The nation’s largest mortgage lender, Wells Fargo, is now offering mortgages to home buyers with just 3% down via their new “yourFirst Mortgage.”
I’m assuming the new loan program is based on Fannie and Freddie’s 97% LTV program announced back in late 2014. And it appears to be geared toward first-time home buyers seeing that the name is yourFirst Mortgage.
That reads as your first mortgage, meaning your first home purchase as well.
The program is available for qualified first-time buyers, including low-to-moderate income applicants as well as the “diverse Millennial population,” which Wells points out is over two-thirds of first-timers these days.
I believe anyone who can demonstrate their ability to repay the loan can qualify for a yourFirst Mortgage if they haven’t owned a home in the past three years, or if at least one borrower on the loan hasn’t.
yourFirst Mortgage Only Requires 3% Down
Wells Fargo’s new 3% down home loan program
No median area income limits
Down payment assistance and gift funds permitted
Only loan option is a fixed-rate mortgage
The main selling point to this new mortgage is the 3% down payment requirement, which rivals the 3.5% down required from the FHA.
To make the deal even sweeter, and perhaps riskier if you like, your down payment and closing costs can come in the form of a gift or from a down payment assistance program.
In other words, you don’t need any cash to qualify, other than maybe some reserves to show you can make monthly payments going forward.
To offset this perceived risk, Wells Fargo is offering a 0.125% interest rate reduction if home buyers complete a homebuyer education course conducted by a certified HUD-approved housing counselor. So instead of a rate of 4.5%, you might get a rate of 4.375%.
Your down payment must be less than 10% to qualify for the rate discount.
You might also learn something about mortgages and homeownership, which could prevent default and/or foreclosure in the future.
Including renters and non-borrowing family members
And non-traditional credit that might not show up on a credit report
Requires PMI but might be able to get lender-paid in exchange for higher interest rate
Playing on the risky theme, the yourFirst Mortgage allows both household income and non-traditional credit.
So if you eschewed credit for much of your life, like some Millennials appear to do, you can still get approved for a mortgage via this program because everyday bills like tuition, rent, and utilities may be used in place of traditional credit tradelines.
Additionally, you’re able to use income from other occupants in the home (that aren’t co-borrowers), including family members and renters, to qualify for the loan.
But rest assured the loans will be “fully documented and underwritten,” so no new housing crisis here…
It appears that Wells Fargo is working with Self-Help, the company that helped launch Bank of America’s 3% down mortgage back in February of this year, known as the Affordable Loan Solution.
The yourFirst Mortgage does require private mortgage insurance because you’re putting less than 20% down. However, it might be built into the rate or lender paid.
I took a look at Wells Fargo’s rates today and they were advertising 3.75% on a 30-year fixed with borrower-paid mortgage insurance, and 4.375% with LPMI.
yourFirst Mortgage Features
3% down payment requirement
Down payment and closing costs can be gifted
Down payment assistance permitted
Property must be owner-occupied (I believe only single unit qualifies)
Loan is fully documented and underwritten
No income limits
Income from others in the household may be used to qualify
Loan type is 30-year fixed
Mortgage insurance required (can be lender-paid)
Minimum FICO most likely 620
Non-traditional credit may be used (utility bills, tuition payments, etc.)
0.125% interest rate discount for completing homebuyer education course
Inside: Are you thinking about moving out? This guide will help you figure out how much money you need to save and where to find affordable housing. Will $5k be enough to move out?
Moving out for the first time is a huge milestone. It’s a chance to start fresh, create your own space, and live on your own terms.
But it can also be a daunting prospect, especially when you’re trying to figure out how much it will cost.
You want to know if $5,000 is enough to move out?
But there are a lot of factors to consider before making the decision to move out, and we’ve laid them all out for you in this ultimate guide.
So whether you’re just starting to think about moving out, or you’re ready to start packing your boxes, read on for everything you need to know about making the big move.
How much money do I need to move out?
Experts recommend having at least $6,000 to $12,000 saved up before moving out.
However, it’s possible to move out with as little as $5,000 if you focus on knowing how to live cheap and have a stable source of income.
However, if you don’t have a job before moving out, the need for a huge savings account is huge.
How much money should I have if I want to move out?
The minimum amount of money required to move out will depend on where you plan to live and your living expenses.
Shortly you will learn factors to include initial moving costs, rental deposit, and ongoing costs like rent, utilities, and food.
If you are looking to move out in an HCOL area, then you will need more than an LCOL city. At this point in your life, it is important to understand HCOL vs LCOL and how it affects your finances.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What are the expenses you should consider when moving out?
Moving out on your own can be a daunting and expensive task.
There are many expenses to consider when budgeting for your new place especially when you are learning how to move out at 18.
This guide will help you estimate the cost of moving out and provide tips on how to save money.
1. Rent/Utilities
The cost of rent varies depending on the location and size of the apartment or home, with the median rental cost in the US being around $1700 per month.
Along with rent, utilities like electricity, gas, water, and internet can cost around $400 per month.
To save money on rent and utilities, consider finding roommates to split costs or negotiating with landlords for a lower rent.
Rent is your biggest expense when figuring out the ideal household budget percentages.
2. Rent Deposit
When renting an apartment, you will typically need to provide a rent deposit. This deposit is a sum of money paid upfront to the landlord to cover any damages or unpaid rent at the end of the lease.
The cost of a rent deposit can vary depending on the location and the landlord’s requirements, but it can range from $1,000 to $5,000 or one to three months of rent.
To save money on a rent deposit, consider looking for apartments with lower deposit requirements or negotiating with your landlord for a lower amount. A clean rental history will help you with this.
3. Moving Expenses
Moving out can be an expensive process, but with some planning and budgeting, you can keep costs under control.
When considering moving expenses, be sure to factor in the costs of moving truck, packing supplies, such as boxes and tape, as well as the cost of hiring movers
To save money on these expenses, try finding free packing materials on Buy Nothing groups or ask friends and family to help you move. You can also minimize your possessions and have less to move.
4. Renter’s Insurance
When moving out and renting a home or apartment, it’s important to consider getting a renter’s insurance policy to protect you from unforeseen events.
Home insurance, also known as renter’s insurance, is a special type of insurance policy that protects your property against losses or damage stemming from covered perils, including fires, storms, or theft. It can give you peace of mind and help you repair or replace your possessions in the event of unforeseen situations.
Insurance premiums are based on various factors, including where you live, how much you choose to insure, and your deductible. Your credit score and history may also affect your insurance rates.
5. Furniture and Appliances
When moving into a new home, it’s important to consider all the necessary expenses for furnishing the space. This includes appliances like a refrigerator, stove, oven, and microwave, as well as daily living items such as a mattress, table, and couches.
I remember when I moved into my first apartment by myself and there wasn’t a washer or dryer in the apartment. Just hookups. I had one of two choices: 1) rent from the management company for $35 a month or 2) buy new appliances with 0% interest for $35 a month. I choose option #2 and it saved me money in the long term.
To save money, consider buying used furniture from thrift stores or online marketplaces like Facebook Marketplace. You can also find plenty of free furniture if you are not picky.
By being thrifty and smart with your purchases, you can furnish your new home without breaking the bank.
6. Housewares
When moving out on a budget, it’s important to consider the essential housewares you’ll need to make your new place feel like home. Here’s a list of must-haves and their estimated costs:
By prioritizing these essential housewares, you can make your new place feel like home without breaking the bank.
Don’t forget to check out thrift stores and Facebook Marketplace for gently used furniture and household items. With a little creativity and resourcefulness, you can furnish your new home on a budget.
7. Internet and Phone Bills
The average cost of internet and phone plans varies depending on the provider and the plan you choose. However, you can expect to pay around $50 to $100 per month for internet and $40 to $80 per month for a mobile phone plan. In addition, there may be additional fees, such as equipment costs or activation fees, which can add up quickly.
To minimize these expenses, consider bundling services with one provider. Many companies offer discounts for bundling internet, phone, and cable services.
8. Credit Card Payments
If you thinking about moving out and are currently swaddled in debt, then you probably don’t have enough money to move out. If you have high-interest credit card debt, prioritize paying it off before moving out.
