Investment in land or assets for personal or business purposes can be profitable only when the asset yields good revenue. For that, the owner needs to maintain his assets in a top condition. But the owner might be busy elsewhere or he might not have the correct knowledge to maintain his assets well. Hence it is always advisable to take professional help. There are many property management companies in the market today. There are certain guidelines for the investors to follow before choosing a property management firm. These are • One should always prefer to select well established assets managing firms as they will already be acquainted with the local market. They will know the market value of a given asset and how much it can be sold or leased out for. These firms will be acquainted with the tenant mindset and hence are in the best position to advise the owner about the ways to enhance the value of a given asset in the eyes of a tenant. They will also be able to identify prospective tenants in a given area and will work towards attracting them. The established property management companies will also be well acquainted with the existing competition in a given area and new investors can take tips from them on how to tackle competition. • Before finalizing the contract with an assets firm it is always recommended to meet the assets managing professionals face to face and layout a systematic method of managing the asset. The maintenance needs of properties are different for each asset. It depends on the physical characteristics of the asset, the intended purpose of its use and the amount of money the owner is willing to spend on its maintenance activities. Having a face to face interaction and discussing about how the asset is going to be taken care of can greatly help in establishing a smooth rapport between the property management companies and the owners. • The owner should always try to take the feedback of the firm he wants to entrust the job of taking care of his asset. This he can do best by collecting information of the quality of services they provide from their existing clients. He can also read reviews of the firm in popular media and decide for himself whether he has the confidence that a given firm will take care of his assets well. Taking feedback from sources other than the representatives of the firm itself will give a clear picture about the positive and negative aspect of the property management companies that are under the purview of the owner. • The owners should take the services of those firms that are committed hundred percent to their clients. The assets managing personnel should be honest in their dealings with the owners and not mislead them about any thing in their tenure. For example some assets managing professionals keep advising the owners to replace old parts like doors or pipelines etc. with minor defects. Usually rectifying the minor snag is enough but the assets managing team of the property management companies might ask for replacing it instead because the parts replacement firms promise to give them a percentage of their profits if they get deals for them. Keeping these points in view will ensure the owner of a property some satisfaction from the firm that he is entrusting his assets with, at least at the beginning. Quality Assurance Quality Assurance Kamyar Shah writes about different topics including self storage, property management, secret shopping and management consulting issues. Article Source: http://EzineArticles.com/?expert=Kamyar_Shah
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Students can make good tenants & here’s why.
1. You can fit more of them into a house. A 3 bed house will frequently accommodate 4 sharers – and that’s without letting the cupboard! This is more intensive than a let to a single tenant or even a house of professional sharers which can have a potential benefit on the yields. (see the next section on potential returns.)
2. Students aren’t quite as fussy. Students particularly undergraduates have tended not to be as fussy as professional tenants. They are more prepared to put up with slightly outdated kitchens and colourful bathroom suites than design conscious professional tenants. However, landlords shouldn’t be complacent; with the advent of more and more private halls accommodation standards are rising.
3. Rent in advance. Some tenants or more accurately their parents will often pay upfront for each semester or term. This is handy for a landlord as they have the rent in advance with which to pay any mortgage or other costs.
4. Student tenants are bright. This in theory makes dealing with them and sorting out problems easier. Catherine Bancroft-Rimmer, author of The Landlord’s Guide to Student Letting comments “You do get exceptions,” “but once you’ve explained why you need them to do something they are usually quite willing to go along with it.” From my experience there is nothing worse than trying to resolve a problem with a thick tenant. The phrase “like pulling teeth” comes to mind.
Where do student landlords go for their landlord insurance?
The potential returns for renting to students are good. This is for several reasons. Landlords receive returns on their buy to let investments in two ways. Income from rent and from the capital appreciation of the underlying asset value of the property.
Renting to students can potentially generate a much higher yield than letting a property to a single tenant. The current average according to Paragon is just over 6% nationally although there are significant variations across the country. Student rentals have the potential to significantly out perform this and multi lets for professional tenants for several reasons:
Students are not as fussy. This means that they are prepared to live in areas not suitable for professional tenants and where capital values of properties are much lower. This potentially generates a much higher rental yield for landlords.
It is possible to let out more rooms in a student house generally thereby increasing the potential rent. For instance many student landlords who let a 3 bed house will let the lounge as a bedroom as well as increasing potential rent levels by 25%.
The latest research from mortgage lender Paragon shows gross rental yields for the market as a whole averaging 6.3 per cent.
John Heron of Paragon says its figures suggest student properties typically enjoy a yield premium of around 27 per cent over the market average, putting student rental yields at around 8 per cent.
“There is a definite premium over renting to a family, as more sharers means higher rental density,” he says. “Student properties are also often in more modest parts of town.”
Research carried out by Landlord Mortgages in 2007 suggested that it was possible to obtain gross yields of over 9% in some parts of the country.
