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How to Buy Your First Rental Property

How to Buy Your First Rental Property

by | Mar 10, 2023 | Blog, Homeowners, Homes, Villas and Condos, Investment Property in Florida, News, Property Management, Real Estate News, Renters

How to Buy Your First Rental Property

How to Buy Your First Rental Property

 

Owning a rental property can be a great way to start investing in real estate. However, buying your first property is just a small portion of running a successful rental business. If approached with no strategy, this can result in long vacancy periods or unfavorable experiences with tenants.

To avoid that from happening, we share our best tips for buying your first rental property and important factors to consider as a soon-to-be landlord.

7 Tips for Buying Your First Rental Property

Managing a rental property can become stressful as a DIY landlord, but there are ways to make the process of buying and managing your first rental property easier. Here are nine tips to keep in mind as you go through each step.

1. Determine if You’re Ready to Become a Landlord

Even though many consider rentals as a way to generate passive income, there are still some responsibilities that will need to be handled throughout the year. In addition to managing tenants, becoming a landlord requires you to create rental applications, lease agreements, collect rent, and handle sudden maintenance issues.

For that reason, it’s advised to determine if you’re ready to become a landlord prior to buying an investment property or if you’ll want to hire a property manager instead.

2. Secure a Larger Down Payment

There are various ways to finance rental properties — all of which may require more in a down payment and overall fees than owner-occupied properties. Most mortgage loans require a down payment anywhere from 3% to 20%, but some real estate loans require a minimum of 20% of the asking price since there’s a higher risk to financing an investment property.

Not all lenders require 20%, especially if you can purchase mortgage insurance, but having a savings account can help you cover any down payment or property-financing expenses.

3. Find Local Investment Properties

The types of properties worth buying are located in a great area, offer in-demand amenities, and are close to highly-rated schools. You can either work with a Realtor that specializes in real estate investing to help you find investment properties or you can use websites like Realtor.com® to find properties yourself. 

You also have the option to work with a local wholesaler or buy a foreclosure from a courthouse auction, but those properties may require more work to get them ready for tenants.

4. Create a Rental Property Business Plan

Creating a rental property business plan can be a great way to determine the goal of your business, your strategic plan, and outline the objective of your business. Although not required, establishing a plan prior to launching your rental business can ensure you enter the market prepared to handle hiccups with ease.

5. Determine Your Rent Price and Operating Expenses

Both your rent price and any operating expenses you expect to pay will need to be identified to determine your property’s profitability. Some landlords explore rental sites to see how much other landlords are charging for similar properties.

Operating costs can include costs like maintenance repairs, listing your property online, turning over an apartment, and tenant screening reports. Each cost varies depending on where your property is located, the amount of times you turnover an apartment, and how comprehensively you want to screen prospective tenants.

6. Purchase Landlord Insurance

You never know what could happen when renting out your property to tenants, which is why it’s advised to invest in landlord insurance. Most insurance providers offer policies with different levels of protection to landlords. However, tenants should still be required to purchase renters insurance to ensure their own belongings are protected during the lease term.

7. Familiarize Yourself With Landlord-Tenant Laws

As a landlord, you’ll need to follow local landlord-tenant laws and Fair Housing laws during the rental process to avoid legal situations that can damage your rental business. These laws can also impact how you handle rental security deposits, screen tenants, and evictions. By regularly checking your local laws and any changes that directly impact the rental industry, you can avoid any lawsuits or violation of any renters rights.

Looking for rental services in Orlando – we can help.

We work with our Owners and tenants as individuals and never under estimate what it takes to keep you happy with your choice of Management Company.

By doing our due diligence with our clients, tenants, and vendors we create a service that exceeds expectations and generates positive referrals. Click one of the buttons below and start your journey with a Residential Property Management company that really cares.