Automating savings on essential bills using Truebill can also help you manage your credit card payments while covering the costs of moving out.
Additionally, ensure that you have an emergency fund and enough money to stay a year to handle unexpected expenses.
Things may get harder if you have to pay for college without help from parents.
How to calculate your moving out budget
Moving out on your own requires careful planning and budgeting.
To calculate your moving-out budget, start by determining your monthly expenses once you move out. Make sure to include the factors discussed above.
Then, decide on your target move out date.
Now, figure out how many months you have to save.
For example, if your target move out date is in 6 months and you need to save $5,000 to cover your expenses, you’ll need to save about $833 per month.
Additionally, create an emergency fund to cover unexpected expenses such as medical bills or car repairs. Aim to save at least 3-6 months’ worth of expenses in your emergency fund.
By creating a detailed monthly budget and sticking to it, you can ensure that you can afford to live on your own and achieve your goal of moving out.
Tips and tricks on how to move out
So, you’re finally ready to move out and start your life as an independent adult.
But before you can start your new life, there are a few things you need to take care of first – like, you know, finding a place to live and figuring out how to pay for it.
Learn the lessons from those who did not move out with enough cash – like me.
Tip #1: Create a Budget and Stay Within Limits
Moving out with only $5000 can be challenging, but creating a budget and sticking to it can make the process much easier.
To start, subtract your monthly bills from your monthly income to determine your basic budget.
For instance, if you make $2500 per month and pay $1500 for rent and bills, you have $1000 left for living expenses.
Allocate $400 for groceries and other necessities, $200 for transportation, and $100 for utilities.
This leaves you with $300 for entertainment and other non-essential expenses.
To stay within your budget, consider using a budget binder to track your income and expenses.
Be mindful of living within your means and avoid overspending by resisting the temptation to spend your first paycheck on new household items or entertainment. Instead, opt for more affordable options such as walking around your new neighborhood or having a picnic in the park.
Tip #2: Reduce Expenses Where Possible
One of the hottest topics is becoming frugal green. To save money and the environment at the same time.
When it comes to furniture, try buying used or refurbished items or borrowing from friends and family. Additionally, cutting back on unnecessary expenses such as dining out and entertainment can free up more money.
By being resourceful and creative, it is possible to move out on a budget without sacrificing quality or comfort.
Remember to allocate 50% of your monthly pay towards necessary expenses, 30% towards things you want, and 20% for debt repayment and long-term savings.
Tip #3: Look for Low-Cost Rentals
Finding low-cost rentals can be a challenge, but there are several options available to those who are willing to be flexible and creative.
Renting a basement suite or studio apartment can be a more affordable option.
Consider couch surfing, subletting, or home-sharing arrangements.
Home-sharing can be particularly attractive as it allows you to pair up with an elderly homeowner who needs a little extra help in exchange for low rent.
Find a tiny home rental.
If you don’t mind sharing the space, you can also consider getting a roommate or looking into pod shares. Pod shares are co-living spaces where individuals rent a bed in a shared room, with access to other community spaces like a bathroom and kitchen.
Become a housesitter and be paid to move out. Learn more with Trusted Housesitters.
With a little bit of research and creativity, it is possible to find low-cost rentals that fit your budget and lifestyle. Remember to determine exactly how much you can spend on rent and be open to alternative housing solutions to help keep your costs at a minimum.
Tip #4: Look Into Getting Renters Insurance
When renting you are more than likely going to live closer to others, which means more things can go wrong. Don’t skip out on renter’s insurance, as it can provide the peace of mind and protection you need as a first-time renter.
Without renter’s insurance, unexpected disasters such as fires, storms, or theft can leave you with thousands of dollars in damages that you would have to pay out of pocket.
Renter’s insurance typically costs around $20 per month and can save you a lot of money in the long run. Some affordable options for renter’s insurance include Lemonade, State Farm, and Allstate.
It’s important to shop around and compare policies to find the best one for your needs and budget.
Tip #5: Plan for Emergencies and Unexpected Expenses
It is crucial to plan for emergencies and unexpected expenses.
Start by setting aside a minimum of $1000 for an emergency fund.
Ideally, you should aim to save at least three to six months of living expenses in a rainy day fund. Remember, having a contingency plan and emergency fund can provide peace of mind and protect you from financial hardship.
Tip #6: Start Saving for a Security Deposit
Remember to prioritize saving for a security deposit by setting a specific savings goal and putting aside a portion of your income each month before you move out!
With dedication and discipline, you can reach your goal and move out with confidence.
More than likely, if you are a good tenant, you should get your full security deposit back after your lease is over.
Tip #7: Start a Side Hustle
Starting a side hustle can be a great way to earn extra money while still maintaining your full-time job. You can earn extra income through various side hustles depending on your skills and interests.
The most common side hustles are online jobs, such as transcription, virtual assistance, proofreading, blogging, freelance writing, data entry, graphic design, and web design. These jobs are flexible and eliminate the need for driving anywhere, requiring only a laptop or computer and a good internet connection.
In fact, learning how to make money online for beginners is a trending topic.
As you start your side hustle, put in as much time as you have available to maximize your earnings. Remember that a side hustle is unlikely to replace the need for a real job, but it can provide a great way to earn extra money and pursue your passions.
Tip #8: Plan Ahead and Create a Timeline
When planning to move out on a budget, it’s important to create a realistic timeline.
Start by mapping out all the expenses you’ll need to cover, such as rent, utilities, food, and transportation. Along with how much money you have already saved for unknown expenses.
Stay organized by keeping a checklist of everything you need to do and when it needs to be done. Don’t rush the process – take your time and make sure you have everything in order before making the big move.
Remember the millionaire quote, failing to plan is planning to fail, so take the time to plan ahead and create a realistic timeline.
Is 10000 a good amount to move out with?
According to various sources, $10,000 is generally considered enough to cover moving out expenses and leave room for emergencies.
However, the actual cost of moving out can vary depending on location, rent prices, and cost of living.
Learn how to save 10000 in a year!
FAQ
There are a couple of different ways to save more money including:
Cut back on frivolous expenses like eating out and buying new clothes.
Sell anything you have that you don’t want or need on websites like Craigslist, Facebook Marketplace, Depop, or eBay.
Consider getting an extra part-time job or side hustle to increase your income.
When it comes to furnishings, be thrifty by asking friends and family if they have anything extra they’re getting rid of or checking out second-hand or discount stores.
Set saving goals and track your expenses using a spreadsheet. That will give you a clear picture of what is and is not possible.
Renter’s insurance is highly recommended, and in some cases, required by leases. It provides protection against unforeseen disasters such as fires, storms, or theft that can damage or destroy your possessions.
While it may seem like an unnecessary expense, it is usually affordable and can save you a lot of money compared to paying out of pocket for damages.
Not having renters insurance can leave you vulnerable to unexpected expenses and potential financial ruin.
You should not spend more on your rent payments than you are comfortable.
Just like with getting a mortgage, you should spend no more than 30% of your take-home pay on rent payments.
You don’t want to be stressed about finances, so you should set a realistic budget for rent that allows you to comfortably cover all of your expenses while still having some money left over for savings.
So, is 5000 enough to move out?
It really depends on your situation.
If you’re moving to a cheaper area and don’t have many expenses, you might be able to make it work.
However, if you’re moving to a more expensive city or have a lot of bills, you might need to save up more money.
When determining how much money is needed to move out, there are several factors to consider, which we covered above. These include where you plan to live, your living expenses, initial moving costs, ongoing costs, and emergency funds.
It’s essential to have a budget and do the math to determine the minimum amount required for a smooth transition to independent living on a tight budget.
Ultimately, it’s important to do your research and figure out what’s best for you.
Know someone else that needs this, too? Then, please share!!
St. Louis is known as the “Gateway to the West” to tourists, but locals are more than happy to simply call it the “Lou.” No matter what you like to call this Midwestern hub, one thing’s for certain: There are a lot of excellent St. Louis neighborhoods to call home.
St. Louis really does have it all: great architecture, a sense of community pride (especially when it comes to great beer making), a thriving sports scene, and lot of friendly locals ready to welcome in new residents. The best part? There are 79 distinct and wonderful St. Louis neighborhoods located in the city proper.
