The Pros and Cons of Buying an Investment Property

Property Management Strategies for New Homeowners

The popularity of investing in real estate in Worcester County Ma has increased as people move away from the volatility of other investment strategies. Buying an investment property for long term financial savings can have its rewards, but like any investment, there are advantages and disadvantages. What should you consider before buying an investment property?

Pros:

Buying real estate is a good long term investment. Property value rarely declines and is a good option to help fund retirement. Many investors who are intimidated by investing in equities will feel more comfortable with investing in brick and mortar.

Tax benefits can be claimed on your tax return. Any work carried out on the property such as maintenance or repairs can be claimed as tax deductions. If the cost of running the investment property exceeds the income derived from it, the difference can be claimed as a tax deduction. The interest paid on your loan to cover the cost of the investment property can also be claimed.

Tenants provide a regular income. One main attraction of owning an investment property is that tenants help to pay off your investment. A common lease arrangement in some areas includes a clause for rent to increase as per inflation. This factor is appealing, because as time goes on, your loan will be decreasing, but your rental income will be increasing.

You can increase the value of your investment. Unlike other forms of investments such as stocks and bonds, an investment property can be constantly changed to help increase its value. Changes to a property such as painting, landscaping, repairing a roof, replacing fixtures and fittings will all add value to a house. An investor can be more hands on in controlling the way the property is managed, therefore helping to maintain the value of their investment.

Cons:

Not all tenants are responsible. Unfortunately, we have all heard of horror stories with bad tenants. If you are unlucky to have a tenant that causes problems on your property, the consequences can be costly. They can damage your property, be late in paying rent or not pay at all. Disputes such as these can take months to negotiate. That’s why it is so important to screen out poor risks. You want to find good tenants that are responsible. What’s often not mentioned is good tenants also want good landlords. It is a two way street.

A vacant property means no income. There may be times when you are unable to secure a tenant. Mortgage repayments will still need to be met; therefore any shortfall needs to be paid from your own savings.

Maintenance can be time consuming. As with any house, maintenance is required to keep the property in order and stop it from declining in value.

Real estate is a non-liquid asset. An investment property is a long term financial plan. Unlike shares, they cannot be quickly converted to cash. There is always the uncertainty of how long it will take to convert your investment into cash.

The most important rule with any type of investment is to do your homework. Research the market trends in the location you plan to buy an investment property and work out your potential rate of return. Investing in real estate can be a valuable part of a balanced portfolio to help your financial security in retirement.

First Time Homebuyers & The Mortgage Pre-Approval Process

Most new buyers might be a little intimidated when they begin a property search. Words like escrow, PMI (Private Mortgage Insurance), and pre-approval sometimes can overwhelm an already stressed out buyer.

A mortgage pre-approval is something that you get from a lender that simply says you are approved for a mortgage before you have selected a specific property. The process of pre-approval starts with you filling out a loan application and providing a lender with some income documentation. The lender will run a credit report and look at your rating, but many times lower ratings will not disqualify you, especially if you are a first time buyer.

The bank’s procedures are the same in the preapproval process as they are with a traditional mortgage application. They will then notify you that you are pre-approved for a mortgage, and they will tell you the amount of money that you can borrow. A good realtor generally has lenders they work with that can navigate difficult lending circumstances.

The advantages of pre-approval

One of the big advantages of going through the pre-approval process is you understand your budget and what you can afford. An additional and more important benefit in pre-approval is realtors need that information to help you meet your goals. An experienced realtor will always refer you to a lender before a home search begins so that you are not looking at properties that you cannot afford.

More Negotiating Power

A pre-approval gives you, the buyer, advantages in negotiations. Without pre-approval sellers only see uncertainty and ambiguity and are usually not willing to discuss any offers.

With a pre-approval in hand, a seller knows that your offer is backed by the lender, and that makes you more valuable. Being pre-approved is automatically going to give your offers a lot more weight when it comes to negotiating with sellers. Therefore, your odds of getting the house that you want are going to improve.