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

 

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Landlord’s Guide to Single-Family Rentals

Landlord’s Guide to Single-Family Rentals

by | Feb 24, 2023 | Blog, Homeowners, Homes, Villas and Condos, News, Property Management, Renters

Landlord’s Guide to Single-Family Rentals

Landlord’s Guide to Single-Family Rentals

 

Single-family homes often serve as primary residences, but more and more landlords are renting out their houses to keep properties they’re not ready to sell. This can also be a great way to generate passive income with a property you already own, as opposed to buying an additional property to rent out.

Keep reading to learn more about single-family rentals and what tools can help you manage your rental properties like a pro.

What Is a Single-Family Home?

Single-family homes can be a detached home that doesn’t share any walls with another residence or attached dwelling that are separated by a ground-to-roof wall. The property owner typically owns the entire property and the land, while those with condominiums (or condos) only own the interior of an individual unit and share common areas with other members of the association.

Single-family homes also don’t share utilities with others and are responsible for all costs associated with the property.

The Pros and Cons of Single-Family Rentals

With more tenants preferring single-family homes to traditional apartments, it’s easy to see the value they provide to landlords. But before renting it out to tenants, here are the pros and cons to be aware of.

Pros of Single-Family Rentals

  • More space: With rising rent prices, more tenants are willing to sacrifice location and popular amenities for more affordable options that offer space. The amount of space single-family homes offer can increase your chances of filling vacant properties faster, especially with a competitive rent price.
  • More privacy: Single-family rentals offer tenants more privacy and remove the chance of dealing with other tenants.
  • Fewer rules: Most rentals in multifamily properties can have additional rules tenants must follow outside the landlord’s rules. Renting out a single-family home gives landlords more flexibility on deciding what is (and isn’t) allowed.

Cons of Single-Family Rentals

  • Higher purchase price: If you don’t currently own a single-family home, you may have to pay a higher purchase price, down payment, and closing costs than with a condo.
  • More financial responsibility: Since a single-family home is considered a stand-alone property, the owner handles all financial obligations. Examples of costs to cover are property taxes, homeowners association (HOA) fees (if applicable), utilities, maintenance, home improvements, and so on.
  • The sole responsibility for maintenance: With a single-family home, you cannot rely on on-site staff to help tenants with maintenance requests. You will be responsible for finding and hiring contractors to help with other maintenance, which can add to operating costs.

Are Single-Family Homes a Good Rental Investment?

Single-family homes can be a great rental investment when priced fairly and competitively. Renting out a single-family home is also ideal if you’re planning to move out of your primary residence but want to keep the property instead of selling.

But with any investment, analyze a property’s profitability to determine if you can generate a profit each month before committing to renting it out. To do this, you can look at important factors such as the neighborhood, property taxes, average rents, and property history before finding tenants.

Are Single-Family Homes Better Investments Than Multifamily?

While it’s true that both single-family homes and multifamily properties offer a great return on investment (ROI), determining which option is best for you depends on several factors.

  • Local rental demand: Cities can vary on rental demand and the type of rentals tenants are looking for. Some areas may have a higher demand for condos and apartments in multifamily properties, while others prefer single-family homes like detached houses or townhouses.
  • Rent price: Generally, you can charge more for rentals in high-rise to mid-rise buildings since they offer additional amenities that increase the property value. On the other hand, single-family homes tend to have a more affordable price that can make it easier to attracttenants in your area looking to save on rent.
  • Vacancy rates: Depending on rental demand, there’s a chance one type of property can require more time to fill than another. If you find other landlords needing more time to fill a single-family home than a condo in a multifamily home, this is something to consider when determining which type of property to rent.

Do You Need to Hire a Property Manager to Manage a Single-Family Home?

You can hire a property manager to help manage your property for you or use a property management software platform to streamline the process for less money. Property managers can charge anywhere from 8% to 12% of the monthly rent price, not including additional fees they may charge for one-off tasks.

Looking for rental services in Orlando – we , at Remax Heritage Bardell Real Estate, can help. We work with our Owners and tenants as individuals and never under estimate what it takes to keep you happy with your choice of Management Company.

