Brewer Caldwell Property Management

Why Choose Brewer Caldwell

2012-01-25T09:43:00.001-08:00

http://www.youtube.com/watch?v=phPc07ubuGs&feature=youtu.be

Handling Tenant Applications: What to look for. -Nick Stratton-

2012-01-09T13:56:00.001-08:00

As a residential landlord, your goals include to minimize vacancy time, obtain the highest quality tenant and receive the highest rental income possible. While each of these goals has their hurdles, finding a quality tenant can be one of the more challenging objectives to reach. Of course, each potential tenant fills out an application, consents to a background check and waits for approval. The trick is learning to read between the lines and figure out if a potential tenant will pay their rent: pay their rent on time: and take care of your investment property. Here are a few tips of what to look for.

1- Evictions and or Rental Judgments: A good screening company will catch this; however they are not always perfect. Checking with County Records yourself will sometimes reveal these items to you. Evictions and rental judgments within the last year usually automatically disqualify tenants (unless they pay most of the yearly rent upfront). Even more important to know is how forthcoming a tenant has been. Chances are if they are trying to hide their irresponsible past, they won’t be responsible for you. On the other hand, if potential tenants are forthcoming and have paid the judgments off, they may have simply had a bad stroke of luck. Always check as much of their rental history as possible to determine how likely they are to pay.

2- Debt- If a tenant has many late accounts, lots of credit card debt; they may have a hard time paying you. In today’s market, foreclosures, short sales and medical debt are almost common place and are easier to look over than other types of debt.

3- Employment history- Do they make 2.5 to 3 times the monthly rent. If they do not, no matter how great their intentions, bills pile up and you may end up being second or last if they can’t afford to buy groceries. Use paystubs, conversations with supervisors to determine not only if they generate enough income, but whether they have stable employment for the term of their lease.

While each situation is different, I recommend creating guidelines of what you will or will not accept when it comes to tenants to make it easier, quicker and in compliance with Fair Housing laws. Although you may have to let some tenants go, it is better to screen critically than to let it go and see evictions later.

A good time to buy, still….?

2011-12-07T11:51:00.001-08:00

Early in 2011 I wrote about acting now to invest in Real Estate. “We are bouncing along the bottom of the market… Invest in Real Estate now when it’s more affordable than ever to minimize your risk and increase your ROI.”₁While this is a new year, the market has not changed much in the rent vs. buy debate. Some may ask why?

According to an article in the Wall Street Journal, “home prices and mortgage rates have fallen so far that the monthly cost of owning a home is more affordable than at any point in the past 15 years and is less expensive than renting in a growing number of cities.”₂ Of those cities, Phoenix is definitely on that list which has sparked debating wars among investors looking for short sales, conventional listings or even trustee auctioned homes. In fact, the article sighted Phoenix being down 40% in inventory.

With this in mind more are investing in Phoenix real estate, but might pull an investor away? Here is a list of points that may dissuade some from jumping in.

Home maintenance- An AC repair alone could be thousands of dollars.
Appreciation is low currently (1% figuring inflation)₃
Managing Tenants and leases
Uncertainty in the market.

While uncertainty will always be present, investors can do many things to overcome the other points. Here are some suggestions

Have a home warranty for repairs, usually covers major things like an AC unit and service charges are usually around $50.00
Consult with local experts to find which areas will most likely retain or increase in value
Hire a professional property manager to help you generate income from your investment.

Although it is still advantageous to buy as it was a year ago, this will not last forever and may become even more difficult as inventory decreases and the number if interested investors increase. Now is the time to buy if one is able.

1- Stratton, Nick. "Investing in Real Estate; Is It worth It?" The AZREIA Advantage (2011): 7. Print.

2- Timiraos, Nick. "Own vs. Rent: A Growing Reason to Buy - WSJ.com." Business News & Financial News - The Wall Street Journal - Wsj.com. 26 Nov. 2011. Web. 06 Dec. 2011. <http://online.wsj.com/article/SB10001424052970203764804577060502694077494.html>.

