroom from the kitchen? Is the only bathroom right next to the kitchen? Can you only access the garage from a bedroom? Is the only door to the backyard through a bedroom? Is the second bedroom only accessible from the first (which, I should note, means it’s not a bedroom)? Is the only access to the unit’s only bathroom through one of the bedrooms in a unit that has more than one bedroom?
Maybe you can fix these problems by moving a wall or whatnot. Maybe you can’t. If you can’t, that is a major problem that seriously affects the properties sale and rental value. And tenants, like homeowners, generally don’t like awkward properties.
Obviously, it doesn’t mean the property is worthless, but it is another major red flag.
9. No Storage
Say you have a three-bedroom, two-bathroom house with no garage, basement, or bonus rooms. You need to note that the lack of storage is a big negative to potential tenants. Not a deal killer, of course, but a red flag nonetheless. The best remedy, we have found, is to add a shed in the backyard. Both Home Depot and Lowes sell such sheds at reasonable prices. But this is an imperfect solution at best. So be careful with a house that has no storage.
It’s safer to buy apartments with minimal or no storage, particularly with smaller units, as 1) the tenant doesn’t need a lawnmower or anything like that since they are not responsible for the lawn and 2) it’s less likely to be a family living there, so the person likely has a lot less stuff.
10. Local Governments That Hate You Simply Because You Exist
OK, that may be a bit of hyperbole. But it’s extremely important to know how landlord-friendly any municipality you intend to buy in is. Some cities require landlords to have annual property inspections, which are both expensive and arduous. Are you willing to put up with that? Other cities, particularly on the East Coast, have eviction laws that are so strict, it can take three months or even longer to evict a non-paying tenant. I’ve even heard of it taking as long as a year, especially if the tenant knows how to game the system.
For a rather extreme example, here’s how Global Property Guide describes the eviction process in the Netherlands:
“Landlords can only give notice in strictly defined cases, and it is extremely difficult for owners to evict tenants once they are established. Only the judiciary, and not the landlord, can terminate the contract, and only after the landlord has given notice of from three to six months. Where the contract is for a fixed period of time, he is restrained from giving notice except towards the end of that period.
“Limited arrears in payment of rent are in general insufficient grounds for a rescission of the contract; only an order for payment can be achieved. In the case of arrears of up to three months, rescission will be denied. Nuisances committed by tenants tend not to be a good basis for eviction; they tend to be denied by tenants, and the court procedure is costly.”
If there’s anyone from the Netherlands who would like to correct me on this point, I’m all ears. But for now, I’ll probably pass on investing there.
On the same note, HOAs can be similarly difficult and anti-landlord in some communities. We’ve all heard of the petty tyrants that have rises to power in some HOAs. Such properties are generally to be avoided.
To wrap it up, it’s once again critical to remember that there really is no such thing as a deal killer. After all, I for one would be willing to buy any property in the country if they paid me a billion dollars to do it. But there are major red flags that will kill most deals. When looking for rental properties, the above list are some of the big ones to watch out for.

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The way to increase the value of a multifamily property is to either increase the income and or decrease the expenses, which will affect the net operating income (NOI). The NOI is a key metric when analyzing the value of a multifamily property. For the purposes of this article, I would like to focus upon the top line of the investment, revenue — and how to grow the revenue of the asset. The asset classes that we focus upon are B and C properties. If you would like more information on NOI and increasing the value of your asset, read our article on “How to Reposition An Apartment Complex.”
12 Ways to Increase Revenue in Your Apartment Complex
1. Add additional units.
On our most recent purchase, the property had laundry rooms spread throughout. The rooms were large, and we began to consolidate the laundry and decrease the size. We were able to create three additional studio units from the extra space, which allowed us to increase our monthly revenue by $1,800 per month. At a 7 cap, the value of the asset increased $308,500. We are in the process of building additional units throughout our portfolio from space that was deemed “useless” from previous owners.
One of our favorite strategies is to convert units that are being utilized as storage units back into apartments. Mom and pop apartment owners fall into the trap of allowing their units to fall into disrepair, and they then begin to fill these vacant units with supplies (a.k.a. crap!). It’s a lot cheaper to go out and buy a shed to store your supplies in than it is to take a unit generating income offline because the owner is unwilling to invest a few thousand dollars. In addition to storage units, we also look for basements that have a means of egress (windows) so that we can build additional units.