Like any big city, neighborhoods in St. Louis are diverse, eclectic, and have their own distinct history and personality. Here are a few of the most popular St. Louis neighborhoods to start apartment hunting in if you’re a new resident:
Central West End
Bordered by St. Louis University and Forest Park, the Central West End is a beautiful neighborhood known for its diverse crowd. Here you’ll find a mix of young singles as well as families. There are many great bars, shops, galleries, and fun sidewalk cafes that line the area.
However, perhaps the most famous building in the Central West End is the Roman Catholic Cathedral Basilica, which boasts one of the largest mosaic art structures on earth. Another major landmark in this neighborhood is the Chase Park Plaza Hotel, one of the city’s most historic hotels.
Due to the neighborhood’s age, there are lots of apartment styles to choose from, from townhomes to high-rises, all with some of St. Louis’s finest architectural highlights. The area hosts a lot of the city festivals too, so be prepared to be out and about– especially during the warm-weather months.
Maplewood
Known as a young, up-and-coming neighborhood, Maplewood could be the perfect area for a resident looking to plant roots and save some green during their first few years in St. Louis. Many locals think Maplewood is the city’s hipster area, and they might not be too far off in their assumptions. For instance, offbeat shops are everywhere in Maplewood, as are laid-back coffeehouses buzzing with creatives and college students.
One of St. Louis’s relics also calls Maplewood home: Saratoga Lanes. This vintage bowling alley is the oldest west of the Mississippi River, according to Explore St. Louis. Beer lovers will also be more than happy to be living in Maplewood, as Schlafly Bottleworks (St. Louis’s most respected craft brewery) offers tours there.
Clayton
Clayton is the famous home of the St. Louis Art Fair, one of the most celebrated events in the city, where 150,000 people flock annually. However, the community events don’t stop there in Clayton. There is also the Gallery Nights receptions and Parties in the Park cocktails (perfect for a roomie weekend outing).
It’s a busy and fast-paced place to call home, but Clayton always presents renters with something to do, whether you’re headed to one of the best bars and restaurants in St. Louis or finding your cultural bearings at one of Clayton’s many art galleries. Clayton is also the home of the St. Louis city government and the Center of Clayton, which is a 136,000-square-foot sports and recreational complex.
Cherokee Street
This is the one neighborhood that everyone in St. Louis is buzzing about. Cherokee Street is full of beautiful vintage and antique shops, artsy and progressive locals, and plenty of Mexican restaurants. If you love all things retro and tacos– this is definitely the place for you.
However, the appeal of Cherokee Street goes well beyond great food and shopping. A lot of renters are flocking here due to the welcoming atmosphere for young startups and business owners.
Many of the businesses here are locally owned and source from excellent vendors. Most have a certain beatnik vibe, making Cherokee Street the perfect place for first-time apartment dwellers or young renters.
If you’re renting with multiple roommates or love to decorate with an industrial, business vibe, then this is the place for you.
Be sure to do some exploring while in St. Louis during your apartment hunt. With literally dozens of neighborhoods, there’s bound to be one with your name on it.
2013 has been an incredible year thanks to aggressive real estate goals and I believe 2014 will be even better! My real estate investing continues to pick up momentum thanks to some major changes in 2014. I changed my attitude, hired a personal coach, bought a new personal residence, took over my parents’ business, bought three long-term rentals, purchased three fix and flips since September and sold four fix and flips since September. I also hired a good friend to help manage my business and help our real estate team continue to grow and expand.
My goal articles for other years
What were my 2013 goals?
I started making big goals in 2013 for the first time in my life. I have no doubt they helped me achieve more than if I did not have goals, or had small goals. I won’t go into all of my goals as they constantly change throughout the year, but I will mention a few. I wanted to sell 200 houses as a real estate agent, I wanted to buy 4 long-term rentals, I made a huge income goal for myself and I wanted to improve fix and flips (not a good goal). I’ll go over how I did on these goals and how I did on other items that were not goals. I did not reach all my goals, but that is okay!
My plan to purchase 100 properties progress
Many of you have read my plan to purchase 100 properties and I am making progress! I was hoping to buy four long-term rentals in 2013, but it doesn’t look like I will get to there. I did buy three long-terms rentals and I think that is an accomplishment even if I didn’t hit my goal. I have plenty of time to buy an extra house in the next 9 years to catch up to my goal (I give details on my rental properties in the rental property section of the blog).
Right now I have 8 long-term rental properties and I am bringing in over $4,000 a month in cash flow each month. For those of you wondering about rental property number 1 being paid off in 2013; it’s not going to happen. Due to the storm and some renter issues I wasn’t able to accumulate enough cash flow to pay off the house. The biggest issue was the massive hail storm that damaged four rental properties. I had to get new roofs on four properties and replace the siding on one home. Insurance covered most of the costs except for deductibles, but the way insurance works I still have not been paid in full. I was paid the insurance money for the cost of repairs minus the deductibles and recoverable depreciation. I don’t get paid the recoverable depreciation until I send in the invoices for the completed work. I have sent those in, but I am still waiting for the insurance company to send the recoverable depreciation which is around $4,000. Right now I owe about $7,000 on the mortgage on rental property number 1. Three renters are behind in rent right now! One had a heart attack, one lost his job and the other said the government shutdown delayed their retirement checks. We are on payment plans with all of them and hopefully they can get caught back up.
2013 was a huge year for me as far as personal improvement
I was never much for self-help books and working on myself before 2013. I figured working hard on my job was what made people successful. What I didn’t realize was it is just as important to work on yourself as it is to work on your job.
I started listening to self-help audio books and reading as many books as I could find. I learned about the law of attraction, being positive and many other techniques to help me succeed. I even started a new blog with some friends at www.victorycoaches.com to talk more about using your attitude to succeed. A few of the people I listen to are Jack Canfield, John Assaraf, T. Harv Ecker, Zig Ziglar, Tony Robbins and many more. I have even started researching the history of the law of attraction which dates back to ancient Egypt. It is fascinating to see the history and how far back these ideas originated from. The thing that got me hooked was not the spiritual side of the law of attraction, but the scientific side. I learned our subconscious can help us succeed if we give it a blueprint for what we want.
I took Jack Canfield coaching, which was an amazing experience. My coach was great and a huge help personally and with my business. Personal coaching allowed me to see why I needed to take over my parents’ business. The program claimed it would increase my free time and triple my income in a year. I was skeptical about those claims, but I think I may actually triple my income in 2014! My free time has definitely increased even though I have much more on my plate now than last year.
I started InvestFourMore in March of 2013 and it has been a wonderful experience. I would not have started the blog without my personal improvement discoveries. I have learned new investing techniques, met many new contacts, and much more from my blog. My blog even allowed me to publish a few books on Amazon (PDF versions here), which I had never thought would happen.
I bought a new personal residence in 2013
I bought a new house in July and we love it! I wrote an article about it here that describes the entire process. I wasn’t planning on buying a home, but it worked out perfect and the new house felt like home right away. This was not a goal of mine, in fact many of my goals revolved around our old house, but I was able to adapt to new opportunities. Buying the new house actually took care of about ten goals I had that involved the old house or buying a shop.
I mentioned I made a big income goal in 2013 that seemed very hard to reach in the beginning of the year; well I will reach that goal. The main reason I will reach my income goal is because I sold my old house. I don’t know if I am supposed to count it as income, but I made almost $100,000 on the sale of my previous home. It won’t be taxable since I lived there for three years! That is why I love big goals; you never know what will happen to help you reach them.
I took over my parents’ business in 2013
I had the idea of taking over in the back of my head for years, but never acted on it because I knew it would be a lot of work. My parents have always run the team, paid payroll, taxes and all the other fees associated with our real estate business and flipping business. My role was to sell houses, find flips, help manage repairs and make the majority of the money.
The problem with our previous deal was my parents did not like running the team and they did not do a lot to promote sales by the other Realtors on our team. I made a lot of sales, but had to give a large percentage to my parents and I made a small percentage on the fix and flips compared to what I did.