By doing our due diligence with our clients, tenants, and vendors we create a service that exceeds expectations and generates positive referrals. Click one of the buttons below and start your journey with a Residential Property Management company that really cares.

Where to Find Single-Family Homes to Buy

With so many house hunting websites apps, you may wonder which is best for finding available single-family homes. Some options to explore are Realtor.com®, Zillow, Homefinder.com, Redfin, Trulia, Homes.com, Estately, and ForSaleByOwner.com.

We specialise in the residential real estate market in the Orlando area. When you are searching for your new home finding the right real estate agent is key and local knowledge is essential. Relocating from out of state, moving within the Orlando area or emigrating from another country you need to work with an agent that knows the local markets and is committed to delivering nothing but first class service and advice each and every day.

Call us today to speak to one of our real estate or property management professionals today! 863-424-2309

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

 

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Difference Between Net Effective Rent vs. Gross Rent

Difference Between Net Effective Rent vs. Gross Rent

by | Feb 17, 2023 | Blog, Homeowners, Homes, Villas and Condos, News, Property Management, Real Estate News, Renters

Difference Between Net Effective Rent vs. Gross Rent

Difference Between Net Effective Rent vs. Gross Rent

You may have come across a rental listing with an attractive rent price, only to discover the actual rent is more than the one in the ad. While this may come off as a surprise, it’s common for landlords to use net effective rent and gross rent interchangeably in rental listings. However, this can make it hard to know how much to budget for rent for both renters and landlords.

We outlined the difference between net effective rent and gross rent to help you distinguish the two types of rent prices.

What Is Gross Rent?

Gross rent is a flat monthly rent price renters are responsible for covering throughout the lease term. Gross rent is typically higher than net effective rent, since it does not account for any promotions landlords may offer.

What Is Net Effective Rent?

On the other hand, net effective rent is the average rent amount that accounts for any discounts the landlord offers. Some landlords add the net effective rent price on their rental listing to attract interest, but this will not match the gross rent amount listed in the lease agreement. Net effective rent is viewed more as a helpful calculation that can help you properly prepare your finances as a renter and income as a landlord.

The landlord can either require the net effective rent each month or only the gross rent for months that are not included in the promotion.

How Is Net Effective Rent Calculated?

Net effective rent is calculated by multiplying the gross rent by the total amount of months a renter is responsible for paying rent. That number is then divided by the lease term, which can be anywhere from six to 15 months.

For more context, let’s say you’ve come across a listing that has a gross rent price of $1,800 and two months free rent on a 12-month lease.

net effective rate calculation example graphic

Because of the promotion, the rent the renter is responsible for will average to $1,500 per month — $300 less than the gross rent price. They can pay $1,500 each month (including the months that are considered free) or pay the gross rent price for only 10 months, depending on what the landlord prefers.

Pro tip: Check your lease agreement to ensure your landlord has listed which months you will not have to pay rent.

Finding Available Rentals

Net effective rent and gross rent both equal the total amount of money that will be paid during a lease term, but can dictate when and how much rent is paid. While it’s normal for landlords to use both rent prices interchangeably, you’ll want to ensure you’re aware of the exact price you’ll need to pay each month during the lease term.

Looking for an Experienced Residential Property Manager?

If you have a home to rent in the Orlando area be assured there is no substitute for experience. Covering Clermont, Winter Garden, Windermere, Dr Philips, Kissimmee, Davenport, Champions Gate, Hunters Creek and Haines City. We remain focused on this greater Orlando area to ensure we are able to provide outstanding service to our Clients without sacrificing performance. Looking for an experienced residential Property Manager in the Orlando area with a demonstrable track record – look no further.

Call us today to find out more (863) 424-2309

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

 

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Lease Signing Process for Landlords & Tenants

Lease Signing Process for Landlords & Tenants

by | Feb 10, 2023 | Blog, Homeowners, Homes, Villas and Condos, News, Property Management

Lease Signing Process for Landlords & Tenants

Lease Signing Process for Landlords & Tenants

 

A rental lease agreement is an important document that includes all the necessary information and legal elements required to protect landlords and tenants. But before signing a lease agreement, it’s important to be informed on the lease signing process, such as who signs first and what to consider before signing.