2. Generate laundry revenue.
When you think of laundry, you don’t think of excitement. But you should! Laundry is a vital service that can attract and retain quality tenants while adding revenue to the bottom line. We recently interviewed John Steinhofer from Caldwell & Gregory, who went into depth about the merits of hiring a laundry provider.
The discussion was focused on the new technologies in the market, how to draft a contract, how to receive a bonus from the laundry company, what to look for when assuming an existing contract, and much more.
A laundry service company will provide you with new machines, a bonus to sign a contract, a plan on how to maximize revenue, and the maintenance of the machines for a split of the revenue. You have to ask yourself if it is worth your time collecting coins and servicing machines — otherwise, you may decide to share the revenue with another party and focus on other vital aspects of your business. Our focus is on providing a valuable service to the tenants, and the laundry provider allows us the time to delegate our maintenance crew to handle service calls from tenants. We don’t want them wasting time fixing machines and collecting coins.
Related: How a Small Apartment Building Made Me $40,000/Year
3. Provide storage.
When we purchased our first property, there were four garages that were filled with junk (that’s an understatement). We decided to empty out the garages, place locks on the doors, and rent them out as storage units. We generated an additional $200 per month while providing an amenity to the renter.
Look for properties that contain garages or closets throughout. Once a tenant rents the space and moves his or her belongings into the storage space, when the lease comes due and you decide to raise them $20, they will think long and hard about vacating because they have a storage unit full of “stuff” that has to come along.
If the property has space and there is a demand for storage, companies such as Betco and Trachte offer prefabricated and portable storage units. They range in cost and size to fit any budget.
4. Charge late fees.
Every operator should be charging late fees to tenants who pay after a specified date in the lease. The reason is two-fold. The tenant will not want to incur a fee, and extra income will be generated. Once a tenant pays the fee once, he will most likely not repeat that mistake. We charge a 10 percent late fee to all rent that is received after the fifth of the month. You need to stay consistent with all of your policies and charge every single tenant who violates this law.
5. Implement utility bill back.
Ratio utility billing system (RUBS) is a program that allows the operator to bill back the tenants for the usage of water, sewer, electric, gas, cable, and garbage. To learn more about how to implement RUBS, click on the article above and visit NWP. It has been such a vital component to our value-add strategy that we have created the three-step framework. It has literally created millions of dollars of value on our properties.
6. Charge for applications.
Every landlord needs to process background checks and evaluate all potential tenants. You are giving control of your asset to a potential problem. Every tenant needs to be screened, and you should charge the market rate. In our market, we are currently charging $45 per applicant. You may be able to purchase these reports at a discount and earn revenue while protecting your asset. The company we use charges us $16 per report.
7. Implement move-in fees.
We have acquired properties that utilize security deposits, but we decided to jettison security deposits and replace them with non-refundable move-in fees. Our feeling is that security deposits can create an uneasy feeling between the owner and tenant (“when am I going to get my money back?”), and we wanted to avoid this uneasiness. Plus, we wanted to collect the fee and retain it. In our market, move-in fees range anywhere from $300 to $500. In some markets, this also creates a low barrier to entry for tenants.
You may be asking, “What happens if the tenant damages my property?” Our solution is to have the tenant purchase SureDeposit in addition to the move-in fee. SureDeposit is a risk management tool that enhances traditional security deposits by offering surety bonds to residents. Most tenants do leave their apartments in decent shape, and we use part of the move-in fee to turn the apartment for the next tenant.
8. Encourage renter’s insurance.
Some property owners require tenants to carry renter’s insurance. If a tenant’s property gets damaged, the landlord’s policy does not cover any of the tenant’s contents. We do not require tenants to own renter’s insurance, but our software company Appfolio offers renter insurance for $9 per unit. As the operator, you can turn around and charge the tenant a very competitive $15 per month. Kill two birds with one stone! Protect your asset and make a few bucks.
9. Consider offering short-term rentals.
We’ve had a few tenants inquire at our properties about short-term leases — anywhere from three to six months in duration. At first, we decided against it. But we noticed that these requests were becoming more frequent, and we realized we could charge a sizable premium in rent for a short-term lease.
The end result has been terrific for the company. We were able to fill a need for the tenant base, along with generating additional income. When the market is asking for something, it is the job of an entrepreneur to listen and to try and provide the solution. When tenants find out that your company is there to find solutions and be flexible, the word gets out. As of now, most of the apartment communities do not offer short-term leasing. I hope it stays that way.