With the new deal I basically bought out my parents, which gives them long-term security and I get to run the team and keep the profits. It is scary taking over a business as we have high overhead with 8 team members and all the fees associated with the office, licensing, advertising and REO dues. I really don’t like accounting work and paperwork and that is one reason I didn’t take over earlier. I knew taking over the team would entail learning payroll, paperwork and many other unpleasant tasks that would take away from my selling houses.
The reason I made the switch, was I was able to hire my friend who took care of all the stuff I didn’t want to do. He wanted out of the corporate world and has a ton if management experience; perfect solution for both of us! He figured out the entire payroll, has been working in lead generation and helping manage everything. I love it! My free time has actually increased since taking over the team because I let others do the work I don’t want to do. My friend also bought my house, which allowed us to move quickly into our new house.
Taking over fix and flips
Part of taking over the business involved taking over the fix and flips. The fix and up operation was not small and took a lot of money and work. I had to set up financing, a bankroll and management to take over the fix and flips. Luckily the deal we worked out allowed me to obtain all of these things.
With our deal, I took over 6 properties that we were working on, which helped provide me with a bankroll to pay for down payments and repairs. Once those properties sold, I had money available for new purchases. We have sold four of those six, one is under contract and another is being worked on.
I have been able to purchase three more fix and flip properties since taking over the business and I have been able to do that with help from my portfolio lender. Not only have they been awesome with my rental properties, they gave me a commitment to do short-term financing on my fix and flips. They will give me 75 percent loan to value, can close in less than two weeks and don’t require an appraisal if the loan is under $100,000. They charge 5.25 percent with 1.5 points; hard to beat that deal.
I also have another fix and flip that should be under contract soon and two short sale offers we have accepted by the sellers that we are waiting to see if the banks will approve.
Real estate business goals
I wanted to sell 200 homes in 2013 as an REO agent. This was a huge goal and well above my totals from any other year. I mentioned I like big goals and that is because they challenge me and constantly motivate me. If I were to make a small goal, then I may slow down or stop once I reach that goal. I was going to fall well short of my goal to sell 200 homes, but taking over the business almost got me there. Since I was able to count all the homes sold for myself for other agents on our team after September first; we sold 184 houses in 2013. There are still a few days left and we have a couple of closings scheduled, but not 16 to reach that 200 mark.
I was able to drive a Lamborghini and Ferrari!
I have always loved cars since I can remember, especially exotic cars. I have never driven a Ferrari, Lamborghini or other exotic car before this year (unless my Porsche 928 counts). This summer I found a special on Travelzoo to drive a Lamborghini Gallardo! I wrote about my experience here and it was awesome! I also signed up to race a Ferrari F430 around a race track a few times and I have the video of that here. I was at a conference in Dallas in September and I was able to see a Lamborghini Diablo they had for sale there. I always wanted a Countach, but I barely fit in the Diablo and the Countach is a smaller car. It probably is for the best as the Diablo is a newer and better car than the Countach.
My other 100 goals
I have a plan to purchase 100 rental properties and I also have over 100 other goals. Part of my coaching was to create a list of 100 goals, which I review constantly, update and change. I won’t go into all of those goals, but they range from extremely small to very large. The list helps me keep fresh in my mind what I want and when I want it. Making small goals makes me feel great accomplishing them and big goals motivate me. Many times I forget about the small goals I had a few months ago, and that is why I have a list that reminds me of what I want.
Conclusion and a sneak peak for 2014
If you know me at all, you know I will have a lot of real estate goals for 2014. I will write another article for those goals and plans, and I hope to have it ready for Monday right before the New Year. Some of my goals for 2014 are going to include big jumps in all aspects of my business and possibly a new car.
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With a Friday deadline looming over lawmakers’ heads, the latest stimulus package seems closer than ever. But nothing has been signed just yet. The $900 billion stimulus proposal didn’t originally include direct payments to Americans, though the latest word from Congress tells us checks will be included after all — even if they’re only half of the CARES act counterpart.
As stimulus checks have been one of the largest pain points for lawmakers, the addition means we very well could have something tangible by the weekend. This is just in time for the 10 million people whose unemployment benefits would end on December 26 and the millions who would face eviction without aid.
Here’s what’s expected to be included
Aid for schools and vaccine distribution is included, though the exact breakdown isn’t quite clear. Here’s what we know so far.
Stimulus checks — While it was a late addition, one time direct payments to Americans is in the current plan. It’s just not at the level of the CARES act. Americans are expected to get $600, $700 if we’re lucky.
Unemployment benefits — $300 weekly unemployment aid is included — a 50% decrease from the $600 weekly benefits offered by the CARES act. The long-term unemployed also see some relief with the extension of extra state unemployment benefits.
Business aid — More than $300 billion is pledged to business support, including another round of paycheck protection for struggling small businesses.
Renters and food assistance — $25 billion is allocated to help renters say in their homes. Food assistance is also included.
Postal service — $10 billion has been allotted to bail out the U.S. Postal system.
[ Read: Latest PPP Data Raises Questions About the Distribution of Loans ]
What’s the holdup?
It’s the same old story, Democrats and Republicans can’t agree on what should be included and prioritized in the package. We seem to be over the stimulus check hurdle, though it did come at the cost of a larger check.
The original $908 billion bipartisan stimulus package proposal included $106 billion for state and local governments — a provision that Republicans would not pass. So that slowed things down. Democrats were able to secure help for cities through funds for transportation, schools and vaccine distribution; it’s just not as much as they originally pushed for. Democrats opposed the liability shield for businesses and universities that may face coronavirus-related lawsuits, so both sides have been forced to compromise.
[ Read: 11 States Stepping up to Supplement Unemployment Benefits ]
The present solution has been to split the original plan into two smaller bills — allowing them to delay the controversial topics without holding up the majority of the package. The first bill will total $748 billion and include measures like the Paycheck Protection Program and Unemployment benefits.
Too long, didn’t read?
The string of swapped proposals seems to be coming to an end — with barely any time to spare to avoid a government shutdown. But there are things lawmakers still can’t agree on. Despite it all, Biden remains eager for aid and has said this package is “an important downpayment” for the additional aid that will come in 2021.
We welcome your feedback on this article. Contact us at [email protected] with comments or questions.
When you start shopping for life insurance, you can be overwhelmed with the number of options that you have. There are hundreds and hundreds of life insurance companies on the market. How in the world are you supposed to decide which one is the best for you?
That’s why I’m here to help. I’ve reviewed dozens of different insurance companies to give you an idea of which one might work best for you.
Life insurance is one of the most important investments that you’ll ever make for your family, and it’s vital that you make the best decision for your family. One of the most important factors that you should consider is the type of life insurance policy that you are going to buy. There are several different kinds of coverage that you will need to review based on your needs.
In addition, it is also recommended that you review the background of the insurance company you are considering buying this type of coverage through. That is because you will want to ensure that the carrier is strong financially and that is has a good name in the industry for timely payment of its policy holder claims. One insurance carrier that meets these points is Erie Insurance Company.
The History of Erie Life Insurance Company
Erie Insurance Company has been in the business of offering coverage protection to its customers for nearly 100 years. The company was founded in the early 1920s when two employees of the Pennsylvania Indemnity Exchange decided to form their own insurance carrier.
In moving forward with their new company, H.O. Hirt and O.G. Crawford raised more than $30,000, and won over 90 stockholders – all from a hand written business plan. Then, in April of 1925, the Erie Insurance Exchange opened its doors.
Over the years, the company has grown and expanded exponentially, adding many different types of coverage, such as home owners, motorcycle, boat, life, business, and personal valuables coverage.
Erie Life Insurance Company Review
Today, Erie Insurance Company has more than 5,000 employees who serve its customers and policy holders. The company’s products are offered via approximately 12,000 independent insurance agents across the United States.
In addition to providing a variety of insurance coverage’s, Erie Insurance Company gives back to the communities in which it serves. For example, the company is involved in entities such as Meals on Wheels, coaching little league sports, and with helping people to rebuild following natural disasters and catastrophes.
Erie is considered to be a strong and stable life insurance company from a financial standpoint. The company has also been listed as number 411 on the 2016 Fortune 500 list. (The company made its initial debut on this list back in 2003).