Yields if anything are rising. This is because as capital values fall, rents are still climbing as can be seen from the recent survey by Accommodation For Students on rent levels.
Research by the Halifax in the summer of 07 suggested that University towns have outperformed other towns in terms of house price growth.
The top 20 university towns also trade, on average, at a premium of £73,005 (or 37%) to the average UK house price. On average, university towns trade at a premium of £3,745 (or 2%) to the average house price in their county, with an average premium of £39,417 (or 20%) to the average UK house price.
If this out performance continues then there is some potential for an investment in a University town doing better than the UK average. However, Property Hawk would caution landlords of drawing to strong a conclusion from these figures. It’s more important to concentrate on the characteristics of the individual property and the immediate area in order to generate good future growth prospects.
Type of property to go for
Students generally prefer to go into Halls for the first year after which they then look for accommodation in groups of 4 or 5. Our research shows that different student groups have varying accommodation requirements. Post graduates for instance frequently prioritise a peaceful working environment and their demands are very similar to that of professional renters. Undergraduates are more likely to request accommodation located close to entertainment facilities and town centres and are more willing to live in larger shared properties.
Location is often a key factor. Students like to be near each other.
“If you can find out where the ‘cool’ bars and places to hang out are; then a property close by will definitely have a marketing advantage. Essential is that your property has good access by public transport to the University campuses as well as the night life and basic shops and services. Not all students have cars!”
A three bedroom property is probably ideal. This is because with a little bit of work, it should be possible to convert one of the ground floor rooms to an additional bedroom thereby allowing you as the landlord to accommodate 4 students. If you provide accommodation for 5 or more students, then you will very likely have to obtain a licence for your property as a House In Multiple Occupation (HMO). This in itself is not a disaster in that it will probably only cost a couple of hundred pounds from the local authority. However, what could be more difficult is that in order to obtain the licence the Local Authority may insist on certain minimum standards in the property. Examples of this are sinks in every bedroom along with other expensive fire safety measures. These works will not only be costly but potentially they will detract from the attraction of your property to the owner occupation market when you come to sell. To avoid this most student landlords are best advised at looking to keep the maximum number of student renters to 4. The exception to this might be where a landlord was looking at making it into a more involved commercial undertaking in which case buying an already licensed HMO would probably be cheaper and make more sense.
Victorian terraced properties often provide ideal student accommodation because of the generous room sizes. Large spacious rooms are particularly appealing to students as these are often more than just a place to sleep. In theory they will be places of study and also their private space to retreat to when all the partying and communal living gets too much! Landlords should therefore look for properties with 3 generous double rooms and one living room that can be converted to this.
Financing and insuring your buy-to-let investment
One of the biggest challenges that landlords face when looking to rent out to students is that they very often require a mortgage that covers HMO (house of multiple occupancy) status. This type of mortgage is required for any house where there are three or more tenants who form two or more households, and in order to realise the greatest profit from their property most student landlords rent houses to more than three tenants. The difficulty with finding a mortgage which allows a landlord to rent out a HMO is that currently less than ten of 150 mortgage providers allow for this criteria. Furthermore, lenders often request that further criteria should be adhered to, for example some HMO mortgage lenders will insist that a landlord must demonstrate a certain amount of Buy to Let experience before entering this sector, consequently this is not an area that a novice Buy to Let landlord could easily enter.
Michael Algony of Mortgages For Business says that some mortgage providers turn their noses up at student tenants and will not lend on buy-to-let properties let to these type of tenants. Its therefore vital for landlords to ensure that their lender is prepared to lend on these types of tenancy before pursuing an application. Landlords may be best seeking some expert advice.
Insurance is also an issue. Finding the right landlords insurance is essential as not all insurance companies are keen on student tenants and they may impose higher excesses or charge higher premiums where students are involved. It is absolutely essential to ensure that a landlord’s property insurer is fully aware of the position if you let to students. This is because many insurers consider that the type of tenant to be a “material fact”. This means that if there is a claim and you have not disclosed this, they can quite legitimately seek to repudiate a claim.
There are obviously some pitfalls of renting to students and it is as well to be aware of these before a landlord seriously considers investing.
Competition – renting to students in some areas is a very competitive market. Some areas are already oversupplied according to Simon Thompson Director of Accommodation for Students.
“Leeds is quite overpopulated with student accommodation, as are the Fallowfield and Withington areas of Manchester.”
Universities and increasingly private developers are constructing purpose built halls of residences. These aim for the top end of the market but none the less it is worth a landlord talking to the local planners to find out what is in the pipeline.
Damage – some of the nightmare stories of the young ones may be exaggerated about the damage caused by wild student parties however, it is a reality that renting to young people away from parental control for the first time has its risks. One way of avoiding the risk of bearing the costs of damage is to ensure the students have a guarantor.