3- Girsh-Boch, Mary. "Rent vs. Buy | PropertyManager.com." Property Management News, Articles and Resources. Property Manager.com, 15 Nov. 2011. Web. 06 Dec. 2011. <http://www.propertymanager.com/2011/11/rent-vs-buy/>.

The other part of the equation By-Nick Stratton 8/3/2011

2011-08-19T11:17:00.001-07:00

Professional property management consists of a series of relationships between the landlord, his agent, and tenants. The relationship between the landlord and his agent/property manager usually occurs first and is the most important one, since the agent looks out for the owners needs first.

Tenants usually come into the picture later, and many times may be disregarded. However, they constitute a major part of property management, which without, nobody’s homes would be rented. While some may cause headaches for owners and property managers alike, it is typically in the best interest of the owner that a tenant stays longer in a home, rather than vacate after only one lease term. Here are some tips you can take to increase the probability that tenants will renew their leases.

1-Respond to all maintenance requests promptly, and make sure they get completed- The majority of tenant phone calls are for maintenance issues. I experienced this when a tenant moved into a home and found the sprinklers not working and some extra garbage in the attic we did not catch. Our maintenance contacted the owner and coordinated the cleanup and fix up of the sprinkler issue. The tenants called back to thank us for how quickly we handled the situation.

2-Break it down for them- Many tenants get confused when signing contracts and more often than not, do not fully understand or read their lease agreements. The more you can simplify or clarify the lease agreement to their understanding, the easier it will be to hold them to it. They will also appreciate your honesty and how upfront you were.

3-Be timely and professional on inspections performed on the property. Let’s face it, nobody likes their privacy invaded. While annual or more periodic inspections are important, tenants will appreciate it more if you pay attention to detail and if you are prompt and friendly.

While these are simple tips, doing these will increase the probability of tenants staying and will save the landlords money.

Number of renters continuing to increase

2011-07-25T11:51:00.001-07:00

While it is no secret that foreclosures have caused a shift in the number of people renting properties, it is interesting to note the numbers associated with this trend. According to an article written in USA today, Mesa, Phoenix and Scottsdale have increased in the number of homes being rented by over 30% since 2010. Many other cities have also seen major increases in this area such as Avondale and Goodyear.₁

With many more tenants, including former homeowners, it is important that property managers, investors and tenants alike understand the laws and rights associated with rental properties. This is especially true with investors who purchase homes still occupied by former homeowners, or current tenants. Although an owner technically may own a property, they still have to go through the eviction process to obtain access to the home if the occupants refuse to cooperate.

One woman in Oakland California broke back into her recently foreclosed home after she had already been evicted. ₂ In other cases, owners may strip the houses of all fixtures (including stove, dishwasher and light fixtures) even though it is illegal. Examples like these show the importance of understanding the laws governing landlords and tenants. To learn more, talk to a professional property manager or someone educated about the Arizona Landlord Tenant Act. You can access this through the website listed below.

Becoming more educated will help investors, landlords, property managers and tenants eliminate or avoid problems that arise in residential housing.

1- Schmit, July, and Barbara Hansen. "More than 500 Cities See More Homes Become Rentals - USATODAY.com." News, Travel, Weather, Entertainment, Sports, Technology, U.S. & World - USATODAY.com. USA Today, 7 June 2011. Web. 30 June 2011. <http://www.usatoday.com/money/economy/housing/2011-05-30-renters-owners-census_n.htm>.

2- Glantz, Aaron. "Fighting Eviction by Breaking Back In." The Bay Citizen. 19 May 2011. Web. 30 June 2011. <http://www.baycitizen.org/housing/story/fighting-eviction-breaking-back/>.

Arizona Residential Landlord Tenant Act- http://www.azsos.gov/public_services/publications/residential_landlord_tenant_act/Residential.pdf

Hard times for some equal great rentals for others.