Keep reading to learn more about the lease signing process and tools that can help you streamline the process.

What Factors Should Be Considered Before Signing a Lease?

Before signing a lease agreement, it’s advised to review the following parts of a lease to ensure you’re aligned with the stated information.

  • Lease agreement type: Check that the lease agreement states the right type of term duration you agreed on. If both the landlord and tenant agreed on a 12 month lease, then the lease agreement should explicitly state this lease term. As a reminder, landlords can offer four types of lease agreements — a month-to-month lease, short-term lease, 12-month lease, or rent-to-own lease.
  • The stated rent price: Avoid signing for a lease agreement that states the incorrect rent price. If the rent price doesn’t match what’s been communicated, then the landlord will need to adjust the lease.
  • The landlord’s rules: Review the rules and conditions the landlord will enforce during the lease term. Tenants may also want to review local landlord-tenant laws to ensure the agreement does not violate their renters’ rights.
  • If the information matches what’s been communicated: Landlords should include rent concessions they’re offering, amenities available to tenants, fees tenants are responsible for paying and when they’re due, and any other information shared with the tenant.

If the lease agreement does not match the information discussed during the application process, tenants are advised to let the landlord know before signing. This is especially important because lease agreements cannot be changed once everyone in the agreement has signed.

The Lease Signing Process Explained

Once a tenant’s application has been approved, the next step is signing the lease to finalize the agreement. Landlords can schedule an in-person meeting to collect signatures or explore electronic lease signing to expedite the process.

Here are the basic steps in the lease signing process that landlords and tenants can follow.

1. Landlord Sends Lease to Tenant to Review and Sign

Landlords can digitally sign Avail lease agreements or their own ready-to-sign document for free. Before collecting the tenant’s signature, landlords will need to invite them to create an account with Avail. They will be emailed with instructions on how to review and sign the lease. They can use this time to raise any concerns they have when reviewing the lease agreement.

If the tenant discovers an error in the lease agreement, landlords can easily edit Avail leases to resend. However, if the document was uploaded to Avail, you may need to upload the revised document to sign online.

2. Tenant Provides First Signature

It’s best practice to have the tenant sign the lease agreement first for a few reasons. If you provide a lease with your signature and the tenant does not sign the document right away, then it makes it harder to move on to another tenant. If the new tenant you chose signs the lease, as well as the original tenant you wanted to lease to, you can end up with two valid leases, which will require legal assistance to navigate.

For that reason, landlords typically require tenants and co-signers or lease guarantors (when applicable) to sign the lease first. This also allows you to review the lease to see if any portions have been changed without your knowledge or cancel the lease if you no longer want to rent to the tenant.

3. Landlord Provides Final Signature

Once you’ve collected signatures from tenants, landlords can provide theirs to make the agreement legally binding. It’s important to review the lease agreement before signing to ensure all the information is correct and complies with local ordinances.

The final lease agreement will automatically populate to both parties’ dashboards to reference throughout the lease term.

Lease agreements cannot be changed once both parties have signed.

Is a Lease Valid If Not Signed by All Tenants?

In most states, all parties included in the lease agreement need to sign for a lease to be valid. However, each state varies on rules and regulations regarding online signatures on lease agreements, so refer to local landlord-tenant laws to check.

 

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

 

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What Is Rental Property Depreciation?

What Is Rental Property Depreciation?

by | Feb 4, 2023 | Blog, Homeowners, Homes, Villas and Condos, Investment Property in Florida, News, Property Management, Renters

What Is Rental Property Depreciation?

What Is Rental Property Depreciation?

 

Rental property depreciation can help you deduct property-related costs to lower your taxable income for the year. Tax professionals typically help in calculating depreciation for your properties, but there are benefits to knowing what rental property depreciation is and what to keep track of as a landlord.

Here’s everything you need to know about rental property depreciation and how to calculate depreciation for your properties.