Also, for the fifth year in a row, Erie Insurance was given the “Highest Satisfaction with the Auto Insurers Shopping Experience” award in the J.D. Power 2017 U.S. Insurance Shopping Study. Out of a possible score of 1,000 Erie obtained a score of 879.
BBB Grade and Ratings
Due to its strong financial foothold, Erie has received very high ratings from the insurer rating agencies. Here, the Erie Insurance Group has earned an A+ (Superior) rating from A.M. Best and Company, and the Erie Family Life Insurance Company has earned an A.M. Best grade of A (Excellent).
In addition to its high insurer ratings, Erie Insurance has also been given a grade of A+ (on a scale of A+ to F) from the Better Business Bureau (BBB). Although Erie Insurance is not an accredited member of the BBB, the company has closed out a total of 59 customer complaints over the past three years (of which 16 were closed out during the past 12 months).
Of the total 59 customer complaints that Erie has closed via the BBB, 39 had to do with problems with the company’s product and / or service, and 15 had to do with billing and / or collection issues. An additional two were in regard to advertising and / or sales issues, two had to do with delivery issues, and the remaining one was in regard to the company’s guarantee and / or warranty issues.
Life Insurance Coverage Offered by Erie Life Insurance Company
Erie Insurance offers a variety of different life insurance coverage options to choose from. These include both term and permanent policies. With a term life insurance policy, death benefit protection is offered, without any type of savings or cash value build up. Because of this, the premium that is charged for term life insurance is usually much lower than that of a comparable permanent plan.
With a term life insurance policy, coverage is purchased for a certain period of time, such as 10 years, 20 years, or even 30 years. Typically, these policies will have a fixed amount of death benefit, as well as a fixed premium charge for the life of the plan.
Erie Insurance offers level term life insurance protection, and policies can be chosen in time periods of 10, 15, 20, or 30 years. This coverage can be purchased starting at age 0, and in many instances, the policy holder will have the opportunity of converting the term policy over into a permanent life insurance policy – which can then provide coverage for the remainder of the insured’s lifetime.
With Erie, there is oftentimes no medical exam required on its term life policies of up to $90,000 in death benefit protection. All an applicant has to do is just simply answer a few health related questions. And, because there is no blood work or medical exam results to wait for, this coverage can usually be approved and issued within just days (or possibly even sooner).
The company also offers permanent life insurance coverage. With a permanent life insurance policy, there is death benefit protection, as well as cash value build up. The assets that are inside of the cash component of the policy can grow on a tax deferred basis. Essentially there is no tax due on the gain until these funds are withdrawn.
Erie Insurance offers both whole life and universal life for permanent life insurance coverage. With a whole life insurance policy, the insured will have guaranteed life insurance protection with a death benefit amount that will not decrease – even as he or she ages throughout the years.
These whole life plans also offer guaranteed cash value, as well as a set premium that will not be raised – even if the insured contracts an adverse health condition in the future. Plus, the insurance company cannot cancel the policy for any reason, if the premium is paid.
There are several different premium payment options that a whole life insurance policy holder can choose from – based on what suits their needs the best. There are also several different riders that may be added to the whole life insurance coverage – some at no additional charge.
Just like with the term insurance policies, whole life insurance plans through Erie offer a fast and easy application process. For those who wish to purchase coverage of up to $90,000, only a new medical questions need to be answered.
Whole life insurance protection from Erie can be purchased for adults and children (or other younger relatives, such as grandchildren and nieces / nephews). These plans can help the younger insureds to build up savings in a tax deferred manner, and to attain guaranteed insurability in the future.
Erie Insurance also offers universal life insurance. Universal life, or UL, is another form of permanent life insurance coverage. In many ways, UL is considered to be more flexible than whole life. This is because the policy holder – within certain guidelines – may choose how much of the premium will go towards the death benefit, and how much will go into the cash value portion of the policy. They may also be able to change the due date of the policy’s premium, based on their changing needs.
Universal life insurance can be advantageous for individuals and for business owners, as it offers guaranteed cash value, as well as the ability to get policy loans with tax free income potential.
These types of life insurance plans can also be ideal for a wide variety of coverage needs, such as:
College expense planning
Estate planning
Income replacement
Charitable giving
Wealth transfer
Inheritance
Mortgage balance payoff
Payoff of personal or other types of debt balances
Retirement income planning
Deferred compensation plans
Business continuation coverage
Key person coverage
While a universal life insurance policy offers both death benefit coverage and cash value, the premium on this type of coverage may be more affordable than that of a whole life insurance policy, depending on the insured’s specific parameters.
Burial Insurance
If you’re worried about leaving those you care about with funeral and final expenses, having a burial insurance policy can help. Today, the average cost of a funeral can be in the range of $8,500 to $10,000 – especially when factoring in items like the memorial service itself, along with flowers, transportation, and music, as well as a burial plot and a headstone.
Burial insurance – which is also oftentimes referred to as funeral insurance or final expense life insurance – is a type of coverage that will pay out a benefit quickly to your named beneficiary so that final expenses can be paid…and so that your survivors don’t have to dip into saving or use credit to pay these costs. With that in mind, having a burial insurance policy can be one of the greatest gifts you give to your family.
Before you purchase a burial insurance policy, though, it is important that you have a good idea of the type and the amount of coverage you’ll need. For example, you may want to only cover the anticipated cost of a funeral service. Or, alternatively, you may also want to add in some additional protection so that your loved ones can pay off other debts, such as final medical expenses and / or the cost of hospice care.
Other Products and / or Services Offered
In addition to just selling life insurance policies, Erie Insurance Company offers a long list of valuable products and services. These include the following:
Auto Insurance
Motorcycle Insurance Coverage
Insurance Coverage for Car Collectors, ATVs, and RVs
Insurance for Teen Drivers
Boat Insurance Coverage
Home Owners Insurance
Renters Insurance Coverage
Condo Insurance
Mobile Home Insurance
Personal Valuables Insurance
Flood Insurance
Retirement Solutions
Personal Catastrophe Liability Insurance
Identity Theft Recovery Coverage
Business Insurance
Erie also offers various industry insurance packages that can be fit to companies in a variety of different industries, such as auto services, contractors, hotels and hospitality, landlords and property owners, manufacturers, offices and professional services, restaurants, retail, and wholesaler-distributors.
Looking For The Best Premium Rates on Life Insurance Coverage from Erie Insurance?
If you are seeking the best premium rate on life insurance coverage from Erie Insurance Company – or from any insurer – it is recommended that you work together with an independent life insurance agency or broker. That way, you will be in a better position to compare, side-by-side, the coverage and the premium prices of numerous insurers – but in an impartial manner. You can then determine which will be best for you.
When you are ready to shop around, we can help you. How? We work with the best life insurance providers. We can provide you with the important details that you need for making a well-informed decision – and we can do this for you directly from your own computer. When you are ready to proceed, just simply fill out our short quote form.
We get that buying life insurance coverage is a big decision. There are many different parameters to keep in mind – and you want to be sure that you are going with the right type and amount of coverage through the best insurance company.
This process of purchasing life insurance protection can be made so much easier by working with an aid on your side who can guide you through the entire way, from beginning to end. So, contact us today – we’re here to help.
Quality and reliability have long been the most crucial features when searching for the best home security systems to ensure the safety of your loved ones and belongings.
Nowadays, many home security companies have gone beyond excelling at the two core features, with leading security companies now also embracing home automation technology and incorporating innovative features into their systems.
Home security systems have come a long way, with countless customization options and wide-ranging functionalities now available on the market.
And if you’re finding it difficult to navigate the multitude of products (and their makers), we’re here to help.
Thanks to the Internet of Things, homeowners can remotely control their thermostats, door locks, vacuums, lights, and even feed their pets while they’re away using mobile apps.
It has also made it simple and affordable for users to monitor their homes from anywhere. Installing home security is easy, especially when you opt for do-it-yourself kits.
Depending on the security needs for your home, you can choose a self-monitoring system or pay to have it surveilled round the clock by professionals.
Here are the 5 top home security brands you can choose from while on a budget — without having to worry about the safety of your home and loved ones:
#1 Protect America Security Systems
Protect America is a renowned home security systems company based in Texas, US. The company offers quality DIY systems and services at budget-friendly rates, with all of their systems being custom built and designed for long-term security.
