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A Sensible Take on Retirement Investing

A Sensible Take on Retirement Investing

Buying a second home isn’t always a luxury. In fact, it can be a smart way to plan for your retirement and where you’ll downsize in your golden years. With interest rates still low and housing prices starting to climb, now may be the time to think about buying the home where you’ll spend your retirement years.

The Vacation Home Plan

Maybe you’re not keen on retiring where you live now, but you have a favorite vacation spot that would be perfect for life after the rat race. Chances are, you’re not the only one who likes to vacation there. Sites such as HomeAway.com and VRBO.com list vacation homes for short-term rental, which could help you save on taxes. Rental income that spans less than 15 days is not taxable as income, but then, expenses for that time period can’t be used as deductions. Rental income totaling less than half the year, however, can cover up to 75 percent of a homeowner’s mortgage costs while still leaving the home available for the owner’s vacation plans.

The Downsizing Plan

Many soon-to-be retirees want to stay close to where they live now, but know they may need or want to downsize to cut down on bills, cleaning and yard work after retirement. This is an easier proposition for the highly independent investor, since he’ll already be familiar with his hometown and its desirable neighborhoods. The key is keeping your retirement cottage rented to pay down as much of the mortgage as possible before you need to move in.

The Rental Next Door

Some forward-thinking buyers think a half-rented duplex is the way to go. By living in one unit and renting out the other, it’s possible to have the mortgage, taxes and insurance completely paid by the rental unit. The catch to this retirement plan is location desirability; there aren’t many great neighborhoods for retirees that also feature duplexes, or that are attractive to renters. Of course, if you plan to rent to other retirees, that makes this option a little more feasible.

Regardless of your rent-to-retirement plan, property management is the key to making your post-work life more enjoyable and relaxing. The professionals at Class A Management can help you with market and property research everywhere in Texas. Call us today at 817-295-5959 or e-mail, .

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The Two Property Investor Personalities: Which One Are You?

The Two Property Investor Personalities

Admit it: we all take a second look at social media click-bait that asks the question, “What kind of (insert label here) are you?” There are lots of personality quizzes that seek to label people in every aspect of life. But, when it comes to property investing, there are really only two portfolio personalities that apply, and they can both apply to your investments whenever you choose.

Personality A: The Wealth-Builder

Stock market investors typically earn a 3-9 percent annual return, but smart property investors can make anywhere from 12-30 percent return depending on the risks they take and other factors specific to their market and timing. Building wealth by investing may seem like a no-brainer, but more aggressive strategies such as flipping distressed properties and buying bank-owned homes involve a little more risk. As with any strategy to build wealth, more risk usually involves more return in a shorter time frame, but the inherent risk is something that some investors prefer to avoid.

Personality B: The Retirement Plan

Holding onto existing wealth and investing for the long-term are hallmarks of an investment plan that has a retirement focus. Planning for life after conventional income sources are out of the picture, retirement investors are risk-averse in a big way. Property investing for retirement requires safe-bet rental income investments and less property trading.

Dynamic Investor, Dynamic Portfolio

Depending on what’s happening in the market, what your plans are and what investment properties you currently own or want to buy, your investment portfolio personality may have multiple facets. As long as your long-term plan includes due diligence before a purchase, smart property management and workable exit strategies, don’t worry about applying a label to the way you invest. If you keep a level head, the only thing you’ll do consistently is expand your portfolio – and your profit.

If you’re ready to take your investment portfolio to the next level, whether that’s big returns or a stable retirement income, the professionals at Class A Management can help. Call us today at 817-295-5959 or e-mail .

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Build Your Exit Strategy in 3 Simple Steps

Build Your Exit Strategy in 3 Simple Steps

Real estate investing is generally a short-term proposition, in the big scheme of things, and an investor needs a way to get out of every single investment. The plan for unloading a property is called an exit strategy, and every good exit strategy has three essential elements that make it work to build your portfolio.

Options

Exit strategies can take the form of wholesale, a renovation (or flip), rental (or buy and hold), or a lease (where a renter has the option to buy). Other options include liquidating the investment entity that holds the title and refinance, but we’re looking at clean breaks in this instance for investors who want to keep on investing. If you can leave more than one option on the table, do it.

Triggers

Obviously, wholesale doesn’t involve an actual purchase and doesn’t require a trigger. A trigger is the point at which the exit strategy comes into play. For a flip, it may be completion of specific renovations or meeting a budget ceiling. For a rental, it may be a change in the market or hitting a specific equity point. Whatever your exit trigger, stick to it.