2011-06-08T14:08:00.000-07:00

The real estate market is being dominated by rentals! Investors are flocking from all over the World including Canada, Australia and China to scoop up the homes in the phoenix Arizona metro area. Foreclosures and short sales make it very affordable for those with extra cash lying around to purchase a property for $100,000 or less which would have sold for more than $200,000 during the housing boom.

According to an article recently published in the Arizona Republic, “the regions home ownership has fallen back to 1997 levels in some cities, including phoenix, 30 to 40 percent of all homes occupied are rentals” ₁

Why the swing in the rental market? The republic article illustrates this by citing an example of a family with a $3,000 mortgage payment who could rent a comparable property in the same neighborhood for $2,000 per month. In the past, you scarcely heard about foreclosing on a home. Recently however the term “strategic default” has grown into our vocabulary.

So why would someone choose to invest in real estate now after all the bad that happened during the boom. For one, the rate of return can be high; many are obtaining 10% returns on their investments, far above what you may find in other investment avenues. Furthermore you can have more control over a home. You can lease it, manage it yourself, and choose your own property management company to manage it for you, live in it part time or sell it.

With all of these benefits it’s no wonder many are still investing in real estate.

1- Reagor, Catherine. "Metro Phoenix Rental Homes Dominate Housing Market." Arizona Local News - Phoenix Arizona News - Phoenix Breaking News - Azcentral.com. The Arizona Republic, 18 May 2011. Web. 02 June 2011. <http://www.azcentral.com/arizonarepublic/news/articles/2011/05/18/20110518phoenix-rental-housing-market.html>.

Making it in the long run: A guide to achieving success in real estate investment part 2 By: Nick Stratton- Director of New Accounts Brewer Caldwell Property Management

2011-05-05T14:03:00.000-07:00

The 2 half of this article is still based upon the article by Jean Folger titled 10 Habits of Highly Effective Real Estate Investors.₁To view this article please use the citation listed below.

6- Stay Educated- "One of the most powerful tools for empowering individuals and communities is making certain that any individual who wants to receive a quality education can do so."-Christine Gregoire-₂ New laws, changes to old laws are constantly happening. One can stay ahead of the curve and prepare themselves for these changes through education. Industry journals, professional conferences, and application of wisdom from industry experts will allow one to achieve their goals.

7- Understand the Risks- Investors may only look at the “best case scenario” of their portfolio rather than looking at both ends of the spectrum. If you own an investment home, or are looking to purchase an investment home to rent, consider the following examples of things that could happen.

· Tenants may be evicted

· Home needs some cosmetic repair including carpet, paint and yard maintenance.

· Air conditioning needs repair (very important during summer months)

· Home sits vacant for 2 months.

While these are important issues to consider; note that planning ahead, proper tenant screening, and working diligently with professionals can lower the possibility of these things occurring and ensure positive outcomes in the future.

8- Invest in a Reputable Accountant
The Small Business Jobs Act which outlines accounting practices owners need to be aware of is one example of changes in taxes. A reliable accountant will stay on top of laws such as this one. He/She will not only help you during tax filing season, but can counsel with you on how to make the most of tax benefits or breaks the government gives.

9- Find Help When They Need It No matter the issue, if you don’t know how to do something, find a trustworthy individual who does. You will save more time, money and energy employing this method, than doing it our on your own. My father always says, “Don’t be so busy saving a penny that you can’t make a dollar.”

10- Build a Network
A chain is only as strong as its weakest link. Buyers will agree; a detailed home inspector, diligent title agency and reliable realtors can make purchasing any home simple and stress-free. There is no need to re-invent the wheel. From the article₁:

A network can provide important support and create opportunities to a new or experienced real estate investor. This group of associates can be comprised of a well-chosen mentor, business partners, clients or a non-profit organization whose interest is in real estate. A network allows investors to challenge and support one another, and can aid significantly in advancing one's career through shared knowledge and new opportunities.