What Is Rental Property Depreciation?

Rental property depreciation describes a property’s reduction in value due to wear and tear or property damage. Depreciation can help landlords recover the costs associated with income-producing properties (such as buying, improving, and managing costs) and must be taken over the expected life of the property.

How Does Rental Property Depreciation Work?

According to the Internal Revenue Service (IRS), you can begin to depreciate your property once it’s ready to rent and available to tenants. Depreciation ends once you’ve fully recovered your costs or when the property is no longer a rental, whichever comes first.

An example of rental property depreciation is as follows: You purchased a rental property on June 20 and published a rental listing for the rental property on August 15. You’ve completed the tenant screening process and found your next tenant set to move in by September 1. Depreciation on the property would begin in August, since your property was ready to be leased in that month.

Rental property depreciation can continue even if the property is not in use, whether it be to make extensive repairs or during the process of finding a new tenant. There are different depreciation methods to follow, but this is often determined by a certified tax professional when completing your taxes.

Can Your Rental Property Be Depreciated?

Your rental property must meet the following requirements set by the IRS to qualify for rental property depreciation:

  • You must be the owner of the property
  • The property must be used to generate income
  • You must be able to determine useful life for the property that’s more than one year

If you’re unsure if your property qualifies, you can refer to a certified tax professional to help answer your questions.

How to Calculate Depreciation on a Rental Property

To calculate depreciation on a rental property, you’ll need the cost basis of the property, the recovery period, and recommended depreciation method. Rental properties placed in service (or in use) after 1986 can follow the Modified Accelerated Cost Recovery System (MACRS) method that spreads costs over the span of 27.5 years — the useful life of a rental property, according to the IRS.

Ideally, a certified tax professional would help you calculate depreciation on a rental property to ensure your tax forms are filled out correctly. However, here are three steps to take to help you perform the calculation yourself.

  1. Determine the cost basis of your property: The basis of the property is the total acquisition cost, including the mortgage, legal fees, transfer taxes, and title insurance. This number is then subtracted from the value of the land the property is built on.
  2. Separate the cost of land and buildings: You can only depreciate the cost of the building, not including the land. To separate the cost between the two, you can refer to the property’s fair market value for individual costs.
  3. Use a property depreciation calculator: Use a property depreciation calculator to determine the cost basis, recovery period, and place in the service period for your property.

The depreciation you calculated can then be shared with a tax professional to confirm the amount is correct.

How Much Does Depreciation Reduce Tax Liability?

You can report your rental income and expenses for your rentals on a 1040 tax form. The depreciation amount will need to be outlined on the appropriate line of Schedule E to reduce your tax liability for the year. Tax liability reduction will depend on the tax bracket you’re in and how much depreciation you report.

 

Looking for an Experienced Residential Property Manager?

If you have a home to rent in the Orlando area be assured there is no substitute for experience. Covering Clermont, Winter Garden, Windermere, Dr Philips, Kissimmee, Davenport, Champions Gate, Hunters Creek and Haines City. We remain focused on this greater Orlando area to ensure we are able to provide outstanding service to our Clients without sacrificing performance. Looking for an experienced residential Property Manager in the Orlando area with a demonstrable track record – look no further.

Call us today to find out more (863) 424-2309

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

 

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When Should You Sell a Rental Property?

When Should You Sell a Rental Property?

by | Feb 3, 2023 | Blog, Homeowners, Homes, Villas and Condos, Investment Property in Florida, News, Property Management, Renters

When Should You Sell a Rental Property?

When Should You Sell a Rental Property?

 

Investment properties can be a lucrative source of passive income, but factors like profitability, maintenance, and the housing market at large can become good reasons to sell a rental property.

According to Avail data, roughly 16% of landlords reported planned to sell an investment property in 2022. If you’re wondering whether to sell your property or when to sell it, here’s what to know about selling a rental property.

How Do I Know if I Should Sell My Rental Property?