Timeline

Timelines can be triggers, and vice-versa, but can also determine the nature of an exit strategy. An overall portfolio timeline, which lays out an investment plan that includes growth in stages, can determine which properties appeal to a buyer. As an example, an investor who plans to flip single-family homes for three years wouldn’t buy a property with a six-month flip timeline at 2 years and 10 months into the investment timeline. Some investors may want to maintain more flexibility than these elements provide. It’s a good idea to include flexibility within your exit strategy options rather than to give yourself an opportunity to let emotion lead your actions. Within the investment portfolio, after all, a single property and its disposal can make a huge impact that shouldn’t be left to chance.

Whether you’re implementing your investment exit strategy, or just starting to look into property investment, Class A Management has experts who want to help you develop a strategy and grow your investment portfolio. Call us today at 817-295-5959 or e-mail, .

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How Sellers Can Win in a Buyer’s Market

How Sellers Can Win in a Buyer's Market

When you’re selling a property in any market, there are a few things you can do to play up your property’s positives and attract just the right buyers. It’s all about knowing what the buyers want and catering to their needs.

Be Sensible With Upgrades

First, let’s take a look at what buyers don’t want. People don’t mind music from the 1990s, but they also don’t want their homes look like they still live in the ’90s. Buyers don’t have to have stainless steel appliances and granite countertops, as long as the appliances are new. Dated, dark kitchens can bring down a selling price significantly. The best way to sell that 1989 brick ranch is to update and modernize. Also, if the property you’re trying to sell has a swimming pool, consider carefully about whether filling in the pool may be a wise idea to speed the sale of the home. That may seem drastic, but a swimming pool even in the best location typically only adds 8 percent of the value of the home, but it adds loads of maintenance and safety concerns. In some locations (near large bodies of water or in extreme cold-weather climates), a swimming pool can even lower the value of your property.

Make a Great First Impression

So, what do buyers really want? Think, “immediate gratification.” Buyers want home that is move-in ready. First-time home buyers, in particular, want updates and amenities that give a home great curb appeal and lots of character. They want to feel at-home from the minute they drive up and first see the house. They’re willing to give a little when it comes to commute time, but they won’t budge on updated kitchens and baths. Give them the updates and add some landscaping to that list, and there’s a good chance that your property will be one of the hottest properties in your local market.

Whether you’re implementing your investment exit strategy, or just starting to look into property investment, Class A Management has experts who want to help you develop a strategy and grow your investment portfolio. Call us today at 817-295-5959 or e-mail, .

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Understanding Multifamily Classifications

Multifamily Classification

New to property investing, ownership or management? One thing you’ve likely picked up on is the rating of multifamily properties according to ‘classes.’ In other words, referring to properties as “class A”, “class B”, or “class C.” Doing so allows for the establishment of set standards and acceptable rental rates for each.

Here, we take a look at the standards defined within each class, as well as the property type you should consider for your investment dollar.

Class A: These properties are the best of the best. They are typically new properties, but do not have to be in they meet other quality standards. They are well designed and use the best quality materials and construction processes. They are also well maintained and well-managed, making them highly desirable to tenants, and capable of commanding the highest rent rate levels.

Class B: While an older property can qualify as a Class A, these properties are likely between 10 and 50 years old. They are built with average materials and construction processes. Management does a good job with the property, but not to the level of a Class A, and is considered status quo. They are functional, useful, and typically in-demand dependent upon the community demographic. Yet, there is not really anything unique or special about them.

Class C: The tenants who choose to live in a Class C property are typically most concerned with affordability. They don’t mind the older age of the buildings, or that the construction and materials used to build them are below average. Systems such as electrical and HVAC are average-to-poor as is management.

For Your Dollar

Many investors automatically think purchasing a Class A is the best route. Better property = greater demand and more money. This, however, isn’t always the case. Our recommended route, instead, is to look for the Class B property that can be enhanced to offer the appeal of a Class A property. There’s less outlay in the beginning, but with just as much potential.

Here’s how:

  1. The construction and materials are already good, but it will require a thorough look at how to improve where needed. How old is the roof? Does the drywall need to be addressed? Is there a better “flow” to the individual units that would improve the appeal? How about the addition of a clubhouse or fitness center? You get the idea; and once it’s decided which projects will be completed, it’s necessary to do it with the best quality materials and construction.
  2. Upgrades are the key to separation between the classes. Take a look at Class A properties in the community and see what they have chosen to offer. Make a list and then get yourself access to a good wholesaler of discount, but high quality, products. This might include bathroom fixtures, lighting, blinds, carpeting or hard woods, countertops, and a wide variety of kitchen upgrades.
  3. Get a management company who knows what they’re doing and will not only help you get everything completed on points #1 and #2, but can also manage everything about it from marketing, to applicant screening, to everyday business.

We know the importance of creating appeal regardless of property class and can help take your property to the next level. Call the professionals at Class A Management at 817-295-5959 or send us an email to .