First Time Home Buyers, We can help you!

CALL S & R PROPERTIES NOW 508-892-7596

If you’re thinking about buying your first home, you probably have a lot of questions – we’re here to help.

So you want to buy a house but you don’t have a ton of money saved up.

There are a ton of programs out there, both locally and nationally, to help first-time home buyers get a foothold in the housing market. Massachusetts, in particular, has one of the best first-time home buyer programs in the nation.

Benefits of a first-time home buyer program

Low down payments: In general, the biggest advantage of these programs is that they allow first-timers to buy a house with a lower down payment — such as 3%, or even as low as 0% of the home’s purchase price.

Flexibility: Other benefits include slightly looser or more flexible lending criteria — meaning you could qualify for a mortgage with a lower credit score or higher debt levels than traditional lenders might accept.

Real Estate Property Management for Retirement Investment

Real Estate Property Management has it’s own challenges. How Can You Make an Excellent Investment for Your Retirement.

The good news is that most people are living longer and healthier lives than at any time in history. The less welcome side of this is that putting an adequate pension plan in place is more important than ever yet harder to achieve as the number of years it needs to cover increases. Traditional investments such as the 401K still have their place, of course, but it’s always sound advice to build a mixed portfolio. A prime candidate for long-term investment is property, but with that ownership comes real estate property management considerations. Here are seven compelling reasons to consider property as part of your pension planning.

Better Returns for the Risk

If history is any guide at all, nothing beats real estate for dependable appreciation over the long term. Although there is a cycle of property price rises and falls (and currently prices in many areas remain depressed), the underlying value has always increased with time. Historically, well-managed real estate shows an excellent balance of risk and return, compared to investing in stocks, for example.

Tangible Assets

Few pension plans offer anything of real, solid value outside the intangible realms of paper money. Financially based investments can go down as well as up, sometimes dramatically so, and although there are products available which guarantee at least some return, the price paid for this security is lower performance. In contrast, real estate retains an integral value which isn’t quite so subject to the whims of the financial markets. People will always need somewhere to live, and a well-chosen property will hold its value across anything but the worst financial turmoil.

Continuous Income

Even if you’re buying property primarily as a pension investment, there is the opportunity to earn income from it during the meantime. By renting out the property, you can use the resulting rental income to pay its mortgage, invest elsewhere, or simply to make your life more comfortable. Either way, property offers the prospect of earning continuous income while building a valuable asset for the future.

Easy Management

For a reasonable fee, you can hire a real estate property management company to handle apartment rentals and the upkeep of your property in the years before you retire, making this an exceptionally hassle-free way of investing. You don’t need to keep an eagle eye on global markets while worrying about the performance of your individual investments.

Straightforward and Understandable

Annuities and other retirement plans can be arcane instruments, and in many cases, you’re relying on your pension adviser to make sense of it all. In contrast, property is a straightforward investment, and paying attention to average prices gives you a clear idea of where you stand at all times.

Easier Access to Your Capital

Even if you invest in property for the long term, you have the option of selling it at any time, whether or not you’ve reached retirement. Few investments offer such easy redemption before the expected maturity date — although of course you’ll need to find a buyer.

Inheritance Issues

Unlike an annuity, a property can be passed on to your family, either as a bequest or a gift. Everyone hopes for a long, happy, and healthy retirement, but it’s good to know that your family members will be the ones who benefit if the worst happens, rather than the coffers of an insurance company.

Given the importance of proper retirement planning, discussing your options with a fully qualified adviser is always the best option. Nonetheless, if until now you’ve only considered investing in traditional pension plans, maybe it’s time to take a closer look at the possibilities of property.

5 Tips For Finding a Great Tenant for Your Rental Property in Worcester County Ma

Property Management Rental Ownership Advice from S & R Properties

Owning rental property can jumpstart your financial goals and let you retire years early. It can also be a disaster. To avoid horrible tenants, damaged houses, and unpaid rent, you need to effectively screen prospective renters. Here are five tips to make sure you find the best tenants possible for your properties.