Related: Why Apartments Are the Single Best Way to Escape the Rat Race Within 3-5 Years
10. Make the most of rental amenities.
If your property has a clubhouse that is underutilized, consider renting it out to tenants for functions. Does your fitness center sit empty most of the day? Rent it out to yoga teachers and personal trainers. Tenants will love the service, instructors will earn money, and you will maximize the amenities on the property. The use of these amenities will also begin to create a more pleasant atmosphere within your property.
11. Work out a deal with cable companies.
When we assumed control of our most recent acquisition, the owners had just signed an exclusive cable contract with a provider for $50,000. Guess who got the money? Although the contract lasts seven years, the company paid the bonus up front. If you purchase a property with an existing contract, ask the seller to pro-rata the fee and credit it to you at closing. You are obligated to abide by the terms in the contract. Why shouldn’t you be entitled to the remaining value on that contract? If your property does not have any type of contract, try to negotiate with a cable provider in your market.
12. Use built-in rent increases.
In our leases, we have a built-in rent increase upon renewal. The increase is only 3%, which calculates to approximately $15 per month. But that is huge for us. It ensures that our rents are always priced to the market, and it is a hedge against inflation. Rents have climbed dramatically over the past several years, and many of the mom and pops have not kept up. We don’t want to become another mom and pop.
We have focused solely on increasing rents and have yet to discuss expenses. I would like to address something that Jake calls refers to as the “expense creep.” What is it? Jake’s simplified definition is those teeny, weeny expenses creeping up each year until you wake up and notice they aren’t that small taken collectively. How do you guard against expense creep?
Let your vendors and service providers know that you will be reviewing their services at the end of each year. You need to keep them honest and competitive. Who should you include in your review?
Software providers
Cell phone/internet services
Trash removal
Pest control
Property management
Carpet and flooring
Laundry leasing
Painters (try every month)
Home Depot/Lowes/HD Supply
For every dollar of expenses saved, that is one dollar that goes straight to NOI.
I hope this article has given you a clear path to increasing revenue and being diligent about your expenses.

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Last July CoreLogic reported that, nationally, rent growth on single-family homes had begun to moderate in 2016 based on the CoreLogic Single-Family Rental Index (SFRI). Now that it is six months later, has that trend continued?
Analysis of the CoreLogic SFRI shows that the slowing in the aggregate index has continued.1 However, an analysis of the index into lower-priced rental and higher-priced rental homes reveals important differences by rent tier. Figure 1 shows that the overall SFRI growth was pulled down by the high-end market, defined as properties with rents of 125 percent or more of the local-area median, although growth in the low-end market, properties with rents less than 75 percent of the local-area median, remained strong. In October 2016, the national SFRI increased 3.4 percent from a year ago, down from 4 percent in October 2015. By tier, rents on lower-priced rental homes increased 5.4 percent, up from 5 percent in October 2015, while rents on higher-priced rental homes increased 2.5 percent, down from 3.4 percent in October 2015.
Affordable, lower-priced rental homes are in strong demand and limited supply. For the lowest-priced rental homes, the shortage in supply has added to rent growth pressure.2 In contrast, new construction tends to be high-end units, and the additional supply has caused rent growth for high-priced rental homes to moderate. According to the U.S. Census Bureau, homebuilder completions of new rental homes increased 21 percent in 2015 compared with 2014, more than double the annual amount from 2010 to 2012 and the most since 1989.3
Rent growth varies significantly across metro areas and over time. Metros with limited new construction and with strong local economies that attract new employees to the market tend to have low rental vacancy rates and stronger rent growth. Seattle experienced almost 7 percent rent growth during the past year, driven by strong employment growth of more than 3 percent year over year and rental vacancy rates of 3.8 percent in 2015, nearly half the 7.1 percent national rate.4 In contrast, Houston, which has been hit with energy-related job losses since early 2015 and a rental vacancy rate of 9.6 percent in 2015, experienced a year-over-year decrease in rent of almost 2 percent in October 2016.

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The Federal Reserve has put its benchmark interest rate at close to 0% over the past ten years as a strategy to boost the economy. However, in December 2016, the Fed hiked interest rates up to 0.75%.
A rise in interest rates is a signal that the Federal Reserve believes the economy is healthy enough that borrowing costs should return to normal levels. This would help keep inflation in check. However, a rise in interest rates could cause some short-term volatility. Economic recovery could slow down; wages may decline, and borrowers would have to pay more for assets, such as houses.