Protect America offers a lifetime warranty on all equipment. They have strong customer service, support, and a 30-day free trial of the system. Protect America also provides an option for landline and broadband monitoring, making it ideal for homeowners in rural areas.
#2 SimpliSafe Security Systems – link to store
SimpliSafe is another American security company known for their self-installed security systems. Their systems are cutting edge, and are connected to a central control panel.
SimpliSafe security systems are DIY installations ideal for people who move from time to time. They’re also cost-efficient and contract-free. With the units being easy to set up, they’re a top option for renters as well.
#3 Frontpoint Security Systems
Frontpoint deals solely with the manufacturing, installation, and maintenance of home security systems.
They also have DIY installation systems which are very easy to set up and a 24/7 concierge-level customer service with knowledgeable representatives. The Frontpoint home security system is suitable for both homeowners and renters.
Frontpoint ensures their customers get value for their money. Their exceptional customer support is what gives them an edge over the competition. They make their customers feel valued.
The company also offers control panels and keypads, door and window sensors and for those looking for separate components.
A smash and crash protection, 30-day money-back guaranty, and robust feature set are other offerings from the company. It has an all-round system for individuals, family settings and all lifestyles.
#4 Scout Security Systems
Scout was founded through a crowdfunding campaign that aimed at creating simple, affordable, and smart home security systems.
The company has expert designers, engineers and business savvy people working together to create beautiful security systems that are easy to use. Scout understands that every customer is different, so they design home security systems that are unique to every home.
Scout has some of the most affordable home security systems that allow homeowners to customize their devices.
Customers can choose their preferred system colors, components, the level of support they want, and the actions they want to be initiated by the devices in times of emergency.
Known as ‘the hub’, the Scout system uses 4G cellular battery backup that provides protection even after a power outage.
The company also offers access sensors, door panels, smoke and carbon monoxide detectors, motion sensors, door lock pads, glass break sensors and water sensors. Their home security systems are very easy to automate.
#5 Brinks Security Systems
Brinks offers high end, reliant, effective, and stable home security systems. Brinks has a track record with many customers across the world.
The company provides live monitoring and mobile and web application from which homeowners can view their homes after logging in. They also offer cloud storage services for surveillance footages for those who want to pay extra.
The security system from Brinks has loads of features, is affordable, and comes with two monitoring options. Their system is DIY and gives homeowners a 30-day risk-free offer and a two-year warranty. They also offer a smart home hub that can connect to home automation devices, a hacker protection feature and LTE cellular signals.
The system uses discreet door sensors with a 200-foot communication range. It has a hands free alarm and can detect the homeowner’s approved access through the phone and unlock the door immediately.
With security being top-of-mind for any homeowner, choosing the correct home security system is a crucial decision in keeping your home (and family) safe.
And as we’ve just learned, there are many options outside of the heavily marketed costly systems, like these 5 best security systems. And while no one can put a price on feeling safe in your own home, it’s good to know you’ve made the best decision for the well-being of your family and loved ones.
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Having great neighbors around can be terrific. You can ask them to feed your pet and keep an eye on your apartment when you’re away on vacation. You can borrow and lend things. You can get yourself invited over to eat that delicious-smelling dinner they’re cooking. No matter how you view it, getting along with your neighbors can help with lots of things. However, problems do come up. How you handle them can impact on your relationship. Here are some common issues and ideas on how to handle them.
Noisy Neighbors
One of the biggest problems apartment renters face is noise from other tenants. While you should be reasonable about certain noises or understanding if the walls are particularly thin, there are some noises that you should probably address.
Late-night noise. Take a look at your lease and see if there are any particular quiet times laid out. Many will ask for residents to keep the noise down between 11pm – 6am, or outline certain times for weekdays and weeknights. Know what you’re allowed to be annoyed by.
Talk to your noisy neighbors. Stop by and politely explain that the noise is bothering you and ask if they might be able to take it down a notch. Ask if you might be able to have a phone number or email address so you can contact them if it continues to be a problem and to open more lines of communication.
Ask to plan ahead. Ask your neighbors to let you know if they’re planning a party or think the noise levels are going to rise. Knowing it’s coming means you can prepare for it, and shows that they’re aware it could be bothersome.
Problematic Neighbors
Some neighbors may or not be aware of when they’re becoming an issue. For example, you may have a neighbor who regularly parks in your private parking spot, or allows their guests to do so. They may leave garbage outside their door, allow their pets to relieve themselves in public areas without picking it up or even get a full grill going right underneath your window, filling your apartment with smoke. What then?
Try calmly talking to them. Point out that what they’re doing is bothering you and you’d appreciate it if they could stop doing it.
Offer solutions on what else they could do. For example, point out visitor parking for their guests or a better place to have their grill.
Follow up. Follow up with a thank you if you see they’re cooperating with your request. A little thanks goes a long way.
Neighborly Smells
Smells travel when you live in an apartment. From cooking and baking to cigarettes or illegal substances, there’s always a possibility that you might be able to smell it in your apartment. While cooking or baking smells may not always smell delicious, there’s not a lot you can do about that. However, other odors you can certainly have dealt with. This particular issue may be a bit more tricky to deal with than simply talking to them, so speaking to your landlord or apartment manager might be your best first course of action.
Find out if this has been a problem in the past, and if there are any easy solutions. Chances are your landlord has heard this before, and may be able to advise you on this.
See if your landlord or apartment manager may be able to talk to the neighbor. This may be particularly appropriate if you live in a non-smoking apartment and consistently smell smoke.
Follow up with your landlord to see what was done and how it was handled.
When to Notify Your Landlord
While handling problems yourself is generally the best course of action, there will be times where you may want to involve your landlord. These include:
You’ve spoken to your neighbor several times and their behavior is still problematic.
The issue is particularly sensitive and you’re unsure of how to approach it (see “Neighborly Smells.”)
You believe your neighbor’s behavior is a breach of your lease and feel your landlord or apartment manager should know about it.
You can ask your landlord or apartment manager to keep your name out of it and make the complaint anonymous to avoid further conflict with your neighbor.
When to Call 911
When complaints happen, there is always a chance that things could escalate. Though rare, you should be able to feel safe in your apartment home. Some situations where you may want to involve the authorities include:
Your neighbor has threatened you.
Your neighbor has purposefully damaged your property.
Your neighbor has assaulted you.
You’ve heard fighting or violence and are concerned for one or more of the tenants.
You smell smoke and believe there may be a fire.
You believe your neighbor or resident is injured and requires medical assistance.
Though you can report some of these situations anonymously, if your neighbor has threatened, assaulted you or damaged your property, you may need to obtain a police report. This will help should you need to take further action. Be sure to share this with your landlord.
After a years-long stretch of low interest rates, it’s hard to let go, but some homebuyers have figured out they don’t have to. Instead of selling one home, where their mortgage has an interest rate around 3%, so they can buy another one with a rate above 6%, they’re opting to hang onto the old address and rent it out.
“People who are hesitant to close out that 3% mortgage see that rents are going through the roof, and they see a possibility to make some money” on the spread between the mortgage payment and the monthly rent, said John Irwin, a Baird & Warner agent.
“We have a unique opportunity right now for people to hang onto their tiny, tiny interest rate and their equity,” said Carmen Rodriguez, a Coldwell Banker agent. It’s fueled by the fact that “we have a lot of people renting because they can’t afford to buy at the higher rates,” which creates demand for the homes their former occupants don’t want to cut loose.
Irwin said three of his clients went this route in recent months. They were all people who could afford to buy the next home without pulling all their equity out of the last one for a down payment, which is the primary obstacle lying in the path of using this strategy, Irwin said.
There’s no data available on how many people have done the same, but in gathering information for this story, Crain’s learned of 16 recent Chicago-area deals that involved renting the old place. It’s admittedly a small number, but every agent interviewed said the strategy is catching on.
“It’s their opportunity to add real estate to diversify their investment portfolio,” said Jessica Coulson, a Compass agent. “They might not have been expecting to.”