Take Great Pictures–and Video–of Your Rental Property

High-quality tenants want to see high-quality properties. Don’t post a few grainy exterior shots of your rental home and expect to get applicants knocking on the door. Take high-resolution pictures and a walk-through video of the entire unit. Even if your property has a few less-than-desirable features, it’s better to be upfront about it. If you try to hide anything, smart tenants will figure it out before signing a lease.

Evaluate Their Texts and Emails

Before you schedule an in-person look at the apartment, try to exchange a few emails or text messages with the applicant. They don’t need to use perfect grammar, but they should demonstrate basic business skills. If they’re already asking you to waive the security deposit, change the day rent is due, or allow pets in a no-pet unit, they likely won’t be model tenants. Save yourself the headache and wait for a different applicant.

In-Person Meetings

It’s inconvenient to meet individually with prospective tenants, but this is one of the best ways for you to get a sense of character from applicants. They should wear clean clothing, they should show up to the appointment on time, and they should not bring adults who will not be living in the apartment. If your applicant shows up with a romantic partner or family member, they may be planning to move that person into the unit without notifying you. You’ll have to use your intuition. If you get an odd vibe from the applicant, take that as a sign to move on to the next tenant. You could be stuck with this person living in your unit for years, so put in the effort to find a good match.

Run a Credit Score

The easiest way for you to learn about a stranger’s personal finance skills is to run their credit score. You want a tenant who is responsible enough to pay their rent every month. If they have a credit score of 600 or higher, you’ll know they’ve paid their bills in the past. A few late payments or a medical bill in collections aren’t going to lower a tenant’s credit score below 600; that takes a consistent pattern of skipping out on financial obligations. You should let tenants know in your initial online postings that you require a credit score of at least 600. That will lower the number of bad-fit applicants who contact you.

Ask About Criminal History and Conduct a Background Check

You’re not running a background check to eliminate any tenant with a criminal history. That might be illegal in your state, and it wouldn’t be a good business practice. Someone with a misdemeanor from college pranks or recent arrests from political activism can still be a reliable tenant. Let potential applicants know that you will run a state and federal background check but that you’re willing to work with them. If a tenant is honest about their history, has non-violent offenses, and demonstrates a current sense of financial reliability, move forward with their application.

Your job as a landlord is to get the best-quality tenant in your rental unit that you can. It may seem harsh to use these metrics to evaluate applicants, but you have limited options for screening people before giving them access to your expensive investment. By using these five tips and clearly communicating your standards to potential tenants, you can get great renters with a minimum of fuss.

Maximize Income with a Property Management Strategy in Worcester Ma

Make the Most of Your Investment – How Property Owners Can Maximize Their Real Estate Rental Incomes and Boost Their Profits

Investing in real estate in Worcester County Ma. is a great way to diversify your portfolio and build wealth for the future. Owning rental property and being a landlord is not right for everyone, but if you know what you are doing and understand what to look for, you can make a handsome profit down the line and enjoy a steady stream of income for many years to come.

As with any type of investment, it is important to maximize your returns and look for ways to bring in as much cash as you can. Maximizing your rental income and boosting your profits is not always easy, but once you get it right, you can enjoy the extra money month after month and year after year. Employing sound Property Management methods is essential to your success.

Choose the Right Neighborhoods

The nature of the neighborhood will have a huge impact on your ability to maximize your rents and raise your rates as your own expenses go up. If you buy in an economically depressed area, you may find yourself stuck with low levels of rental income and high repair rates, especially if you focus on the low-income segment of the rental market.

That is not to say you cannot make money in these areas – many landlords are doing just that. It just means that the job is that much harder, and the hassle factor can make renting there a bit more difficult.

That is why so many property investors choose to focus on up-and-coming neighborhoods instead of economically depressed ones. Buying rental units in places where growth is taking place is always a smart move, since buyers can benefit from market appreciation and higher rents down the line.