1-Folger, Jean. "10 Habits Of Highly Effective Real Estate Investors." Investopedia.com - Your Source For Investing Education. Web. 04 Apr. 2011. <http://www.investopedia.com/articles/mortgages-real-estate/10/habits-of-effective-real-estate-investors.asp>.

2- "Christine Gregoire." Great-Quotes.com. Gledhill Enterprises, 2011.
2 December. 2011. http://www.great-quotes.com/quote/166663

Making it in the long run: a guide to achieving success in real estate investing part 1. by: Nick Stratton

2011-04-04T16:00:00.000-07:00

The majority of this article as well as the following article will be based upon an article from Investopedia.com titled 10 Habits of Highly Effective Real Estate Investors by Jean Folger.₁ This first portion will summarize her first 5 effective habits, adding additional insight and or other sources to further support these effective habits. To view the full article, see the citation listed below.

1- Treat investments as businesses: In a book by Michael J. Glauser about non-profit organizations, it states that the difference between success and failure stems from applying this principle.₂ Good businesses and investment returns do not happen by accident; they are the product of hard work, goal achieving, effective planning, and careful analysis. For example, some owners forgo analyzing their investment costs when they wait to achieve a high rental price rather than pricing their home to rent out quickly. As a result, they lose another month of rent over an extra $50-$75 dollars a month which equals less return than if the landlord had priced their home correctly based upon market conditions.

2- Know their markets: the saying goes “knowledge is power” which certainly applies to knowing where and when to invest in real estate. Although no one can predict the future, there are reports and indicators that can guide one who invests in real estate. For example, a recent article in Forbes.com ₃ highlighted economic areas in the U.S. that are declining. Other sources may include local or national reports such as the Cromford report ₄ or Case Schiller index. ₅ Careful study of historical figures as well as discussions with local professionals aids in minimizing risks.

3- Maintaining High Ethical Standards: Acting ethically will do more in the long haul than taking advantage of situations or people to get ahead quickly. Since investing wisely involves many parties, the stronger these relationships, the greater your chance for success. One can not build strong relationships without high ethical standards.

4- Develop a focus or Niche: Most businesses expand because they developed their core competency first. As you perfect your business model, you will provide yourself with the highest rate of return on your investment. You can then branch out into other areas of opportunity with more capital than trying to tackle it all with less. Many companies buy out their competitors or invest in other fields beyond their expertise with this strategy.

5- Strive to be good customer service representatives- Whether working with associates, business partners or clients such as tenants; great customer service keeps relationships strong and business transactions smooth. When looking at partners, one should also ensure they value providing excellent customer service.

2-Glauser, Michael J. The Business of Heart: How Everyday Americans Are Changing the World. Salt Lake City, UT: Shadow Mountain, 1999. Print.

3-Brennan, Morgan. "Cities Where Economies Are Getting Worse - Forbes.com." Forbes.com. 16 Mar. 2011. Web. 04 Apr. 2011. <http://www.forbes.com/2011/03/16/cities-where-the-economies-are-getting-worse.html>.

4-http://www.cromfordreport.com/

5-http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us----

To prepare or not to prepare: What the Small Business Jobs Act of 2010 could spell out for landlords.

2011-03-08T10:54:00.002-08:00

The Small Business Jobs Act, signed by President Obama in September of 2010, has been the topic of much discussion and controversy among business owners. The act’s summary outlines positive effects such as “promoting entrepreneurship, providing access to capital, and encouraging investment in small businesses.”₁However, it also mandates that ALL Landlords’ collecting rental income, “be subject to the same tax reporting requirements as a business or trade.”₂More specifically, landlords will have to issue 1099’s to all businesses, parties and individuals who perform $600 or more on their rental property.