Voids – students drop out. Although there is a great demand for student rental property, it is not uncommon for students to drop out from their course. The impact on you as a student landlord will vary depending on how the tenancy has been structured. If the tenancy is a joint tenancy then the other student tenants will be responsible for paying any shortfall in individual rent whilst they find an acceptable replacement tenant. However, if each room is let separately with a individual tenancy agreement with each of the tenants, then this means that you the landlord will not receive rent whilst the room remains unoccupied. Clearly a landlord should generally go for a joint tenancy for certainty, whilst the other approach gives both parties more flexibility.
The other aspect about renting to students is that their period of occupation is generally only for the academic year which is only 9 months. The academic year finishes at the end of May and many students will go away for the summer and decide to rent somewhere else on return. Therefore a landlord can only count on rent for 9 months of the year. It may be that student tenants decide to stay for several years. In this case they will continue to pay rent during the Summer break in order to retain the property. Sometimes a landlord will negotiate a reduced rent during the Summer in order to retain the existing tenants. The upshot is that a landlord needs to factor in a void period into their investment calculation.
Chris writes for the landlord site PropertyHawk which provides incorporates free property management software that enables landlords to track all their financial data relating to their portfolio. It allows users to print tenancy agreements and other forms FREE FOREVER. The site generates a real time rent book for each property as well as calculating a landlords tax liabilty. The service is totally free to use at http://www.propertyhawk.co.uk
Article Source: http://EzineArticles.com/?expert=Chris_Horne
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Are you House Poor?
The great American Dream has always revolved around owning a home. Sure, having the 2.3 kids, the cushy corporate job and the stylish car to drive to work everyday are part of the myth, too, but nothing quite summed up Americana quite like the white picket fence. But if recent economic numbers are any clue, this dream is becoming a nightmare for many in the US.
According to date released by the United States Census Bureau, an increasing number of homeowners are spending a larger and larger amount of their incomes on housing than in previous years. People in 49 out of 50 states reported an increase. The only state that didn’t, Alaska, spent the same amount. The report showed that people are spending around 21 percent on their housing needs, up from 19 percent in 1999.
This is a huge problem for first-time buyers who may now be priced out of housing markets all across the country. Economists point to rises in home prices in the last 7 years, as well as higher interest rates, coupled with stagnant wages over the same period.
While everyone seems to be in agreement that the housing “bubble” is either bursting, or getting ready to burst depending on where you live, housing prices are still up a remarkable 32 percent since the beginning of the decade.
Household incomes, on the other hand, haven’t done a very good job of keeping up. The same Census report showed that income has actually dropped, not risen, over the past 7 years, down 2.8 percent.
Maybe the worst news in the report was the percent of people who allot more than 30% of their income for housing. The numbers are up almost 8%. National guidelines suggest that more than 30% of household income for housing is excessive and not financially healthy.
What does this mean in the long run?
Most experts agree that until income can catch up to housing, the real estate market will remain lifeless. And since real estate is one of the biggest drivers to the overall economy, a weak real estate market means a weak economy.
Things appear to be the worst in California. Not only do they have the most expensive real estate in the nation, 48 percent of California homeowners spend more than 30% of their income on housing related costs.
Until income can begin to grow as quickly as the real estate market, this trend shows no signs of slowing down. Which could mean that the upcoming real estate slump could last much longer than anyone predicted.
Credit History can Bite you in the Butt
A recent study has shown that the number of people who pay more than they should for their mortgage is rising. And if you look at the surface, the number one reason this rise is happening is because of race.
A study done by the Federal Reserve shows that around 55 percent of African-American borrowers pay higher than normal interest on their mortgages. But it’s not just the African-American community. The same study showed that 46 percent of people who identify as Latino also pay more due to a higher than average interest rate on their loan. As for Caucasians, only 17 percent of borrowers fell into that category.
The overall numbers of people who pay more than the average interest rate is up considerably, from 11.5 to 24.6 percent in the last two years.
While these numbers appear to be caused by rampant racism amongst seemingly all lenders, there might be another explanation. The connection between the interest rate offered and the borrowers credit history.
The interest rate that is offered on a mortgage loan is directly proportional to the amount of risk the lender feels that they are taking. If you have sparkling credit, the chances of you getting the best possible interest rate are fantastic. On the other hand, if you have declared bankruptcy or if there are any other black marks on your credit history, the chances of you getting a great loan are almost zero.
Another possible culprit is the rise in speciality loans that have gained in popularity over the last few years. While the idea of buying a house without a down payment was once a rarity, these days, it’s fairly common. And in almost all cases when this happens, the interest rates are higher because the lender is taking an additional risk by not having a down payment.
Sometimes, home buyers are agreeing to let the closing costs associated with buying a home be figured into the interest rate. Again, this is a less than honest way for a family to buy a home with very little to no cash on hand. The catch is, of course, that you will end up paying significantly more over time than if you had just paid the closing costs up front.
While no one can suggest that racism is dead in America, it is possible that while African-Americans and Latinos pay more for their mortgages, it could be caused by various other factors that may or may not be connected to a persons’ race.