Research the Local Rental Markets

No matter how nice your apartments are, you will not be able to charge $1500 rent in a neighborhood where $800 rents are the norm. It is important to research the local rental markets and set your own rates accordingly.

If you are unable to make a profit on those $800 monthly rents, you may need to look elsewhere for a better investment opportunity. If you are happy with that level of rent for the time being, you can invest in a solid property, continue to make improvements and succeed with the local market.

Keep in mind that public programs may be somewhat limited in the amount of rent they are willing or able to pay. If you plan to incorporate Section 8 and other programs into your rental income stream, you will need to research those markets as well. Many property owners actually like these programs, since a good portion of the rent is guaranteed by the government. Other property owners find that the hassle factor is more than they like. You will need to make up your own mind and decide which mix of public and self-pay renters works best for you.

Renovate and Decorate

Making consistent and smart property improvements is one of the best ways to maximize your rental income and boost your profits over time. You may start with a block of similarly-appointed apartments, all charging the same amount of rent. As time goes by, however, you can make strategic improvements that would justify higher rents and attract a better class of tenants down the line.

When a long-time tenant moves out and you clean the apartment, consider going one step further and doing a bit of renovation. Instead of merely cleaning the same old carpets, you could take them out and replace them with upscale hardwood floors. You could upgrade the kitchen countertops from Formica to granite, or install new stainless steel appliances.

Suddenly you have an upscale apartment that will appeal to young professionals in the area. Repeating the upgrade process each time a tenant moves can help you rebrand your apartment building and boost your rental income over time.

Investing in real estate is a great way to build your wealth over the long term, especially if you make strategic investments in the future of your business. Understanding the factors that affect market rents, from the nature of the neighborhood to the amenities on offer, is one of the best ways to maximize your income and your return on investment.

Real Estate Tips- Sell your home faster in Worcester County Ma.

Real Estate Selling advice for Worcester County Ma.

Want a Fast Sale? Upgrade Your Home’s Exterior.

Everyone wants a quick sale when trying to offer a home for sale in Worcester Ma.

Most home sellers are going to wait weeks if not months before their property actually sells. Real estate agents understand and promote the benefit of staging the interior and the exterior of the home for a fast sale and with good reason. The appearance of the outside of a home enhances what’s commonly referred to as curb appeal. It’s an important part of enticing potential buyers to step inside for a long look. If you want to sell your home quickly, take the time to upgrade one or more of its exterior features to increase its attractiveness.

Major Improvements

Unless the building actually needs a major improvement, you probably won’t be making any of these changes. However, if the home is in need of any of the following repairs, you should make them to improve your chances of selling quickly. A good Property Management Company can help you and some offer flexible options to support you.

A new roof
Replacing cracked sidewalks or exterior steps
Repairing a driveway
Porch or deck repairs If you need to close settlement by a certain date, you can easily make a few exterior improvements to encourage buyers to consider purchasing your property. Many of the upgrades simply provide a facelift that makes your property more attractive, while some of them offer functional enhancement along with an element that instills beauty to the property. You can discuss your thoughts with your real estate agent. As an experienced professional, this individual might be able to tell you which changes could lead to a quicker sale.

Exterior enhancements that you should consider include:

Adding landscape lighting to accentuate architectural details and to promote
safety
Painting wooden shutters and/or window frames
Pointing brick exteriors
Getting professional landscaping
Installing a border fence
Creating a rock garden
Cleaning and staining the deck
Installing a security door

Many of the tasks that you complete when selling a home will make little difference to some buyers. In general, however, taking the time to improve the appearance of the home on the outside as well as on the inside can help to promote a faster sale. A home that is move-in ready is always more desirable than a home that needs a lot of work. Take the time to make necessary changes to the outside of your home and consider a few cosmetic ones, particularly if you are in a hurry to sell.

S & R Properties of Leicester Ma serves all of Worcester County.