Effect on Mortgage Rates
Increasing the interest rate does not necessarily result in a proportionate increase in consumer mortgage rates. From 2000 to 2017, there has been only a small amount of correlation between the short-term federal funds rate and the long-term 30-year fixed mortgage rate. In fact, it's fairly common for 30-year mortgage rates to move on their own, independent of other economic factors.
For example, from 2004 to 2006, the Federal Reserve increased short-term interest rates from 1 to 5.3%. Over the same period, mortgage rates increased from 5.8 to 6.3%. While interest rates increased by more than 4%, it resulted in only a 0.5% increase in long-term mortgage rates.
Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
Long-term mortgage rates move as a result of many factors, such as the federal funds rate. Other factors that affect mortgage rates include the inflation rate, the erosion of purchasing power of money, the budget deficit, and household savings rates.
Therefore, an increase in the federal funds rate will only have a small effect on long-term mortgage rates and the overall housing market. However, it's assumed that the federal funds rate will increase fairly steadily over the next two years, reaching an estimated 2.5%. There is likely to be an announcement of an interest rate increase each quarter, and consumer confidence may waver.
Increasing Mortgage Rates
Similar to the federal funds rate but somewhat independent of its movements, some experts say the 30-year fixed mortgage rate is expected to increase over the next two to three years. However, the perception that the potential rise in the federal funds rate is causing mortgage rates to increase is incorrect. If inflation turns out to be higher than expected, it could be the cause of an increase in mortgage rates. Additionally, if the current housing shortage persists with new housing developments lagging behind population growth, it will increase apartment rents, owner-equivalent rents and mortgage rates.
With inflation rates and housing prices making up 30% of the consumer price index (CPI), they are the most significant factors in terms of whether mortgage rates increase in the future. If the Federal Reserve can contain the budget deficit and if home builders become more active, mortgage rates should only increase slightly, even if the federal funds rate increases significantly.
While currently 30-year fixed mortgage rates sit at 4.00% as of Jan. 10, 2017 even if 30-year mortgage rates increase above 6%, it shouldn't alarm consumers. The average mortgage rate was 9% in the 1970s, 13% in the 1980s and 8% in the 1990s.
Also, increases in the 30-year mortgage rate are a signal that the economy is improving and the job market is strengthening. Underwriters will be more relaxed in writing loans, and the pool of homeowners will increase in size. Therefore, it's economically possible for consumers to take on higher mortgage rates; the housing market will be fine, even in light of an increase in the federal funds rate.
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Effect of Fed Fund Rate Hikes on the Housing Market | Investopedia

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Zillow Digs announced the top home design trends for 2017, along with the three soon-to-be forgotten fads from 2016. Results were based on a survey of leading interior design experts and trending photos on Zillow Digs.
So what will be 2017’s hottest trends? Check out the full list below!

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As landlords, we want some amount of tenant stability; after all, tenant turnover is a cashflow killer. Very rarely will we sign a lease for a term of less than one year or allow tenants to break a lease without a very good reason. We just want the general comfort of knowing that we likely will not have to worry about that particular unit for at least a year. Sometimes, however, tenants want to break their lease. By “break” I mean move out before the lease term is expired. The reasons for this are often quite varied and range from “I just don’t like it here anymore” to “I lost my job.” With the first example, we have to get our tenants to face the hard reality of the lease by explaining to them again that they have signed a contract which we expect them to uphold. We make them understand we really cannot force them to stay, but that there will be penalties if they do not get the OK from us to break their lease. The second example, however, is a different matter. There are times when we will let a tenant out of their lease, and job loss is one of those potential reasons. I explain why below and also provide you with four other reasons we allow a tenant to break their lease. 5 Legitimate Reasons to Allow a Tenant to Break Their Lease They Are Active or Reserve Military Active and reserve military personnel can be transferred or activated very quickly. If they have to go, there is really nothing you can do, as Federal (and often State and local) laws allow these tenants to break any lease. In fact, you might even be required to hold their property for them so it will be there when they return. Be sure you understand the potential ins and outs of these laws. They Get a Job Transfer A job transfer is not the tenant’s fault, and it can often be a good thing for them. Many times they have very little control over where the particular company they work for sends them (unless they just up and quit), so there really is no reason trying to enforce your contract here. It is very unlikely that any sitting judge would actually allow you to do so anyway. As a cautionary measure, it is wise to place a clause in your lease that allows for the lease to be broken due to a job transfer so long as the transfer is over 50 or so miles away. After all you don’t want them to move if they are just transferring to another local branch. Related: Month to