The 1099 form, already required from businesses and companies involved in real estate transactions, is used to help report income to the IRS. The new legislation now requires owners of small portfolios (one to two rental properties) to keep track of work or payments made to contractors.₃This even affects those who have a vacation home that is leased for part of each year. Although the senate has been working towards amending some of the business reporting aspects of the act, the general landlord reporting portion remains untouched.₄

Regardless of future changes, it may be wise to keep financial records of all expenses related to every rental property. For those who employ professionals to oversee their rentals, you may even want to verify they are following this practice. While this will place a greater burden on investors and small businesses alike; it appears to stay in effect for now; meaning for work currently being done or that will be done in the future, you might ask each contractor to fill out a W9 form (If performing $600 or more of contracted labor for the year). This can be retrieved directly from the IRS website. http://www.irs.gov/pub/irs-pdf/fw9.pdf

1-The United States Senate Committee on Finance. 5 Aug. 2010. Web. 23 Feb. 2011. <http://finance.senate.gov/legislation/details/?id=da799068-5056-a032-5229-92cebbd2b7a0>.

2- Hemingway, Mark. "New Law Creates Big Tax Headache for Rental Property Owners." Washington Examiner | Breaking News, Local News, & Political News | Washingtonexaminer.com. 04 Jan. 2011. Web. 15 Feb. 2011. <http://washingtonexaminer.com/print/blogs/beltway-confidential/2011/01/new-law-creates-big-tax-headache-rental-property-owners>.

3- Davis, Manny. "1099s for Landlords Included in Small Business Jobs Act." All Business. D&B Company, 10 Oct. 2010. Web. 14 Feb. 2011. <http://www.allbusiness.com/government/government-procedure-lawmaking-legislation/15166028-1.html>.

4- Russ Wiles. (2011, February 6). Tax rules put burden on landlords. Arizona Republic,p. D.1. Retrieved February 16, 2011, from Arizona Republic. (Document ID: 2261369311).

Investing in Real Estate; is it worth it?

2011-03-08T10:54:00.000-08:00

One can not look into the future without thinking about investing. We invest many ways including education to increase knowledge and power, health drugs to extend our years and even in clothes we wear in order to be noticed or perceived in a particular way. Many times these things are done very casually, with little or no thought.

However, when placing our assets in “typical” investments, we are generally more cautious and take more time deciding where to invest our money. Questions and skepticism arise such as, “In which avenue do I put my money?”, or “What will be the return on my investment (ROI)?” and “How much risk is involved?” When investing in Real Estate, the answers to these questions are often uncertain. Yet the timing of investing in Real Estate can help resolve concerns related to these questions.

We are in the middle of one of the most difficult economic times this country has known. However, for those able, it is also a time of great opportunity. According to a KPHO article from January 20^th, the Phoenix area had 4,500 foreclosures combined in the months of November and December.₁ This does not account for the short sales that have taken place in today’s market. The number of distressed home sales has driven property prices down, making home buying extremely affordable for big and small investors with mortgage rates at such incredibly low rates. Today, investors can lease a home for a greater amount (positive cash flow) despite the mortgage, taxes and insurance.

This window of opportunity with an abundant supply of foreclosures and short sales will not last forever. A recent article in the Inman news website stated that foreclosures in California, Arizona and Nevada had actually declined in 2010.₂ Although the last couple of months show a large number of foreclosures; eventually the market will return to normal. Indeed we are bouncing along the bottom of the market. Translation: Invest in Real Estate now when it’s more affordable than ever to minimize your risk and increase your ROI.

1-Berry, Jason. "U.S. Home Sales Skyrocket - Valley News Story - KPHO Phoenix.

" Phoenix News, Arizona News and Local Weather from KPHO CBS 5 News. 20 Jan. 2011.

Web. 24 Jan. 2011. <http://www.kpho.com/valleynews/26564890/detail.html> .

2- "Foreclosures Ease in Arizona, California, Nevada | Inman News." Real Estate News for Realtors and Brokers | Inman News. 19 Jan. 2011. Web. 24 Jan. 2011. <http://www.inman.com/news/2011/01/19/foreclosures-ease-in-arizona-california-nevada>.