Earlier this month, a pair of Coulson’s clients bought a house in Northbrook and rented out their two-bedroom West Town condo. The two properties are about 22 miles apart, and their mortgage rates are more than 2.5 percentage points apart. Coulson did not disclose her clients’ personal financial details, but said the condo rented quickly at a number that will be profitable for them.
In November, Bekah and Dan Carlson moved from an Andersonville two-flat where their mortgage, taken out in 2015, was at 3.75%. They bought a few blocks away in Ravenswood, at 6.5%.
Since 2015, it had been their goal to keep the two-flat after eventually moving, Dan Carlson said, and preserving the low payment that the two-flat’s mortgage has was a key part of making it work. But with home prices rising quickly last year, it looked like they might have to offload the two-flat in order to have enough cash for a purchase.
“If it had come down to leaving the neighborhood or selling the two-flat, we’d have sold the two-flat,” Carlson said. Ultimately, they were able to make the purchase and keep the two-flat, which “is a good source of extra income, a good use of our money,” he said.
There can be reasons other than money to take this route, Rodriguez said. Her client who has a child with specific needs at school is moving to a school district that suits those needs, but hopes to move back to the house she loves after the child finishes school.
The combination of a sweet mortgage rate and a hot rental market meant “she can hold onto it until she’s ready to move back,” Rodriguez said.
Besides needing the equity from one home to afford buying the next one, many people wouldn’t want to rent out the old address for a simple reason: They don’t want to be landlords.
Coulson said she suggested the rental plan to a pair of physicians who have a very low mortgage rate, but they said with busy jobs and little kids, “they weren’t interested in being property managers. They wanted to focus on their own home.”
It’s not only the unwillingness to take 2 a.m. calls about a broken furnace, Irwin said, but “there’s always the possibility that the renter might not take care of the home like you do, and when you go to sell that (home), the wear and tear may cost you.”
One big obstacle for people who need a mortgage on the new home is that without a history of rental income, the old property might get in the way of obtaining a mortgage for the new property, according to Jim Tausche, senior vice president of residential lending at Draper & Kramer Mortgage.
Despite the heat in the rental market, there’s no guarantee that the old property will land renters or that rental income won’t be interrupted by vacancy or by renters failing to pay.
Tausche said mortgage lenders would likely examine all the details of each scenario individually, making it as important as ever to talk to a mortgage broker before going house hunting.
If the property is a condo, it’s also important to check whether the homeowners association limits the number of rentals in the building.
Last Updated on February 25, 2022 by Mark Ferguson
Rental properties are a great investment, but they take work to manage, especially if you do not use a property manager. I own more than 20 rental properties and I managed my rentals myself until I had 7 and realized it was taking way too much time. My rental properties are single-family, mixed-use, and commercial properties. Managing rentals is not extremely difficult but it takes time, you have to pay attention to details, and be firm with tenants to successfully manage rental properties yourself. You can’t be easy on your tenants and you can’t ignore problems, because that is when rental properties can change from a great investment to a poor investment.
Self-management
Whether you chose to manage your rentals on your own or hire a property manager you need to know how to manage the properties. If you are hiring a property manager you need to know if they are doing what they are supposed to be doing. It can help top manage rentals yourself to get an idea of what is involved to see if the management company is any good or not! A lot of this is also common sense and you don’t have to manage properties first if that is not your thing.
Here are some tips on how to manage rentals the right way. You will notice that there is a lot that needs to be done and it may not be as easy as you thought.
How to figure market rent rates
Determining market rent should be done well before you are ready to rent a house and one of the first things you do as a real estate investor. You should have an idea of what a house will rent for before you even buy a rental property so that you know it is a good investment. It is tricky to tell people exactly how to determine market rental rates because each market uses different techniques to rent homes. Some markets primarily use the MLS to rent homes, while other markets (like my market) use Facebook, Craigslist, or Zillow as the primary method to rent a home.
You need to check the prices of other rentals in the area to see what market rents are. You cannot simply choose the highest rent you can find and assume that is what you will get. You can also check with property management companies or real estate agents to see what they think properties will rent for.
When I am trying to determine rental rates, the first thing I do is pull up properties for rent on Facebook. I browse the marketplace to see what is available in the neighborhoods that are most similar to my property. I don’t look at the most expensive rentals, I look for homes in the lower end of the price range (Be careful if you see an incredibly low-priced rental, it may be a fraudulent listing trying to get people to mail money to Nigeria). There also could be some incredibly high rents being asked for executive or short-term rentals that may not compare to your rental.
Looking at prices online is the first step. To see what is actually renting takes a little more work. Print or write down the ads that are the most comparable to your property. Wait three days, and then check to see if the ads are there. If the advertisements are gone, then those houses were probably rented. If they are still up then they probably have not rented. Check again in a week to see which ads are still there and which are gone. If you want to take one more step then call the numbers or email the ads that you first printed and ask if the properties are still available.
I have tried a couple of different methods of pricing my rentals.
Price at the top of the market and try to find a renter who will pay a premium.
Price a little below market and take my pick of great renters.
My experience has been better with taking my pick of great renters. Even though the rent is lower, I usually have a lot less to worry about like late rent or excessive wear and tear. Whenever I price rentals high, I am waiting for a decent to mediocre candidate to send an application in, instead of picking the best tenant from many applications.
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Advertising
Once I have a decent idea of the market rent, I place an ad on Craigslist, put a for rent sign in the yard, and post it on Facebook, Craigslist, and Zillow. I don’t post in my MLS because very few people look for rentals with an agent in my area. Other areas of the country primarily use MLS or another method to advertise rentals. Be sure you research what the most prominent way to advertise rental properties is in your area.
Application
I use an application I found online and altered slightly when I am looking for potential tenants. I used to not charge an application fee or run a credit check but I do now. I charge $50 for an application fee and I use that money to run a credit check and background check. Potential tenants have had no problem paying these application fees, and it helps to make sure all tenants submitting an application fee are serious. A great way to judge a tenant is by talking to them as much as possible and looking at their application.
I want to see an application that is filled out as much as possible with multiple references. If an application is barely filled out, then the potential renters aren’t taking the process seriously or they are trying to hide something. When I talk to a potential renter, I want to learn as much about their previous living situation as possible, I ask about pets, I ask about employment, and who will be living in the property. The longer you talk to a tenant, the more you can learn about them.
When you first talk to a tenant on the phone, take notes so you remember what they said. Then when you meet them in person, ask them some of the same questions to make sure they give you the same answers. If someone is lying to you, it is a very bad sign. If they are late or do not show for an appointment it is an extremely bad sign. To avoid tenant problems, proper screening is vitally important and we now use SmartMove for credit and background checks. SmartMove lets the tenant sign in and pay them directly for background and credit checks so you don’t have to take social security numbers or private information. They also give you a recommendation on whether you should accept the tenant or not.
References
I always call references for all applicants that I am considering. I want to talk to the reference for the applicant’s previous residence and their current employer. I want to know if they paid rent on time, took care of the residence, or were high maintenance. By high maintenance, I mean calling in every week for minor issues, causing plumbing problems because their children like to flush toys down the toilet or any number of other items. I want to see if they had pets and if that information matches up with what they are telling me on their application. I want to ask the employer how long they have worked there. I want to know if they are a good worker and how solid their position is.
I will also ask how much money they make to see if it lines up with what the applicant is telling me. You cannot rely on everything a reference says because they may want the tenant out of their property and will say they are great when they are a nightmare! This is only one piece of the puzzle.
Pets and smoking
Pets can be an extra source of income or destroy your house. I prefer not to allow pets at all, but I may allow one dog with an additional pet deposit or an increase in rent. I usually charge a $200 nonrefundable pet deposit for a small dog. I always want a pet reference as well, meaning they had the pet in their previous residence and the pet did not hurt the property.
I do not allow cats, cats can ruin a house quicker than anything. If you haven’t smelled cat urine in a house, it is not pleasant. At a minimum, you have to remove all carpets and padding and in some cases remove the subfloor as well. I do not allow smoking in my rental properties at any time. If anyone is caught smoking or breaking any of the other rules, the lease says I can fine them $750 per occurrence.
Lease
I am lucky that I have a sister who is a property manager. I was able to use her lease and customize it for myself. Everything needs to be in writing including rent, term, late fees, the date rent is due, and things the tenant can and can’t do. A few things I include in the lease:
No painting without written approval.