Five Things You Must Do Before Buying a Home

Leicester Ma Real Estate-Serving all of Worcester County

Buying a home for sale is probably the most significant financial investment you will ever make. Before you take the leap, you need to do your homework and make sure you are really ready. Here are five things you need to do before you call a realtor and start shopping for a home.

#1. Check Your Credit Score

Even if you think your credit profile is spotless, it is important to pull a copy of your report and your three-digit credit score. Credit bureaus make mistakes all the time, and an error on your credit report could have profound implications on your home search.

If your credit file contains errors, you could be charged more for your mortgage, or even be turned down altogether. If the black marks on your credit profile are legitimate, knowing where you stand now will give you a goal to work toward. Improving your credit score before you start shopping for a home is a move that could save you money for decades to come.

#2. Set (and Stick to) Your Price Range

Knowing how much home you can afford is absolutely vital. Do not rely on the real estate agent to set a price range for your search – they may try to maximize their commission by pushing you into a pricier property. Instead, do the calculations yourself – there are plenty of mortgage calculators where you can run the numbers.

Do not forget about the other associated costs of home ownership – things like real estate taxes and home repairs. Those costs can really add up, and your budget needs to be big enough to handle them. It is better to buy a home for less than your maximum price rather than stretching to make the payments on a more expensive property.

#3. Research the Local Neighborhoods

You may already know where you want to live, but it is still a good idea to research some of the local neighborhoods. Things like crime statistics, the performance of the local school district and real estate taxes will have an impact on your quality of life, but those factors will also influence the future value of the property.

If you have a family or plan to start one, the quality of the local school district may be your biggest concern. If the schools are bad, you may need to budget for a pricey private school, and that will influence how much you can afford to spend on the monthly mortgage payment.

#4. Create a Home Buying Checklist

Before you start shopping, you should create a checklist of things you want. You may want to make a list of must-haves and nice-to-haves to make shopping easier.

The home you buy does not have to meet every wish you specify, but the closer to the mark you get the less renovations you will have to do later. Do not be in a hurry to find the home of your dreams – it can take some time to find the perfect property.

#5. Have the Home Inspected

There is no substitute for a thorough home inspection. Whether you are buying a starter home or moving up to your dream home, you need to look for hidden damage.

Do not rely on the home inspection the seller may have done. It is important to have an independent home inspector check out the house and provide you with a full report. Depending on the results of the inspection, you will have gained some bargaining power – or avoided a costly mistake.

Buying a home can seem like a scary experience, especially if you have never done it before. Knowing that you are prepared before you start shopping can reduce your stress level and help you find a home that truly meets your needs – and your budget. Let S & R Properties help you through the process.

Three Essential Tips for Buying Your First Investment Property in Worcester County Ma.

Before You Buy Consider Some Practical Real Estate Investment Advice.

Buying an investment property in Worcester Ma and its surrounding towns is a great way to secure your financial future for the long term, but it is not a decision to take lightly. Aside from the price of the property itself, there are many other costs to factor in, and it’s easy to end up going way over budget to the extent you end up losing out. Before making any commitment, you’ll also need to study the local real estate market exhaustively. The following tips will help you get started on the right track:

Consider the Type of Investment

For most first-time property investors, a rental property tends to be the obvious option. However, investing in a property that you can profit from by renting it out to long-term tenants also requires a very specific set of market conditions. Most importantly, you’ll need to be sure you can get enough money from rental payments to cover any mortgage, insurance and maintenance costs while also leaving a healthy profit.

Yet another option to consider is buying a neglected property for renovation and resale. Such a project can net you an enormous profit, but it’s not something you want to risk getting into unless you know exactly what you’re doing. If you can organize your own team of tradesmen and carry out a lot of the work yourself, your profits will be much greater.

Find the Right Location

It shouldn’t come as any surprise that location is one of the most important factors when buying any property, but this is doubly true in the case of investments. You’ll need to find a neighborhood with a high appeal if you want to have any hope of getting a good resale or rental price. In the case of rental properties, it’s much safer to buy real estate in a good area where the likelihood of getting bad tenants and default on their rent is less likely.