Month vs. Annual Leases: Which Protects Landlords? They Lose Their Job If a tenant loses their job and generally has no prospects of finding replacement income in the near future, we have found that it is best to generally let them move on. After all, you are not going to get blood from a stone. If a tenant has lost their income, their relationship with you is likely to become more and more strained as time goes on and resources dry up. Best to sever the relationship early, get your property back and move on down the road. They Encounter Extraordinary Circumstances Unfortunately, bad things happen to good tenants. We have had tenants get divorced, get diagnosed with cancer or suffer some other type of misfortune. These types of circumstances can cause radical shifts in income and outlook on life in general. Suddenly the rent is not that big of a deal if you are fighting for your life or trying to survive a bitter breakup. It is best to have a bit of sympathy here and let folks move on and focus on whatever they might need to focus on. They’re Simply a Pain in the Neck Some tenants just end up being a pain in the neck. They seemed like a good fit during the application process, but once they move in, nothing is ever right for them. Nothing can ever be fixed properly, they complain constantly, they are late with the rent and other payments. They are just a pain in the neck and sometimes enough is enough. When is that point reached? It is hard to say, but sometimes it is best to just say something like, “I do not think this is the home you are looking for, as I cannot seem to meet your needs. I will be happy to let you out of your lease so you can find something that better fits your needs.” They will either move and you will be rid of the problem, or they will tone themselves down. Either way, hopefully your problem is solved. Sometimes it is just better to get out of a bad tenant relationship. Related: 17 Vital “Rules” Your Rental Lease Should Cover Conclusion In sum, we try not to let our tenants break their lease for foolish reasons, but we do understand that sometimes it is a necessity due to circumstances that may be beyond their control or for us to get some peace of mind. How and when you decide to allow your tenants to break their leases will be up to your local laws and your own personal opinions and business practices. Whatever you decide, keep the lines of communication open and try to maintain a good rapport with your tenants. Let them know that they can come to you if they need to discuss any situation. Don’t get angry. Keep everything professional and business like. After all, sometime breaking a lease is good for both sides.

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Property revaluations set to be mailed to New Hanover County residents By Port City Daily staff on February 19, 2017 is your source for free news and information in the Wilmington area. NEW HANOVER COUNTY — Property owners in New Hanover County should expect to get their property revaluation in the mail in the coming days. The New Hanover County Tax Department has completed its 2017 tax revaluation for all properties in the county. Residential property owners are first on the mailing list and will receive a letter with their 2017 assessed property value in the coming days, according to a notice from the county this week. Commercial property values will be mailed by March 1. New Hanover County conducted a full tax revaluation of more than 104,000 parcels of land in the county over the last two-and-a-half years. The revaluation’s purpose is to fairly reflect the value of all property and to help ensure that property owners pay equitable taxes, based on the value of their property, according to the county. “New Hanover County’s Tax Department has been incredibly diligent and thorough in (its) revaluation process to get a true and accurate value of each property,” County Manager Chris Coudriet said. “Every parcel in the county was visited by an appraiser, questionnaires were sent to each property owner to ensure that the information on file was accurate, comparable properties were analyzed, and uniform appraisal methods were applied across the board. This detailed process has resulted in values that accurately reflect our current market.” North Carolina law requires each county to conduct a revaluation at least once every eight years. The last revaluation in New Hanover County went into effect in 2012 and future revaluations will now occur every four years. The new values became effective on Jan. 1 and will be reflected in the tax bills property owners receive in August 2017. Property owners have the opportunity to appeal the new value if they feel it is not accurate and have factual supporting information. The quickest way to appeal is through the tax website, where an appeal form can be submitted directly. In addition, property owners can complete and mail in the appeal form that is attached to the revaluation notice they receive. The county’s preliminary tax base as of Jan. 1, before any appeals have been made, is $32.9 billion, compared to $30.94 billion in January 2016. That represents a 6.3 percent increase. Each individual property’s value may have increased, decreased or remained unchanged in the revaluation. Detailed Frequently Asked Questions and the appeal process can be found on the Tax Department’s 2017 Revaluation webpage. mail, New Hanover County, property revaluation, property tax, Property Tax Revaluation

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If you are like many people, you may be investing in a buy and hold rental that you can use for passive income in your later years — or even in your earlier years. You look at the monthly mortgage payments, look at the common expenses, and decide it is a “go.” But did you remember to include these hidden expenses before you started spending all that extra money you will have?