Do not hang curtain rods without written approval.
No smoking on the property.
No pets on the property.
Only people on the lease and their children may live in the home.
No overnight visitors for over three straight nights.
No illegal activities on the property.
If any of these rules are broken, the lease says I can fine the tenants $750 per occurrence. If there are any exceptions to these policies, I put them in writing in additional provisions in the lease. I have a section that shows what utilities are paid by tenants, in my case all of them. I have a section that says if the tenants break their lease early, they owe the remainder of the rent due for the entire lease. If I can rent the home again, I can’t charge the previous tenants for rent as well, but I will charge a one-month’s rent lease-break fee. I have many other items in the lease. I am not an attorney and I highly suggest you have an attorney look over any lease you create.
Lead-based paint
With any house built prior to 1978, I have to provide a lead-based paint pamphlet explaining the dangers of lead-based paint. I also have a lead-based paint disclosure signed by the tenants as well.
Deposits
I charge one month’s rent for the deposit, and it must be paid with the first month’s rent before the tenants move in. The only time I split up the rent and deposit is if the tenants want to reserve the home before they move in. They can pay the deposit first and then pay rent when they move in.
Safety
Each state has different laws regarding carbon monoxide detectors and smoke alarms. No matter what your state law is, I would put them in. In Colorado, we have to have carbon monoxide detectors within 15 feet of every bedroom. They are very cheap for the protection they offer, and you can plug them straight into an outlet.
Keep tabs on your tenants
The worst thing a landlord can do, besides rent to bad tenants, is ignore tenants or their properties. If you never talk to your tenants or never send them anything in the mail they will think you don’t care. Once they think you don’t care they will stop caring about the house and stop paying rent. Landlords cannot assume tenants will pay their rent and take care of properties without any oversight.
When I managed my properties, I had a tendency to be very lenient with my tenants. Some tenants paid on time and took care of my rentals and others always paid late and damaged my houses. I learned you have to be tough no matter what the tenant tells you. After learning my lesson I became very strict on rent being in on time and scheduled routine check-ups on the houses.
I learned the more you contact your tenants the better tenants they will be. We have a maintenance person check every house once a quarter. He checks furnace filters, smoke detectors, carbon monoxide alarms and looks for any problems. It is written into the lease that we have someone check the house every quarter and the tenants know they will have to keep the house in relatively good condition.
I said this once already, but it is worth repeating. The worst stories I hear are from landlords who did not check on their houses for years and they were surprised to find the tenants had trashed the house. Not only can tenants trash the house easily without oversight, but they also have a greater tendency to commit illegal acts at the house or create dangerous situations.
A drug house is a landlord’s worst nightmare, especially a meth house. If a property is used as a meth lab, the entire interior may have to be gutted costing tens of thousands of dollars or more. If the tenant knows they will be checked on every couple of months, there is a much better chance they will refrain from illegal activities.
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Late Fees
My leases say that all rents must be received by the 1st of the month and rent is late on the fifth. If we don’t receive rent on the fifth we start charging late fees. I don’t care why the rent is late, we charge late fees. It is not fair to charge late fees to one tenant and not another. If you don’t charge late fees the tenants will think they can continue to pay rent late with no penalties. Pretty soon the tenants are one month behind and it is a struggle for them to ever catch up. Once they get too far behind they may stop paying altogether and then you will have to evict them.
Evictions
I rarely have to evict a tenant, but that doesn’t mean I have not had bad tenants. The reason I avoid evictions is I usually come up with a mutually agreeable move-out plan for the tenant. If you have to evict a tenant it can be a very expensive and a long process. The eviction process varies in every state. In Colorado, it takes about a month to evict a tenant. In other states, it takes longer and in a few states, it is a quicker process. It is not only the time it takes to evict someone that costs money.
To get to the eviction point, the tenant is at least a couple of months behind on rent. People also do not like being evicted and have a tendency to do damage to homes when they are evicted. I have avoided evictions, but that does not mean I have avoided vacancies. I have ended leases early in multiple situations where the tenant could not pay rent or would not for various reasons.
Instead of going through the lengthy eviction process, we were able to work out a deal where the tenant moved out before their lease was up and I did not hold them responsible for the rest of the lease. I could have held them responsible for future rent as well, but that leaves hard feelings and there is a better chance they would damage the home.
By letting them leave early, they get the feeling I am helping them out. In my rental market, I also have no problem renting homes quickly. I would much rather get a bad tenant out right away and get a good tenant in the property. I still try to collect any back owed rent or any damage done to the property above and beyond the security deposit.
We also always use a lawyer when we have to evict because while it costs money it saves time and it is easy to mess up the paperwork!
Behind on rent
Most of my tenants are very good about paying rent on time because they know they will be charged late fees. I had one tenant that was always late and always has a multitude of excuses and pretended he was not late. The funny thing is he had bought a brand new Toyota Sequoia and we got a call from another car dealership because they were trying to buy a second brand new car. Some people do not know how to manage or save money! If I never told this tenant how far he was behind, he would assume he was paying on time. In fact, he would probably stop paying altogether and assume someone else had started paying rent for him.
One thing we do is send an invoice every month to every tenant. This reminds them to pay rent on time, reminds them where to send the rent and they have no excuses for not knowing they were behind. If a tenant gets more than one month behind or stops communicating with us we will post a notice to vacate on their door. When you post this notice you do not have to evict the tenant, but it sure gets their attention and if they don’t contact us, it is the start of the eviction process.
Maintenance
Some landlords are cheap and will not maintain their properties or repair their houses. You are asking for problems from the property and the tenant if you do not maintain the property. A house that shows poorly will attract poor quality tenants and if the tenants are unhappy with the home they will be less likely to pay rent or take care of it.
If the landlord ignores problems like a bad roof, bad electric, or bad plumbing it could cause thousands of dollars in damage or be dangerous. Rental properties do not have to look like a luxury resort, but they should be functional, all the major systems should work and they should look and smell decent. Maintenance items will come up and that is why it is important to have enough money in reserves to pay for repairs.
How long does it take to manage rentals?
There are many tasks associated with managing rentals, but it doesn’t take a lot of time for one property. The most time-consuming part of managing properties is getting them rented. If you only have one rental property you should be able to spend a few hours a month managing it. Many of those hours will come from renting the home and much fewer hours will be from collecting rent, dealing with maintenance, and other issues.
Managing one rental property, two or three rental properties is not too difficult either. Once you start getting four or more rentals it starts taking a significant amount of time to manage your properties. If you don’t have the time to manage them; get help. When you don’t take the time to screen tenants or check up on your properties is when you encounter serious problems.
Hiring a property manager
There is a lot involved in managing rental properties, but not every rental will have issues that require a lot of management. I have had rental houses that never have a problem, are well maintained and the tenants always pay on time. I have had other rentals where the tenants are always having problems, pay late, or stop paying completely. I had one tenant who had a heart attack and could not work anymore. We came up with a mutually agreed-upon plan where he would move out and try to pay me back for back rent owed. He never paid me, but I rented the house right away for more money than he was supposed to be paying and it worked out okay.
It is worth it for many people to use a property manager, especially if they can’t handle being tough on tenants. Property managers will cut into your profits, but they will save you time as well. Property management fees usually range from 8 to 12 percent of the monthly rents. Some property managers also charge a leasing fee, which could be one-half or one month’s rent. In my area, I can find property managers who charge 8 percent of the monthly rents with no leasing fees. I have thought about starting a property management company, but with fees that low it is hard to make much money.
I have a real estate team that consists of real estate agents, assistants, and myself. When I gave up managing my rental properties, I handed the duties over to my team. Not only does my team help me with selling houses and my fix and flips; they manage my rental properties.
Conclusion
If you want to manage your own rentals, make systems to help you. Create a system to check your houses, make sure rent is on time, and make sure accounting information is logged every month. It was not difficult for me to manage my rental properties, but I also started to let things slide at the end and that is when problems occur. If the tenants don’t think you are paying attention they will be more likely to try and take advantage of the situation. If you are looking to buy rental properties and do not think you can handle managing them, make sure you account for the cost when figuring your cash flow.