Determining whether to sell or keep renting your property depends on a variety of factors, but these are a few indicators that it may be time to consider selling:

  • Profitability: Ideally, your rental property should bring in more money than you’re spending to maintain it. If the rental income you’re generating isn’t higher than the cost of your annual operating expenses, the profits (or lack thereof) may not be enough to justify holding on to the property.
  • Maintenance: Maintenance is an unavoidable part of owning a property, but it can be time consuming. If the time and money spent on rental property maintenance becomes overwhelming, it may be time to consider hiring a property manager or selling.
  • Tenant turnover: High tenant turnover can be the result of many things — the rental market, the property itself, or even your style as a landlord. But high tenant turnover means spending time and money advertising your property and losing rental income due to vacancy, which can become unprofitable over time.
  • Property finances: Financial factors like property appreciation, capital gains from selling a rental property, and new investment opportunities should be considered, too. If your rental property is worth a lot more now than when you bought it or you’ve identified an even better investment opportunity, it could make sense to sell. Note that it’s important to be aware of any capital gains taxes from a sale and how to defer them with a 1031 exchange.
  • Housing market: The current housing market can dictate how much you can charge for rent, how high tenant turnover is, and how valuable your property would be if you were to sell. In highly competitive housing markets, landlords may be more incentivized to sell a property.
  • Location: If you’re moving away from your rental properties, you can always try long-distance real estate investing. But since this often means hiring a property manager, some landlords opt to sell their rentals, instead.

When Is the Best Time of Year to Sell a Rental Property?

Based on Realtor.com® data, the week of April 10-16 is the best time of year to list a home for sale in 2022. Why? According to seasonal data from 2018, 2019, and 2021, this week in April has the most favorable conditions for home sellers when looking at factors like competition, listing prices, days on market, likelihood of price reductions, and homebuyer demand.

Compared to other weeks in the year, Realtor.com®’s historical data from April 10-16 showed higher-than-average listing prices, more buyers looking at listings, homes selling more quickly due to higher demand, and even a lower level of competition from other sellers.

What To Do Before Selling a Rental Property

Before you list your rental property on the market, a few things need to be handled:

  • Notify your tenants: You’ll need to give tenants appropriate notice that you’re selling the property. The amount of notice often depends on your lease and local laws, but can also dictate your timing for listing the property. In some cases, tenants will need to leave the property, but in others, a new owner will take over the rental lease.
  • Prepare the property: Once you notify tenants of the sale, you’ll need to prepare the property for sale. This consists of a property inspection — regardless of whether tenants are staying or leaving — to identify any wear and tear or damage and address any needed repairs. If tenants have moved out of the property, it may be a good time to tackle property renovations that will help increase the value of the rental.
  • Research home value: Doing some research on your property’s value is essential, even before working with an agent. Tools like Realtor.com®’s My Home give a breakdown on a property’s value, local market trends, and how your property compares to those currently for sale.
  • Work with an agent: You can sell a property on your own, but most sellers choose to work with a real estate professional to make the selling process a lot smoother. An agent will be able to help you prepare the necessary paperwork, get your property in front of buyers through a multiple listing service, and assist with the entire home-selling process.
  • Time your sale: To avoid being hit with short-term capital gains tax, it’s commonly advised to hold on to a rental property for at least one year. In some cases, you’ll want to wait until a lease has expired or allow time to complete renovations. An agent can help you make decisions about when to list your property on the market, or you can use market trends and research — like those provided by Realtor.com® — to help determine an optimal time to list.

 

Looking for an Experienced Residential Property Manager?

If you have a home to rent in the Orlando area be assured there is no substitute for experience. Covering Clermont, Winter Garden, Windermere, Dr Philips, Kissimmee, Davenport, Champions Gate, Hunters Creek and Haines City. We remain focused on this greater Orlando area to ensure we are able to provide outstanding service to our Clients without sacrificing performance. Looking for an experienced residential Property Manager in the Orlando area with a demonstrable track record – look no further.

Call us today to find out more (863) 424-2309

​

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

 

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