There are the common expenses that most people know about and can plan for… and there are expenses that you will have that will reduce your cash flow significantly. If all you have is the rental income — and no “real” job — you could be a former landlord soon if you do not take them into account.
I am not listing property taxes, property insurance, utilities (water, gas electric), HOA dues, snow removal, lawn care, etc. Those are generally obvious and often stated on some cap rate statement (that generally shows a higher cap rate than actual).
The Big 3 “Hidden” Expenses
Maintenance Expenses
The doomed landlord (or real estate agent) puts a number like $600 a year for maintenance on their cash flow statement for a rental that is renting for $1,000 a month. You can believe that number, or you can be assured that maintenance will run at least 10% of the rents. In older buildings, or a building where the owner has only spent $600 a year, it may run as high as 20% until you get the maintenance under control. Never assume anything but a number of 10% or more.
Related: How to Accurately Estimate Expenses on a Rental Property in 3 Easy Steps
Management Expenses
A typical property manager will charge between 8% and 10% of rents to manage a property. In a larger multifamily apartment situation, it may be as low as 4%. All properties MUST be managed, whether by yourself or others. If you think you will manage your own property for free, please contact me directly, as I have many places that you can also manage for free. You must be compensated for your risk and your time. Always assume a number of 10% for a single family home.
Vacancy Expense
Everyone will have a vacancy at some point. If you have a single family home, you may be 100% full — or 100% vacant. I use a number like 5% to account for vacancy. It will cover periods between renters. If you are only vacant for two or three months, just once every five years, you will have used up this expense allocation. Use 5% unless you know it will be more. Never use less.
9 Other Hidden Expenses That You Might Forget
There are also some less common expenses that you may not factor into the cost of a Rental Profit and Loss Statement, but that are most definitely part of the business of real estate, even in a one-unit rental. If you only have $100 a month in cash flow, you will quickly eat that up. I am not going to talk about tax deductions, only the actual expenses. A tax deduction doesn’t help much when you have a negative cash flow and are losing money.
All these expenses are real and must be paid.
Permits and Fees
Many cities are jumping on the rental license bandwagon. It’s a quick way for them to get an extra $50+ — and often more. In some of my rentals, the license is $50 a year, and they require an inspection every three years. That means over $100 a year to get a rental license. In Minneapolis, MN, it costs $7,000 a year for a vacant building permit, so if you bought a rehab there, it could get very expensive.
Tenant Screening Charges
If you are procuring tenants, you better be factoring in the cost of screening them. With a typical charge being $40 for each adult, each rental turn could be an extra $80+. Some landlords, such as me, pass these charges on to the incoming tenant. But sometimes I waive the fee as an incentive to get a tenant.
If you are using a property manager, plan on giving up a month’s worth of rent (or your first born) to them when the tenant moves in. And a bunch more along the way…
Many forms of advertising are free, but you may want to put an ad in a paid format, especially when times are slow. If you have multifamily properties and generally always have something vacant or coming vacant, you will likely have a full-time ad generating prospects.
You will never expect that eviction expenses are to be included in any pro-forma statement when you are buying a property. If you do not screen well or neglect to put aside some money to evict, you will be a former landlord very soon. The cost of a bad tenant or an eviction can wipe out several years of profits.
If you are buying a property with tenants included, know that one or more of these tenants might be your first time experiencing the cost of an eviction. Assume that it takes at least five months’ worth of rent to cover the cost of an eviction, factoring in the extra legal expenses, repairs, vacancy, lost rent and advertising. Your headaches are free.
Be sure to have the capital necessary to do what it takes to recover from a bad tenant.
You will likely be driving to and from your property. You will be driving to and from the home improvement store. You will be driving to show properties, sign leases, pick up keys, clean common areas, empty coin-op laundry machines, and answer maintenance calls. I drive quite a few miles, making multiple trips, every month. This is another expense that will eat into your $100 a month cash flow. Never underestimate the ability for this expense to add up quickly.
If you are planning on doing your own maintenance, you better have some decent tools. Any job is easier with solid, quality tools that are meant for the task. A simple thing, like a GFI tester, will be able to test an outlet in seconds. A multi-meter will take longer to do the same task. Without the right tools, your first maintenance job on your property will cost a lot more than just the $5 part.
Banking Charges
Banks like to charge fees to businesses. They give away the farm to individuals, but they like to gouge businesses. While a bank charge might not break your budget, it is an expense that needs to be paid. Account fees, check printing fees, bounced check fees, and cash deposit fees are all ways to reduce your profits. My account is free, but not all banks offer free accounts.