When you’re investing in a property to renovate and resale, you’ll need to be able to see the potential in otherwise unattractive and derelict buildings. The best opportunities often come in the form of the worst-looking house on the street but, after plenty of work, and sweat equity it can be inviting to potential buyers. Knowing what updates to the property will yield the highest return is very important.

Before parting with any money or even making any offers, be sure to thoroughly examine the area first. I have managed underperforming properties because the owner was not familiar with the Worcester area market and overpaid, thus making it very difficult to stay out of the red.

If possible, get to know the location you are buying in and leave nothing to chance. Hiring a trusted Real Estate professional goes a long way to minimizing errors. Finally, consider buying in a growth area that is under redevelopment and increasing demand.

Factor in Ongoing Costs

It’s important to remember that there are many more costs involved when buying an investment property than the actual money you put down initially. For starters, all of the same costs involved in buying a home for your own use also apply, such as building insurance and conveyance costs. However, with investment properties, you’ll also need to factor in any additional taxes that might apply as well as ongoing maintenance costs.

When buying an investment property, particularly one that you plan to rent out, you’ll need to have plenty of additional savings available to pay for unforeseen problems. The last thing you want is to have a tenant calling you because of a major issue that you cannot afford to fix. As such, you should always have enough money saved up to pay for any unforeseen consequences without having to apply for emergency funding.

Final Thoughts

Investing in real estate can be extremely profitable, but it taking the wrong steps can lead to financial meltdown. You’ll need to have plenty of funding available as well as a contingency plan in case of things going wrong. As such, it’s always a good idea for first-time property investors to start small by buying a low-value but livable home that needs only a small amount of work and money spending on it to get a good rental return. Only once you feel comfortable with the marketplace and you have built up a large amount of capital should you consider expanding your property portfolio.

Don’t Forget to Check these 5 Crucial Factors When Doing a Final Real Estate Walk-Through in Worcester County Ma.

So, you’ve found your dream home. You’ve agreed upon a price and a professional home inspector has signed off on the quality of your purchase. Before the seller turns over the keys to you and relinquishes all responsibility for the home, you need to complete a final walk-through to ensure everything is in order. To make sure you don’t accidentally miss any problem areas, the following are five essential components you must check during this crucial inspection:

– Although it might seem ridiculous that you would have to check, be sure to check all light switches and electrical plugs when doing a final walk-through. Not only do you want to know what each switch controls, you also want to make sure there are no electrical issues prior to finalizing a sale. Carry an object like a hair dryer with you and plug it into every electrical outlet in the home.

– Ensure all ceiling fans are in working order, including bathroom and laundry room fans. Look for signs of moisture condensation around fans to make sure vents aren’t plugged and in need of cleaning.

– Air conditioning units and baseboard heaters should also be checked. Air conditioning repairs can be quite costly; if there’s a repair needed, you want to make sure the seller pays the bill. The same theory applies to heaters and ducting. Be sure you know the next due date for maintenance and that all warranty and maintenance records are turned over to you upon sale.

– Another no-brainer is to ensure all appliances are in working order. Are there any condensation leaks behind the refrigerator? Has the range hood fan been properly maintained? Unless you plan to replace all appliances once your offer to purchase has been accepted, you’ll want to double-check the condition of existing units.

– Confirm the quality of existing windows and that all are in working order. Can you open and close windows with ease? Are there condensation issues in between panes? Look for signs of wear and tear inside window frames to make sure the current owner hasn’t just recently cleared away signs of moisture or mold build-up.

The final walk-through is your last chance to make sure your new home is everything you hoped for. Failure to spot signs of trouble can mean you’re on the hook for any repairs. Don’t be unaware of the importance of this final act before you take possession of the home.

S & R Properties based in Leicester, Ma. has you covered. We have over 20 years of experience representing real estate clients throughout Worcester County Ma.

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