Office Expenses
When you have a rental, you need a solid computer to run your company. You will also need a decent printer. You will need to print leases, notices, and all sorts of letters. I use a Xerox Phaser 6280 color laser printer, and when cartridges need to be replaced, it is expensive. You will have to buy paper, envelopes, labels and stamps. You may need a cell phone, a scanner, a file cabinet and software such as Microsoft Office with Word and Excel, Quicken, and TurboTax; all of these are my favorites.
Related: Don’t Forget To Budget For These 3 Overlooked Expenses
At some point, you might need to incorporate. All my rentals are in their own LLCs. You may need an accountant for tax advice or tax preparation. Each LLC will need its own set up and tax forms.
You know about property insurance, but what about liability insurance for your business? If you create a property management company to run your rentals and provide an extra layer of protection for your assets, a business liability insurance policy might be a great investment. Another insurance policy you might want is a business umbrella policy.
If you are basing your financial independence on a few rentals that bring in $100 a month each, unless you have counted on these potential extra expenses, you must be prepared to work just a bit longer in your pursuits of leaving your full time job. These costs are all part of doing business, and if you only have $100 of cash flow, they will eat into your profits quickly.

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7 Types of Tenants Who Cause MAJOR Landlord Headaches 61
Tenants are the lifeblood of the landlording business. But as landlords, we don’t want just anyone as our tenants. We want good quality people who will pay, stay and respect our properties. We want tenants who will not cause problems, either to us or to our other tenants. We landlords already have enough problems to deal with, and the last thing we need is to add to those by selecting a tenant that will make numerous unreasonable requests, burn up the phone lines or just be a general pain.
Tenant screening is one key to finding good tenants. Another key is being aware of characteristics that can signal a potential problem. Over the years, experience has shown that there are several characteristics landlords should beware of and that are worthy of further investigation. I’m not saying that the following characteristics always present a problem, just that years of experience have taught me to look deeper and be a bit more cautious.
7 Types of Tenants Who Cause MAJOR Landlord Headaches
1. The Storyteller
The storyteller has always got to explain things before he answers your questions. Even the simplest questions that should require only a yes or no answer come with a long and convoluted story. For example, if you were to ask, “Have you ever been evicted?” instead of a yes or no answer, you are like to get a response such as, “You see there was this time when my roommate…”
Be careful with the storyteller. Listen to the stories if you want to, but understand that the storyteller often thinks they can gloss things over and smooth talk their way into your property. Beware and don’t fall for it.
2. The Momma’s Boy
You know the type — the child who just can’t seem to cut those apron strings. Despite being 30 years old, they have never really made a decision on their own in their entire life and have not had to. Mom (or Dad) has made all of the decisions for them. This type shows up to apartment viewings, lease signings and other appointments with mom and/or dad in tow. They never talk to you; rather, mom does all the talking, negotiating, etc.
Related: How to Be a Landlord’s Dream Tenant — and Get into Any Rental You Choose
Does this mean mom and dad coming along is always bad? No. But you can usually tell the child who is trying to spread their wings from one who has been coddled all their life. Beware of this type of applicant. Have they ever held their own job or been on their own before? They often have no clue how to live on their own or how to manage their lives. They and their mom could be a load of problems down the road.
3. The Spoiled Deadbeat
This type also has mom and/or dad in tow, but they are really excited to tell you how wonderful their kid is and how great a tenant he or she will be when the kid is indifferent and unengaged. The parents offer to pay the deposit, co-sign, anything to get you to rent to their wonderful kid.
Beware. There is potentially something wrong that they are trying to dump on you. Most likely they just want them out of the house. But you have to ask yourself why. What is wrong with this kid? Perhaps it is nothing. Or perhaps the kid is a lazy deadbeat.
4. The Perfectionist
We have all had a perfectionist in our lives at some point. They drove you crazy, didn’t they? Nothing is ever good enough. Do you want to let one live in one of your properties? Will anything ever be right for them, or will they constantly harass you with phone calls about this little thing or that little thing? Beware of the perfectionist.
5. The Complainer
The complainer often shows up and very quickly lets the tongue start flapping: “My last landlord never fixed anything.” Or perhaps, “The property was never maintained, and the other tenants were trashy.” “Will that be fixed?” “This room is really small.” “Who lives next door? I don’t like a lot of noise!”
The complaints go on and on. And they likely will go on and on if you let them in your property. A bit of complaining is normal. But beware of anyone who complains too much.
6. The All Cash Dealer
The all cash dealer looks and sounds really good. They wave a lot of cash in front of you stating that they can pay the deposit along with first and last month’s rent today. They might even say they want to pay a year’s rent upfront. Sounds great, right? But you have to ask yourself why they are doing this.
Related: The Top 14 Tips Landlords Wish Their Tenants Knew
Sure, there could be a multitude of legitimate reasons, but it is not normal. Paying a year upfront is not how things are normally done. Could they be trying to hide something? Maybe, maybe not. Again you need to beware. Plus, think about this — how do you evict someone who has paid a year of rent upfront if things go south? It is possible, but a bit more difficult.
7. The Space Cadet
Ever have someone get lost five times while trying to make it to a showing? Could they never seem to get the correct address or the correct time to show up? You might be dealing with a space cadet, and again, you need to beware of letting this person into your life. Can they remember to pay the rent on time, or will you constantly be calling them? Will they be able to care for your property? Again, the answer is maybe or maybe not. You just need to dig a little deeper to be sure they are nothing more than a bit directionally challenged.
Remember, I am not saying that folks displaying these characteristics should automatically be disqualified. What I am saying is that you need to be on the lookout for these characteristics, and if you see them, beware. Check out the stories, review the cash dealer’s background, talk to the complainer’s previous landlord and current boss. Remember that rudeness and promptness can count. Remember also not to discriminate against the protected classes and to have your selection criteria written down and on file.
[Editor’s Note: We are republishing this article to help landlords who have found BiggerPockets more recently. Let me know what you think with a comment!]
What characteristics do you look out for? What makes you say “no way?”

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The internet has become one of the most important channels for marketing and advertising. In order to succeed in any given industry, you need to take full advantage of your online marketing options and give your brand as much positive exposure to as many users as possible. When it comes to the multifamily industry, this is particularly true.
In a recent study by J Turner Research, 83 percent of respondents indicated using online ratings and reviews as they searched for an apartment. As a result, reviews that appear online, whether positive or negative, are often a potential resident’s first impression of your communities. An overall positive reputation of your communities across diverse platforms, such as review sites (Yelp), search engines (Google), and social media (Facebook), play a role in search engine algorithms and help determine where your communities rank in search results. By ensuring that your communities are equipped with enough reviews, you have a better chance of obtaining a higher search ranking and organically drawing more interested residents to your communities.
What role do online reviews play in SEO ranking?
Online reviews may be the deciding factor that helps you outrank your competition in local and community-based search results. In fact, these reviews equate to about 8% of your position and can make the difference between landing on the first page of the search results or the fifth. Overall, the quantity, quality, and diversity of these reviews will determine where you fall in a localized rental search. According to MOZ, these qualities combine to give your page its “review signal,” which is one of the top factors that determine where your communities end up on local search.
How can communities improve their review signal?
Your first task should be to gather as many reviews as you can from satisfied residents, past and present. You will have a better chance of edging out the competition if you have a higher quantity of reviews. For example, in a Yelp search, businesses in similar categories that have more reviews tend to rank higher in search results.
However, review quality is another factor that should not be ignored. In fact, a community with 100 three-star reviews is not likely to fare as well in search rankings as a community with 50 five-star reviews. Therefore, it is important to seek a healthy balance between quality and quantity when surveying residents for their opinions. Also, when actively pursuing reviews, remember that authenticity is important to renters. There’s no way to make everyone happy, and renters may view your lack of negative reviews as untrustworthy and inauthentic.
Finally, search algorithms consider the diversity of reviews. Reviews across different platforms and social media sites will help you rank higher in search engine results—your brand will be recognized by the search algorithm as being more widespread and having more footprints in the digital landscape.
A good online reputation goes beyond SEO—it appeals to human nature.
If your communities have few or mixed reviews, you will have lower search rankings and a more tenuous online reputation. Don’t fear negative reviews as a whole, however, because they provide an opportunity to proactively address concerns and demonstrate your commitment to resident satisfaction. With the right mixture of review quantity, quality, and diversity, renters are more likely to visit your communities. In spite of the general digitization of the world the apartment industry still relies heavily on personal connections and gut instincts. People prefer communities that are backed up by thorough feedback from actual residents. By establishing a reputation online as a trustworthy and pleasant place to live, you will see fewer vacancies and more interest—a formula that sets up your communities for success.
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